Rupiah devaluation in Indonesia hits tempeh producers

The rupiah hit an all time low against the dollar, imported soybeans became more expensive, tempeh producers are forced to raise prices. A 2,000 rupiah per kilogram subsidy is not enough. Capital flight from markets adds pressure on the economy.

As reported by CCTV+, currency devaluation has led to rising prices for staple foods, including tempeh, making life harder for millions across Indonesia. The Indonesian rupiah hit an all time low against the US dollar, affecting markets and small businesses nationwide. Tempeh producers have been among the hardest hit, given the country's heavy reliance on imported soybeans — a key ingredient for this staple protein source.

Junae di, who has been in the business for nearly three decades, said the current situation is unprecedented and he has no choice but to raise prices. "It's very sad because originally we sold at a normal price, but now the price is, so to speak, abnormal. If the price doesn't stabilise, we will suffer losses because the price of soybeans is already too high. So it's too much. All we want is to survive," he said.

At the same time, the war with Iran has triggered a capital outflow from Indonesian markets, further straining the economy and weakening the currency.

Eko Listiyanto, a macroeconomics expert at the Institute for Economic and Financial Development, explained: "The main reason remains the ongoing war between Israel, Iran and the United States. Geopolitical tensions are intensifying at home. This has led to a significant outflow of investors from the Indonesian market, both from the stock and money markets. As a result, this caused shocks in our financial sector, especially in the stock market, and ultimately affected the rupiah exchange rate."

The government is trying to mitigate the impact by introducing a subsidy of 2,000 rupiah per kilogram for imported soybeans. Officials say the subsidy is intended to provide short term support and ease pressure on businesses and consumers, but as the rupiah continues to fluctuate, small producers like Junae di say they still have to bear most of the financial burden and adapt in any way they can to stay afloat.

Tempeh is a traditional Indonesian fermented soybean product and a primary protein source for millions. Indonesia imports more than 80% of the soybeans needed for its production. The falling rupiah makes imports more expensive, hitting producers and consumers alike. The Middle East war and global market instability are worsening the situation, triggering capital flight from emerging economies, including Indonesia. The 2,000 rupiah subsidy — about 13 US cents per kilogram — only partially offsets the price rise.

When global geopolitics lands on a plate of tempeh, the world becomes a small place. A war in the Middle East and a falling rupiah are links in a chain that connects a farmer in Iran, a trader in New York and a soybean seller in a Jakarta market. Junae di, who has fed his family with this simple product for nearly 30 years, is now fighting for survival. His words about "abnormal prices" are not a complaint but a cry of despair reflecting the economy of an entire country. The subsidy is a band aid on a deep wound. And as the rupiah continues to fall and investors flee the markets, tempeh remains a symbol not only of Indonesian cuisine but also of the vulnerability of those who depend on a world that no longer exists.