Reevaluation of Rice Policy

KOMPAS/PRIYOMBODO

Workers unload sacks of rice from a truck on Monday (14/10/2019) at Kebayoran Lama Market in South Jakarta. The rice was transported from Madiun, East Java. The government is optimistic that rice stocks will be adequate to meet the demands for the next few months despite the long dry season that has hit rice production centers this year.

JAKARTA, KOMPAS — The change in the mechanism in the distribution of the food assistance for the poor has changed the national rice landscape. The government, therefore, needs to evaluate the policy because the change has caused problems related to price stabilization, management of the government’s rice reserves and the welfare of farmers as producers.

One of the problems found during Kompas’ monitoring in the past week was the sluggish procurement of unhusked rice and rice by the State Logistics Agency (Bulog) in the rice production centers of West Java, Central Java and East Java. Nationally, the realization of Bulog’s rice procurement totaled only 1.04 million tons from January to September, or 57.7 percent of this year’s target of 1.8 million tons.

The realization of the unhusked rice and rice procurement targets has continued to decline in recent years. In comparison, the realization of rice procurement from January to September 2018 was 1.44 million tons, lower than 1.95 million tons during the same period in 2017.

In addition to expanding the mechanism for the distribution of food assistance from the social assistance program (Rastra) into the non-cash food assistance program (BPNT), the high price of unhusked rice and rice in the field has hampered Bulog’s procurement.

KOMPAS/MELATI MEWANGI

Farmers take rice boorstocks on Sunday (10/13/2019) during the ngala indung pare Nyalin traditional ceremony in Dukuhkarya hamlet of Rengasdengklok district, Karawang regency, West Java. The ceremony is held once a year at the end of a harvest to welcome the new planting season.

The chairman of the advisory board of the Indonesian Agricultural Economics Association, Bayu Krisnamurthi, believes the current rice policy has been distorted. The price stabilization program at farm gates and at consumer level relies on the absorption of domestic production, stock management and distribution to the beneficiaries of the rice assistance program.

However, the distribution channels have diminished with the end of the Rastra social assistance program as of September 2019.

Unlike in the Rastra program, in which each poor family (KPM) is given rice assistance, in the BPNT program, poor families receive Rp 110,000 each through e-money, which can then be used to buy food from e-warong kiosks that have been appointed as distributors.

The distribution of rice under the Rastra program by Bulog continued to decrease from 2.78 million tons in 2016 to 2.54 million tons in 2017 and to 1.2 million tons in 2018. From January to August, the realization of the rice distribution totaled only 353,000 tons.

Food security cannot only depend on Bulog. We need to review the current policy clearly and objectively.

The government and other stakeholders must sit together to evaluate the current rice policy. "Food security cannot only depend on Bulog. We need to review the current policy clearly and objectively," Bayu said.

There are three principles that, according to Bayu, must be fulfilled in determining food policy. First, ensuring food availability by taking into account the latest weather and climate dynamics. Second, ensuring fair incomes that can improve the welfare of farmers as producers. Third, regulations and programs set by different ministries and government institutions must complement each other.

In the long run, the sluggish procurement of unhusked rice has the potential to erode the price stabilization role, especially at the farm gate. In fact, Law No. 18/2012 concerning food explicitly

mandates that the government to stabilize the supply and price of staple foods at the farm gate to protect farmers\' income and purchasing power.

The stabilization function at the consumer level has also been disrupted. Previously, the distribution of rice through Rastra was considered effective in reducing market price volatility.

Strengthening Bulog’s commercial role

According to the head of the Agriculture Ministry\'s Food Security Agency, Agung Hendriadi, Bulog, as an institution that is also in charge of food security, must strengthen its commercial role. "In its procurement task, Bulog can use commercial schemes. On the distribution side it should take the same approach," said Agung.

In order to strengthen its commercial role in rice distribution, according to Agung, Bulog must win the market, both in traditional and modern markets. Therefore, it is considered necessary for Bulog to continue to improve its marketing strategy.

KOMPAS/ANGGER PUTRANTO

Narusin, 50, harvests his rice in Benelanlor village, Kabat district, Banyuwangi, East Java, Sunday (13/10/2019). Unhusked rice at the farmer level currently sits at Rp 6,000 per kilogram, higher than Rp 5,000 per kilogram three months ago.

Bulog also needs to play a major role in the distribution of the rice under the BPNT program. Bulog should at least become a major distributor of rice designated for e-warongs. Based on Social Affairs Ministry data, the number of BPNT recipients totaled 15.6 million families. With an average rice assistance of 10 kilograms per family per month, the BPNT program can absorb a rice supply of 1.87 million tons per year.

According to Agung, in order to win the market in the BPNT program, the corporate structure of Bulog, which has branches at the provincial and city/regency level, needs to be further strengthened.

Bulog’s large organizational structure is its competitive advantage for winning the rice market. In addition, Bulog should not become too dependent on government programs.

Bulog president director Budi Waseso said his side was still waiting for the government\'s decision, especially regarding the absorption of domestic rice production and distribution of food under the BPNT program.

Kompas/Priyombodo

A rice trader measures rice on Sunday (13/10/2019) at Kebayoran Market, South Jakarta. The market price of rice is relatively stable, although the harvest season has ended in several rice production centers and others are experiencing drought.

Previously, Budi said his party could not reach its procurement target for 2019 for government rice reserves because there was no guarantee of distribution. According to deputy head for food and agriculture coordination at the Office of the Coordinating Economic Affairs Minister, Musdhalifah Machmud, the government paid attention to the flow and potential for absorption or distribution. A surplus in one area must be channeled into a deficit region. (JUD)