Indonesia sweats high chili prices

JAKARTA, Indonesia — Bernad Wulur is crazy about chili. Sometimes he can’t help but buy every last chili on sale from his neighborhood handcart.

“My wife and I are Manadonese,” explains the native of Sulawesi, one of the country’s main islands. “Manadonese breathe fire. We use chili in around 90 percent of our dishes. Without the fire it wouldn’t be Manado food."

Not that Bernad's addiction is unusual in spice-mad Indonesia, a country where even the local Starbucks sandwich arrives with a sachet of fiery sauce. “Mild” is not on the menu here.

Recently, however, Bernad’s taste buds have been getting a reprieve. Since early June, the price of chili has doubled at local Indonesian stalls, hitting hard the pockets of the country’s many spice lovers.

“I used to buy chilies at around 25,000 Rupiah a kilo [$2.70] but now the price can reach 60,000 [$6.70],” Bernad lamented. “If things don’t change soon, we may have to stop eating Manado and switch to Javanese.”

Javanese food, of course, being less spicy.

Since early June, unseasonably wet weather in Indonesia has spoiled local chili harvests, causing prices for the main varieties to rise on average by more than 50 percent, according to the Indonesian Bureau of Statistics.

With around 100 million of Indonesia’s 230 million people living on $2 or less a day, the poor can be sensitive to even minor increases in living costs.

Confounding the problem, the chili shortage has come just before Ramadan, the Islamic holy month, when high demand means higher food prices across the board.

Other than distressing the country’s many chili lovers, the spike in chili prices is also alarming some economists, who worry that the more expensive chilis, combined with other recent price hikes, could push the country’s inflation out of control.

Indonesia’s central bank last week, in fact, increased its inflation outlook to between 4 and 6 percent for the year, the top end of its previous forecast.

Bustanul Arifin, an agricultural economist at the Institute for the Development of Economics and Finance, said higher inflation could force the central bank to raise interest rates — a move that could curtail economic growth and lead to worsening unemployment, which is already running at 10 percent.

“If we want to guard against this kind of food inflation caused by shortages, the government needs to be better prepared to help farmers deal with unusual weather, which seems to be on the increase,” he said.

For the millions of people who live on Indonesia’s two most-populated islands, Java and Sumatra, 2010 is shaping up to be a year without a dry season. The dry season was supposed to begin in mid-May and continue until September, but the west of the country has stayed rainy and overcast through July.

This long wet period has caused unseasonal flooding in many parts of the country and halted an important renewal of the country’s famously dilapidated highway network.

The rains are also affecting agriculture.

Chili plants, like many other tropical food crops, benefit from a dry spell before harvesting. Soggy soils, which increase the risk of diseases and fungal infections, have reduced harvests in Java and Sumatra.

Because chilies spoil quickly, the government can’t stockpile them and sell them cheaply on the market to bring down prices like it does with rice or sugar.

Local newspapers, in their efforts to explain the 2010 Chili Crisis, are blaming climate change for the adverse weather.

Many have cited a 2007 World Bank report that predicts catastrophic results if climate change takes hold in Indonesia, where 40 percent of the people work in agriculture.

But the report actually predicts a drier climate, not a wetter one. And the Indonesian Meteorological Agency said the recent soggy weather stemmed from a one-off seasonal shift — from a hot and dry “El Nino” weather pattern to a colder and wetter La Nina system due next year.

Whatever the cause, agricultural experts say the Indonesian government needs to be better prepared for extreme weather, especially those patterns that can be predicted.

“We should be ready for the worst possible situations, including the gradually increasing problems brought on by climate change,” Arifin said.

This means faster response times when bad weather is predicted. Other short-term actions to mitigate the effects of more extreme climates, Arifin said, could include better education programs for farmers. It could be “as simple as giving chili growers plastic bags to put on their plants to protect them from the rain,” he added.

Those rains may soon be coming to an end, according to the most recent forecast from Indonesia’s meteorology agency, which suggests that precipitation will drop to normal levels in important chili growing areas this month. If so, then chili prices are likely to drop in coming weeks as more are harvested.

One of the few Indonesians that isn’t anxiously awaiting the sun is Sujiman, a chili trader at Jakarta’s large Kramat Jati fruit and vegetable market.

Sitting on a dusty box surrounded by chilies, Sujiman said traders like him have done brisk business during the shortage, enjoying the highest prices seen in a decade.

But he agrees that prices have now stabilized around 38,000 Rupiah a kilo, or about $4, and will “probably go down sometime after Ramadan.”

When asked about the shortage, he only laughs and says he has sold plenty of chilies this week, most of which are bound for out of town.

“Here,” he said, holding up a bag bursting with the fruit. “Have this one on me.”