The revocation of the 2017 Trade Ministerial Regulation No. 47, which regulates the maximum retail price of rice, deserves appreciation.
The regulation —withdrawn while still in the process of legalization at the Justice and Human Rights Ministry— once sparked controversy because it was to regulate all types of rice quality using one price and apply equally throughout Indonesia.
We appreciate the decision of the trade minister to revoke the regulation because, on one hand, it shows the government is willing to explore different ideas and listen to input of the people. On the other hand, the revocation also shows the government does not understood the basic problem of rice.
Controversy over the maximum retail price of rice was caused by the intention of the government to set the rice price at Rp 9,000 per kilogram throughout Indonesia. The government last year claimed that the price, which reached above Rp 10,000, was set to such a figure because of the long distribution chain and ploys on the part of the traders who wanted to earn high profits.
Over the past two weeks, the media was enlivened by actions of the Food Task Force against PT IBU, which allegedly manipulated the quality of rice sold to consumers.
According to explanations by the alleged rice perpetrators, the issue of rice prices lies on the production, processing, storage and distribution stages. There are fears that rice production figures are not as high as those of what the Agriculture Ministry has recorded. Moreover, when considering the findings of the Central Statistics Agency and the Ombudsman of the Republic of Indonesia, it is possible that the harvest areas are different compared to the official figures of the government.
While improving the accuracy of rice production data, the government needs to immediately have a comprehensive and integrated food policy from upstream to downstream, from central to regional governments, and among institutions. The policy should later be transformed into a national policy on rice and carbohydrate sources.
The government also needs to develop a medium-term policy on the agro-industry after rice harvests so that the prices are not burdened only by rice grains, because paddy and rice have byproducts with economic values. Meanwhile, the short-term policy should deal with the production of rice and other local carbohydrate sources.
From this experience, in the future the government needs to be careful in setting the prices of rice because it will affect farmers who cultivate, traders who sell, and the ability of state-owned logistics agency Bulog to absorb grains, all of which are based on the government\'s purchase prices.
