Agriculture Minister Andi Amran Sulaiman guaranteed a safe stock of rice for up to six months.
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Kompas/Totok Wijayanto
Agriculture Minister Andi Amran Sulaiman (left) visits the Cipinang Central Rice Market, Jakarta, Monday (4/12). The visit was made to survey rice stocks following natural disasters in a number of regions.
JAKARTA, KOMPAS – The increasing price of rice and the decreasing procurement of state logistics agency Perum Bulog may indicate that all production has been absorbed by the market. The government must ensure the availability and affordability of rice stock.
Agriculture Minister Andi Amran Sulaiman guaranteed a safe stock of rice for up to six months. The statement was made by Amran during a sudden inspection at the Cipinang Rice Wholesale Market (PIBC) in East Jakarta on Monday.
This optimism is based on the Agriculture Ministry’s strategy to increase the planting area for rice from 500,000 hectares to between 900,000 hectares and 1 million hectares in July, August and September. The July-September period is the critical time for maintaining rice stock, as the November-January rainy season could damage the rice harvest.
With the additional planting area, domestic production is expected to reach 3 million tons of rice per month. The would be enough to meet the rice consumption of 2.6 million tons per month.
During the visit to Cipinang market, Amran found that the price of medium-quality rice was well below the government’s retail ceiling price (HET) of Rp 9,450 per kilogram. At Cipinang market, medium-quality rice was Rp 7,800 per kg. "The HET policy set by the government has been effectively implemented in Cipinang Rice Market," said Amran.
As with Amran, Trade Minister Enggartiasto Lukita said his ministry was monitoring the stock and price of rice in priority areas. The availability of rice stock, said Enggartiasto, was guaranteed because the Agriculture Ministry had ensured the abundant and sufficient production of rice.
"We are closely controlling the movement of the rice price so that it will not exceed HET. Rice sold at Bulog’s market operation price of Rp 8,100 per kg is also available to the public," he said.
However, the prices of rice in the market indicate different circumstances. Data from the Trade Ministry shows that the national average price per month of medium-quality rice has increased consistently since July 2017, from Rp 10,574 per kg to Rp 10,794 per kg in November 2017. On Monday, the national average price of medium-quality rice was Rp 10,845 per kg, well above the HET.
In Magelang, Bulog Kedu region head Sony Supriyadi said that the current average price of medium-quality rice in six cities and regencies in Kedu was Rp 10,000 to Rp 11,000 per kg. The high price was because most rice fields were being planted, with the typical planting season lasting up to three months.
"The rice price may gradually decline during the upcoming harvest in February," he said. Rice deliveries to Bulog’s Kedu warehouse was also declining. Before, it received 35 tons to 70 tons per day. Currently, the warehouse received rice deliveries of 20 tons to 23 tons only twice a week.
In response to the fluctuating prices, the government has begun market operations to reduce the price fluctuation in some areas.
In Jakarta, PT Food Station Tjipinang Jaya president director Arief Prasetyo Adi said that Bulog’s Banten branch had released 15,430 tons of medium-quality rice as part of its market operations. Bulog was selling medium-quality rice for Rp 7,800 per kg during market operations, which will last until the harvest season expected to begin at the end of January 2018.
Decline
The government believes it has enough rice stock to meet the demand, even though Bulog\'s rice procurement has begun to decrease. Actual rice procurement was 2.12 million tons as of Nov. 24, about 56 percent of this year\'s procurement target of 3.74 million tons.
Since August 2017, Bulog has raised its purchasing price by 10 percent to boost procurement. However, according to Bulog’s for rice procurement director Tri Wahyudi Saleh, as of last week, the total rice procurement was only about 50 percent of the 850,000-ton target set for the August-December period.
High prices have slowed procurement. According to observations of the Central Statistics Agency (BPS), from January-October, cases of dry milled grain prices falling below Bulog’s standard purchasing price (HPP) only occurred in March and April.
The decrease in prices was relatively small, at an average of only 10.4 percent among 125 observed cases in March and 11.89 percent among 143 observed cases in April.
Center for Socio-Economic and Agricultural Policy researcher Erwidodo at the Agriculture Ministry said that the increase in rice prices indicated that the market had absorbed the rice production. The rice prices increasing to above the HPP price base made it difficult for Bulog to purchase rice.
"It is important for the government to ensure that the rice stock is safe, and that the price is affordable but does not harm farmers. It should also calculate the safe amount of the stock Bulog needs to stabilize the price," said Erwidodo.
Agriculture professor Dwi Andreas Santosa at the Bogor Agricultural University said one of the recommendations made during the national consultation meeting in October required President Joko Widodo to form an independent team that was free of sectoral interests to review food data.
The goal was to ensure that data on national rice production and stock were at the basis of decision making. The government needed accurate data on rice production and stock in issuing new policy.
Food production data is crucial. The actual production and market price of corn and rice were believed to be different from the Agriculture Ministry’s data, which have always shown a surplus rice production in recent years.
