Airlangga: Bulog to Keep Absorbing Farmers’ Production

Kompas/Priyombodo

A worker wheels Bulog rice to market stalls to help maintain the supply availability and price stability (KPSH) of rice, cooking oil and granulated sugar at the Kebayoran market, South Jakarta, in September 2019.

BOGOR, KOMPAS — Coordinating Economic Minister Airlangga Hartarto has said that the State Logistics Agency (Bulog) will keep absorbing domestic production of rice and unhusked rice in order to stabilize farm-level prices. His office will also hold a coordination meeting on managing the government’s rice reserves.

Airlangga said this through text message after a limited cabinet meeting at the Presidential Palace in Bogor, West Java, on Tuesday (11/2/2020). He said that Bulog’s function as a price stabilizer would not change.

Separately, Agriculture Minister Syahrul Yasin Limpo said that Bulog had a highly important role in maintaining prices, particularly by not releasing the rice stock and by absorbing farmers’ production during the major annual harvest season.

Farmers are worried that the selling price for their rice crop will fall during the March-May 2020 annual harvest season, as the rice market is saturated. This is reflected in the warehouses of Bulog, millers, farmers’ groups and traders, which still hold stockpiles of rice.

Many have warned the government over the impacts from the change in the food aid distribution scheme, from natura (rice-based) to cash-based, especially as regards farmers’ welfare. The change is believed to have affected the continuing decline in Bulog’s absorption of rice/unhusked rice, from 2.96 million tons (2016) to 2.05 million tons (2017), and from 1.49 million tons (2018) to 1.2 million tons (2019).

KOMPAS/ABDULLAH FIKRI ASHRI

Officers survey the government’s rice stock at Pegambiran Warehouse in Bulog’s Cirebon Branch Office in Cirebon, West Java, in March 2019.

Bulog’s market has narrowed in line with the expansion of the non-cash food aid (BPNT) scheme since 2017. Rice distribution has continued to decline, and Bulog’s function to stabilize the market may weaken. Today, Bulog must compete to supply food ingredients to distributors.

Social Affairs Ministry poverty management director general Andi Z.A. Dulung said that Bulog could increase its rice supply to food commodity distributors under the BPNT program, which would minimize the risk of stockpiling rice at warehouses that then goes bad from prolonged storage.

The amount of rice that Bulog supplied to BPNT distributors continued to increase over the past year, from 1.34 tons in January 2019 to 29,778 tons in December 2019. Between 120,000 tons and 150,000 tons of rice is needed every month for the BPNT scheme.

“There is an opportunity to supply up to 1.5 million tons per year to agents,” said Andi.

It is hoped that the mechanism will drive local economies and improve the recipients’ welfare.

The government changed its food aid distribution scheme from rastra to BPNT to ensure that the aid reaches the right target at the proper time, and with the correct amount, price and quality through proper administration. It is hoped that the mechanism will drive local economies and improve the recipients’ welfare.

Institution

IPB University agriculture professor Dwi Andreas Santosa, who also chairs the Indonesian Farmers Seed Bank Association (AB2TI), said that Bulog’s status should be changed to a food agency that reported directly to the President.

Establishing the agency would fulfill Law No. 18/2012 on Food and its aim to achieve food sovereignty, self-sufficiency and security.

Meanwhile, Indonesian Ombudsman commissioner Ahmad Alamsyah Saragih said that Bulog should be changed from a government agency to a limited liability company to help it become profitable. Bulog had plenty of opportunities to expand its business because of its network of warehouses and distribution channels.

The government would be able to maintain Bulog’s role in stabilizing prices, so long as the agency was only an executor. The funding would come from the government. Alamsyah criticized the current funding mechanism for pressuring Bulog’s rice procurement and distribution programs, as Bulog often needed to borrow money from banks at commercial interest rates.

The government must review regulations on the ceiling price, food task force and programs to absorb farmers’ rice and unhusked rice.

Indonesian Agricultural Economy Association (Perhepi) researcher M. Husein Sawit said that any changes to Bulog’s status and funding mechanism should be accompanied by an overhaul of the rice business’ ecosystem. “The government must review regulations on the ceiling price, food task force and programs to absorb farmers’ rice and unhusked rice,” he said.

Evaluating these regulations would improve the ecosystem, including for farmers, millers and consumers. A healthy ecosystem would boost farmers’ welfare.

Husein added that the government would still be able to control the rice market through Bulog. Bulog’s special function to manage the national rice reserves enabled the government to control prices at the farm and consumer levels.

Perhepi deputy chair Bustanul Arifin said that Bulog should make internal improvements for better business efficiency so it could expand commercially. (JUD/INA/MKN)