Rice stocks at farms, milling businesses and trade posts are depleting as a result of the decreasing harvesting area.
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ANTARA FOTO/Rahmad
Farmers harvest in a flooded rice field in the Cubrek paddy field area, Syantalira Aron, North Aceh, Aceh, Saturday (2/11). Hundreds of hectares of rice had to be harvested earlier to save the rice that was in danger of becoming spoiled by the flood.
JAKARTA, KOMPAS – Rice stocks at farms, milling businesses and trade posts are depleting as a result of the decreasing harvesting area. Consequently, the rice price is crawling up while the government’s rice stock level is far from ideal. A number of experts warn of possible fluctuations in the national rice trade.
Kompas investigations into a number of rice production centers in West Java, Central Java, East Java and Lampung in the past two weeks have found that rice stocks were depleting while the prices of rice and unhusked rice have increased. Many small-scale rice mills (with a capacity of less than 1.5 tons per hour) have ceased operating due to the lack of a supply of unhusked rice. Many other mills are operating far below their normal capacities.
Karangsinom Rice Mill Association secretary Nur Adji said in Indramayu regency, West Java, that he estimated 70 percent of the regency’s 53 rice mills had ceased operating due to the lack of unhusked rice.
A similar situation is found in Greater Surakarta in Central Java. Central Java-Yogyakarta Rice Mill Community member Ali Mustofa said that 40 percent of the hundreds of small-scale rice mills in the Greater Surakarta area had stopped operating after running out of raw materials. Some mills operate out of only four to six days a week.
The situation was different in November and December of last year, Ali said, as although rice mills operated at a reduced harvest and reduced unhusked rice stock, this year, in addition to those factors, the rice price ceiling (HET) policy forced rice mill business owners to think twice before purchasing and storing unhusked rice.
This is because the production cost is higher than the HET price, especially for medium-quality rice, which is set at Rp 9,450 (US$0.69) at the production level. Trade Ministry data shows that the national average price for medium rice was Rp 10,845 per kilogram on Thursday (30/11/2017).
Can’t catch up
With the price of dried unhusked rice (GKP) at more than Rp 5,000 per kilogram and a milling yield of between 50 and 52 percent, the rice production cost at the mill level is between Rp9,600 and Rp 10,000 per kg. Consequently, medium-quality rice HET becomes a burden for mill businesspeople and traders.
In Anjatan, Indramayu regency, the GKP price is Rp 5,500 per kg. This is an increase of 20 percent from the price during the harvest period in August, which was between Rp 4,500 and Rp 4,600 per kg, and much higher than the government’s purchase price (HPP) of Rp 3,700 per kg.
In Klagensrampat, Maduran district, Lamongan regency, East Java, the GKP price is Rp 5,300 per kg at the farmer level. This is an increase of between 17 and 26 percent from that in the preceding month, which was between Rp 4,200 and Rp 4,500 per kg. Meanwhile, the average price of milled unhusked rice (GKG) in East Java has increased from Rp 5,300 per kg to Rp 5,900 per kg in the past two months.
In Mranak, Demak regency, Central Java, the GKG price has increased from Rp 5,600 per kg to Rp 6,000 per kg in the last three weeks. Apart from relying on an unhusked rice supply from the preceding harvest season, a number of mill businesspeople searched for unhusked rice in other regencies or even provinces.
As the rice price increases, the rice supply diminishes. In Johar Rice Market in Karawang, Johar Rice Market Traders Association head Sri Narbito said that the price for medium-quality rice had increased from Rp 9,200 per kg last month toRp 9,500 per kg currently.
The price increase was also found in Surabaya’s Genteng Market, Semarang’s Dargo Rice Market, Koga in Bandar Lampung and Legi Market in Surakarta. At small-scale retailers in rice-producing villages, such as in Haurgeulis and Anjatan, both in Pekalongan, and Siwalan in Purwokerto, the lowest price of rice has increased from Rp 9,000 per kg to Rp 10,000 per kg in the last two months.
Lowest stock
The rice price increase is reflected in the inflation rate of October 2017. Central Statistics Agency (BPS) data shows that there was a 0.45-percent deflation in the food spending group. However, inflation occurred in three out of 11 sub-groups, namely those of grains, tubers and “others.” The commodities that contributed the most to inflation were red chili (0.05 percent) and rice (0.04 percent).
This high price makes it difficult for the State Logistics Agency (Bulog) to procure rice. As of Friday (24/11), Bulog could only procure 2.12 million tons of rice, around 56 percent of its target of 3.74 million tons of rice this year. As of that date, Bulog’s rice stock reached 1.16 million tons. According to Bulog president director Djarot Kusumayakti, by the end of the year, the agency’s rice stock will be at 700,000 tons.
A member of the board of supervisors at the Association of Agriculture Experts (Perhepi), M. Husein Sawit, said that this was the lowest rice stock at Bulog in the last 10 years. The government’s rice reserve (CBP) level, set at 280,000 tons, was deemed not to be ideal. The ideal CBP level for an effective intervention price through market operations is between 1.3 million and 2 million tons.
A number of regional governments are flooding the market with rice in order to prevent the prices from increasing further. Other than the Jakarta administration, the Lampung administration and regional Bulog office have also conducted market operations.
East Java regional Bulog office head Muhammad Hasyim said that the local administrations of Trenggalek, Kediri and Lamongan regencies have requested market operations.
Agriculture Minister Andi Amran Sulaiman said that inflation rate in the rice trade remained small. Bulog’s rice stock is said to be sufficient and more than one million hectares of rice fields will be harvested by the end of the year.
On several occasions, Amran said his ministry made efforts to resolve the rice scarcity problem in the past three years. The ministry has increased rice field areas nationwide to ensure at least monthly harvests of at least one million hectares. Therefore, rice production is always higher than average monthly rice needs.
Trade Ministry director general of domestic trade Tjahja Widayanti shared Amran’s opinion. She said the government was ready for market intervention and faced a possibly increasing rice demand ahead of the Christmas and New Year holidays.
This year, the government has set aside Rp 2.5 trillion to purchase around 280,000 tons of rice for rice reserves next year. This amount is deemed to be especially small when compared to the nation’s population of more than 250 million. Husein Sawit said that Thailand, which has a much smaller population than Indonesia, has 1.1 million tons of rice reserves. South Korea and the Philippines also have one million tons of rice reserves each.
