Indonesian salt saga: President steps in to resolve shortages that have hit food firms

President Widodo relinquished the authority over the issue from the Ministry of Marine Affairs and Fisheries (KKP), which restricted imports to protect local producers, passing on the responsibility to the Ministry of Industry instead.

Coordinating Minister for Economic Affairs Darmin Nasution said the deed was done because “the need for industrial salt is urgent”​.

Despite protests from local farmers who fear the government is failing to support and develop the domestic industry, Widodo agreed with Nasution, saying: “We need to be realistic. Industry certainly needs salt of a different quality to that produced by salt farmers.”​

“If we do not import industrial salt, industry could stop.”​

Industry rationing​

Nasution stated that because local salt cannot be used for industry, there has been a severe shortage of salt and many firms have had to stop production. He also warned that this obstructs incoming investment into the country.

He said that some food companies had warned the government they would stop operating if they did not get enough salt, and even move to Thailand, Vietnam or Malaysia.

Following the President’s decision, the Ministry of Industry immediately recommended allowing 676,000 tonnes of industrial salt to be imported into Indonesia for 27 companies in “critical condition”, said Achmad Sigit Dwiwahjono, a ministry official.

One food firm badly affected was PT Indofood Sukses Makmur, which produces Indomie noodles. Indofood had said it tried to find ways to cut salt use.

The Indonesia Food & Beverage Association also stated that biscuits and snacks manufacturers also struggled with the shortage.

Salt industry sorrow​

In a bid to manage the salt industry and to try to aid local salt farmers, the Indonesian government had restricted salt imports and revised import taxes.

However, there are inherent problems in the local salt industry. Indonesian salt is produced by the evaporation of brine in coastal ponds. This method is highly vulnerable to the humidity and rain that Indonesia experiences much of.

Furthermore, domestic industries in the country, such as food and beverages and paper pulp, require high-quality salt with a sodium chloride level of 97%. Salt produced from such a method of natural evaporation and with traditional equipment only has a sodium chloride level between 86% to 92%.

To compound matters, the La Niña phenomenon in 2016 and its accompanying severe rainfall damaged salt crops and production had declined 96% year-on-year to 188,000 tonnes.

Last year, salt production was only 950,000 tonnes — far below the 3.5 million tonnes required by industry.

Last August, Indonesia was forced to import 75,000 tonnes of salt from Australia to help cover the deficit.

Around that time, a Forbes report highlighted the absurdity of the situation, with a ship being apprehended off the coast of Indonesia for trying to smuggle in just 15 tonnes of salt, worth US$750 to US$1,000 in total.

Shortage to self-sufficiency?​

According to recent statements from the Indonesian government, it is currently preparing more land for salt farming in its eastern region, to move closer to self-sufficiency.

Districts in the province of East Nusa Tenggara such as North Central Timor, South Central Timor, Ende, Malaka, the provincial capital of Kupang, and other regions have been suggested.

The government hopes to expand salt-farming land up to 40,000 hectares, and to become self-sufficient in salt by 2021 before then targeting exports.

Now that President Widodo has transferred the mandate to the Ministry of Industry, it is uncertain if this plan would remain unchanged.