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Indonesia sweats high chili prices

In spice-mad Indonesia, the 2010 Chili Crisis is taking its toll.

Indonesia chili
An Indonesian woman selects chilies for sale at an early morning market in South Jakarta. (Enny Nuraheni/Reuters)

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.