The Government is Strongly Committed to Stabilizing Rice Prices in the Market
By: Gema Iva Kirana )*
The government stabilizes the price of rice in the market so that it is always under control. People need to understand that long droughts cause crop failures, resulting in changes in rice prices. However, they don’t need to worry because the government is carrying out market operations so that the rice supply is sufficient and the price returns to stability.
Rice is the staple food of Indonesians. However, in the last few months there have been changes in rice prices that have surprised the public. In fact, they don’t need to be confused because the government has moved quickly to stabilize the price of rice so that the price is still affordable for even small people.
One factor in changes in rice prices is due to high market demand. Meanwhile supply is considered inadequate. Moreover, there is the El Nino phenomenon, which causes prolonged heat and has a negative impact on rice fields. There are several areas where harvests have failed due to the effects of drought so that the rice supply has not been in line with public demand.
President Jokowi said that currently the government’s rice reserves are 1.6 million tons and will still increase. He targets the government’s rice reserves to reach 3 million tons. In other words, the government does not remain silent when there are changes in rice prices. However, immediate action was taken to increase the stock of rice reserves so that the stock would always be sufficient for all Indonesian people.
Policies to meet rice reserves (stocks), including through imports and market intervention to stabilize rice prices, are often taken to overcome national rice volatility.
President Jokowi while visiting the Bulog Warehouse in Karawang, West Java on September 14 2023 instructed Perum Bulog to hold market operations (OP), both at the retail and wholesaler levels so that the price of rice at the consumer level would fall.
Rice shortages have the potential to occur considering that major producers such as India banned rice exports last July to meet domestic needs.
Domestically, rice prices have started to rise since July 2022 due to the decline in national production amidst the long dry season, the El Nino phenomenon which is predicted to last until early 2024 and also the increase in fertilizer prices due to the Russo-Ukrainian War.
According to records from the Ministry of Agriculture, seven provinces (Aceh, North Sumatra, Riau, Riau Islands, NTT, NTB and Papua) are experiencing medium-level drought in paddy fields, while 20 other provinces are experiencing low-level drought.
The National Food Agency (Bapanas) noted that the price of premium rice, which was IDR 13,140 per kg in January, will increase to IDR 14,230 in mid-September 2023, while the medium type will increase from IDR 11,550 to IDR 12,580 per kg.
Changes in rice prices, according to the BPS report, contributed 0.41 percent of the 0.92 percent of the food, beverage and tobacco group which contributed to 3.7 percent of the annual inflation rate in August 2023.
Government rice reserves (CBP) in Bulog warehouses, which currently amount to 1.6 million tons, have been increased to a minimum of two million tons. Secretary of Perum Bulog, Awaludin Iqbal, is confident that the target of 1.2 million tons of CBP by the end of 2023 will be met through imports and absorption of local farmers’ grain even though Bulog has to distribute 630,000 tons of rice social assistance packages to 23.5 million Beneficiary Families (KPM).
Social assistance of 10 kg of rice per month for 23.5 million KPM for three months (September, October and November 2023) is the second package for 2023 after the same amount was given to 23.5 million KPM in March, April and May 2023.
Meanwhile, changes in rice prices, according to predictions by the Head of the IPB Biotech Center, Dwi Andreas, will continue until February or March 2024, although not as sharply as before thanks to the OP and social assistance packages given to 23.5 million KPM.
On the other hand, Dwi, who is also the General Chair of the Association of Indonesian Farmer Seed Banks and Technology (AB2TI), assessed that the current price of rice is being enjoyed by farmers who previously continued to suffer losses for the last three years.
The average Farmer Exchange Rate (NTP) 2021 – 2022 index published by BPS is 98.5, aka farmers suffer losses because production costs are above the selling price.
Farmers will only make a profit if the NTP is above 100, which will be achieved in August 2023 with an NTP of 111.85. Farmers’ losses from 2022 to mid-2023 for one planting from a rice field area of 2,000 m2, based on the results of an AB2TI study in 50 rice center districts, ranges from IDR 250,000 to IDR 1 million.
To overcome changes in rice prices, market operations are still an effective way. While waiting for the rice supply at Bulog to be sufficient, people can buy cheaper rice through market operations.
The government stabilizes the price of rice in the market so that it is still affordable for the public. The way to do this is by increasing the rice supply at Bulog, so that the stock is met and can be distributed throughout Indonesia. With a stable rice supply and market operations, people can enjoy rice at a stable price.
)* The author is a contributor to the Persada Institute