PROBLEM INCREASE ON THE PRICE ONLY

I. INTRODUCTION

1.1 Background

The government's irregularities in regulating the agricultural sector, particularly related to the policy on
food sector imports, are becoming more obvious. Not long ago the rise in commodity prices of onion and
garlic in the last two weeks made housewives screaming almost in all cities in the country.price increases
at a certain level are not really a problem, as long as it is under control. But it will be a problem if the
price increase is not controlled, so that miserable people's life with lower-level economy. Especially if the
increase causes a high inflation rate.

The impact is the decline in people's welfare and purchasing power.the housewives were complaining as
prices rose ahead of the political year. Therefore, efforts to address the sources of price increases
become strategic to do.

As happened recently the soaring price of onions is disebabka by several things. The increase in the price
of the onion is so drastic, of course, raises a variety of problems for the good consumers of the State.bag
consumers, the increase in the price of this onion was so torture, especially for the lower community.
The need for onion commodities as a spice kitchen is very difficult to reduce considering the onion itself
has become a mandatory condiment.

In addition, this impact is also felt for the State because the increase in onion prices is the largest
contributor to inflation increase.therefore it should be discussed about the issue of the increase in the
price of this onion.in this paper will be discussed on the issue of rising prices of onions, the things that
cause it and some solutions that can be done to overcome the problem.

1.2 Problem Formulation

1) What is the issue of onion price rises occurring in Indonesia?

2) What causes the onion price hike?

3) What solution can be done to solve the problem of onion price increase?

1.3 Objectives

1) To know the problem of the increase of onion price that happened in Indonesia

2) Know what causes the onion price increases

3) Knowing the solution that can be done to overcome the problem of the onion price increase?

II.discussion

2.1 Problem of Onion Price Rise

The rising prices of varied horticultural products sparked price volatility, especially onion and white.
Previously, the price of onion and garlic was in the range of Rp 16-18 thousand per kilogram. Currently
the price of garlic jumped to Rp 72 thousand per kg, while the onion Rp 48 thousand per kg.price
increases are considered unnatural, per day can even rise up to Rp 5,000. Variations in price fluctuations
that vary, if not anticipated, may turn into a food crisis.
Technically, the volatility of food price increases is due to weak distribution infrastructure, currency
exchange rates, and prices of agricultural inputs.but there is a much more systemic, namely the
occurrence of price spikes due to human factors.which include human factors are the dominant role of
the capitalists, speculation in the futures exchange, the weakening of the state's role, the wrong import
policy, and the national private game in trade.

The increase in food prices, especially onion and garlic, would make small traders uncomfortable trying.
Consumers are reduced and complained.horticultural food price hikes are unprofitable to small farmers,
traders, and consumers. Thus, supervision of onion stock and other horticultural food commodities is
absolutely necessary. Legal umbrellas that prohibit hoarding need to be effected.distribution information
network and the price of onions should be transparent.

Data from the Ministry of Trade (12/3) mentioned that in February and first week of March 2013, the
price of garlic and onion increased by 31.38 percent on the average. The price starts from Rp 15,000 and
then increases to Rp 60,000 per kilogram (kg). Meanwhile, the average red onion rose 11.36 percent.on
March 4, 2013 the price is Rp 21.000 kg, but on 12 March to Rp 40,000 per kg. It is feared that rising
prices of garlic and onion will contribute the biggest inflation for March 2013.in February 2013, the
biggest inflation was contributed by the increase in price of garlic and onion about 16%.

2.2 The Cause of Onion Price Rise

There are some things that pointed out to be the cause of the rising prices of onions that are currently
lately, among them are as follows:

a. Weather

Due to unfavorable weather and high rainfall in various parts of the world end of 2012 and continued in
January to March 2013, the production of some horticulture commodities decreased, especially the
commodities of garlic and onion in a number of countries including production centers in
Indonesia.impacts, crop failure and disruption of supply for domestic consumption markets.the price of
the two commodities in a relatively short period of time has skyrocketed as a result of less supply.
b. Lack of supply and rising prices of onions in China

Another factor driving the onion price increase is the lack of supply and rising prices from its home
country of China, which is the largest exporter of garlic to Indonesia, 95 percent of the nation's needs.in
China alone the price of garlic rose from Rp 13,000 per kg to Rp 18,000 per kg due to crop failure and
increasing domestic demand.

c. Breach of importer rules

The onion crisis in Indonesia is complicated by investors and big businessmen or importers, by violating
import rules.several containers from 599 imported garlic containers from China, were held in Port of
Tanjung Perak, Surabaya. It is suspected that there is an intentional element of the importer to hold the
container by stalling the time of processing import approval letter (SPI) and import recommendation
document of horticultural product (RIPH). The hope, there is a scarcity of onions in the market so that
will boost prices.the Trade and Business Competition Commission (KPPU) indicated that 11 garlic
importers conducted cartel practices by biding their permit for 394 containers of garlic products.

d. Import Restrictions Policy

In general, the dynamics and complexity of a problem caused by certain commodity price movements
have created various problems as well as challenges and opportunities that stakeholders need to
observe and anticipate through a number of policy measures and the implementation of appropriate
targeted strategies, to control by making them more valuable and useful (riant nugroho, 2009).

Due to the implementation of the policy on import restrictions on 13 horticultural products through
Regulation of the Minister of Agriculture No. 66 of 2012, one of garlic commodities has resulted in a high
price increase in a number of consumption markets in the regions.initially the policy was made by
considering a variety of reasons, among others, to protect the yields / harvests of local farmers who will
enter the harvest, to be absorbed in the harvest and can guarantee a more favorable price level in order
not to fall to a low level, such as experienced in the previous year, and can control the ideal amount of
supply that will enter the domestic consumer market, between the ratio of domestic production to the
level of import demand.
Based on government data and figures, local garlic production produced by farmers shows an average
production of 14,200 tons per year, while for the consumption needs of the people of Indonesia, the
average per year is 400,000 tons.looks big enough comparison rate, between the number of production
and the number of demand for domestic demand, the number of 385,800 tons per year.

Around the beginning of the year between January and March 2013, the harvest is expected to soon be
experienced by local farmers producing horticulture commodities, especially garlic and onion.with the
basic reason that the imposition and determination by stakeholders regarding restrictions on imports of
horticultural products, especially garlic commodities put into effect.

Price movement for these two commodities, now has become the main concern and focus for the
government, especially President Susilo Bambang Yudhoyono (SBY).due to rising food prices that
occurred lately, the impact is widespread enough for the livelihood of the people, and should be
immediately controlled price stability so that will not erode the purchasing power of Indonesian people.

Based on the above facts, it should be necessary to immediately improve regulation on Permentan's
policy No. 66/2012 regarding restrictions on horticultural imports, especially garlic commodities and
policies related to local garlic, not by closing the tap tightly, but rather to control its supply in the country
because our garlic production (local) will not suffice for the provision of public consumption needs.

2.3 Onion Price Increase Solution

The cause of rising food prices, especially onion commodities, when observed can be caused by three
factors.first, the scarcity of goods; secondly, the decline in the value of the currency held by the public;
and third, the high demand.of the three factors, the second factor is the problem of rising prices
(inflation) on basic goods that usually occur on an annual scale in an aggregate (equitable in a society),
and this happens not because of the scarcity of these basic goods.

At least there are several steps that need to be done by the government to overcome the price increase,
especially onion commodities, in order to be stable.
a. Keep an eye on prices to keep them under control

the government should be able to keep the price under control, not allowing high prices to be boosted
unilaterally by private sector sellers, while people scream.Illegal practices, such as fraud, stockpiling,
monopoly, fixing prices, and raising prices, need to be dealt with with strict sanctions.

In addition, the government needs to encourage the development of the real sector only (agriculture,
fishery, plantation, industry, transportation, etc.).regulations governing goods and services that may or
may not be made on an ongoing basis should be made in a just manner.food product trading activities
need to be maintained to be fair, healthy and fair, no harm between sellers and buyers by raising prices
as they are today.

b. Decrease in production costs

The government should reduce the costs of agricultural production facilities and improve the distribution
infrastructure of agricultural products.the high cost of production and freight costs are currently valued
as the main drivers of rising food prices, particularly onions.required the imposition of strict sanctions
for the perpetrators of illegal product circulation and supervision of the rules imposed on the increase in
demand for food and beverages

c. Education of local consumers

A component factor that needs to be seriously taken into account by policy makers in the event of a
regulatory overhaul is to try to create the excitement of the farmers again to improve local garlic
productivity and production, as well as to intensify the implementation of education to consumers in the
country can switch (diversification) which was used to process food with imported garlic to local garlic
type which is currently still less desirable use.

Thus, if the policy can diversify their demand, it will certainly have two advantages at once: first: Farmers
will be more eager to replant, resulting in increased yields / yields of local garlic production that could
potentially increase the income of farmers, there will be a reduction in the number of domestic garlic
import quotas due to the high demand of consumers who have switched and contaminated the use of
local garlic products everyday.

In the long run, the government needs to stop food imports on domestically produced products such as
onions, fruits, vegetables and so on.because food imports, in addition to wasting foreign exchange, could
kill domestic food producers and threaten national food sovereignty. In addition, food imports will only
prosper the speculators and compradors sellers. On the other hand, a country with a population of more
than 100 million people, is unlikely to advance, if food needs depend on imports (FAO, 1998).countries
need to immediately make the agricultural sector as a source of national economic power. Finally, all
political-economic policies prior to the political year should be conducive to controlling rising food
prices.

d. Technology Utilization

An additional consideration that should be a common concern is to promote the field of research and
development in agriculture.with the weakness of technology dissemination and utilization of the
technology to the public widely become one of the obstacles also for the adoption of technology in the
effort to increase the production, plus the mechanism of investment and agricultural finance that is
currently still not all can be reached by the community, especially the farmers.

Increasing production capability and creating high competitiveness for domestic agricultural
commodities, especially horticulture commodities before the free trade era, became one of the basic
strengths of the nation's economy and the key to repeating the success of Indonesia as an agrarian
country that supports the world economy.
III.cover

3.1 Conclusions

1) The increase in prices of various horticultural products triggers price volatility, especially onion and
white. Previously, the price of onion and garlic was in the range of Rp 16-18 thousand per kilogram.at
this time the price of garlic jumped to Rp 72 thousand per kg, while the onion Rp 48 thousand per kg.

2) There are some things that pointed out to be the cause of the rising prices of onions that are currently
happening, among others are as follows: Weather, Lack of supply and rising prices of onions in China,
Violation of importer rules and Import Restrictions Policy.

3) there are several steps that need to be done by the government to overcome price hikes, especially
onion commodities, in order to be stable ie Overseeing prices to be controlled, Decrease in production
costs, Education on local consumers and Utilization of Technology

3.2 Suggestions

It is necessary to add the government's policy lag on the import of food so there is no price increase like
this again.