Farmers Left Vulnerable

The instruments for stabilizing farm-level rice prices are weakening in line with the shift in the food assistance model. The Bulog’s rice purchases continue to decline while the government selling price lags.

KOMPAS/TOTOK WIJAYANTO

Warehouse workers arrange sacks of rice on Monday (10/2/2020) at the Cipinang central rice market in Jakarta. Statistics Indonesia recorded rice production of 31.31 million tons in 2019, a year-on-year decrease of 7.75 percent from 33.94 million tons in 2018.

The instruments for stabilizing farm-level rice prices are weakening in line with the shift in the food assistance model. The State Logistics Agency (Bulog)’s rice purchases continue to decline while the government selling price (HPP) lags.

JAKARTA, KOMPAS — The changing distribution mechanism for food assistance has resulted in the continued decline of domestic rice procurement by the State Logistics Agency (Perum Bulog) over the past four years. Many are worried that the lack of upstream-downstream integration will further pressure farmers’ welfare.

Scores of farmers and farmers groups in rice-producing regions, including West Java, Central Java, Yogyakarta and South Sulawesi, expressed their worries last week over the plummeting price of unhusked rice during rendeng (rainy season planting) in March-May 2020. Remaining rice stock at public warehouses is another cause apart from Bulog’s declining rice absorption.

Statistics Indonesia (BPS) recorded thousands of cases in 2019 during which unhusked rice was sold for lower than the government selling price (HPP), although the number of cases consisted 0.38-3.58 percent of the total transactions sampled. The cases occurred more frequently during the peak of the March-June 2019 harvest season.

The BPS still refers to the farm-level HPP of dried unhusked rice (GKP) of Rp 3,700 (US$0.27) per kilogram as set in Presidential Instruction (Inpres) No. 5/2015 on the government procurement and distribution of rice/unhusked rice.

KOMPAS/P RADITYA MAHENDRA YASA

A farmer bicycles past a rice field on Monday (10/2/2020) in Karangawen district, Demak regency, Central Java. Quality seeds, as well as fertilizers and pesticides, are vital to the intensive agriculture program.

The regulation is deemed outdated and increasingly irrelevant to the absorption of rice/unhusked rice for food reserves. This has been reflected in Bulog’s declining absorption of rice/unhusked rice from 2.96 million tons in 2016 to 20.05 million tons in 2017, and from 1.49 million tons in 2018 to 1.2 million tons in 2019. Last year, Bulog absorbed only 66 percent of its target.

Agriculture professor Dwi Andreas Santosa of Bogor Agricultural University (IPB), who also chairs the Indonesian Farmers Seed Bank Association (AB2TI), said on Monday (10/2/2020) that farmers would grow increasingly concerned if the government did not act. Price stabilization instruments greatly affected farmers’ welfare. “Without any improvement, the farmers will suffer,” he said.

The HPP is a vital instrument to ensure that farmers obtain adequate prices for their crops. Unfortunately, the government has not revised the HPP for five years, while production costs have continued to increase.

The farm-level HPP for GKP, for instance, remains Rp 3,700 per kg, although the AB2TI’s April 2019 survey in 28 rice-producing regencies found that production costs per kilogram of GKP had reached Rp 4,523.

The government would also prepare alternative upstream-downstream rice policies.

Earlier, food and agriculture coordination deputy Musdhalifah Machmud at the Office of the Coordinating Economic Minister said that the government would adjust the HPP ahead of the March 2020 major annual harvest. The government would also prepare alternative upstream-downstream rice policies.

Non-cash assistance

Other than the HPP, the change in mechanism from the natura rice-based food aid, distributed through the rastra rice welfare program, to the non-cash food assistance (BPNT) scheme, distributed via direct transfers to recipients, is also deemed to have cause the decline in the direct procurement of rice/unhusked rice from farmers.

Bulog president director Budi Waseso said that because of the change, the rice distribution channels managed by Bulog had narrowed. Last week, Bulog warehouses held 1.84 million tons of rice stock, or 60 percent of their maximum capacity, of which 900,000 tons came from rice imported in 2018.

The government changed the food aid distribution mechanism from rastra to BPNT in 2017. The BPNT scheme aimed to ensure that government aid reached the correct targets and distributed the correct amount at the proper time, price and quality through proper administration.

The scheme was hoped to boost local economies and improve the welfare of the aid recipients.

Poverty management director general Andi Z.A. Dulung at the Social Affairs Ministry said that the BPNT scheme allowed market traders and distributors to purchase rice and other food commodities from a variety sources, including mills, Bulog and private rice companies. The scheme was hoped to boost local economies and improve the welfare of the aid recipients.

Bulog’s position

Presidential special staff for economic affairs Arif Budimanta said that Bulog’s role was still important, but that the government was still formulating the best policy direction, including on matters related to the shift from rastra to the BPNT.

In a limited meeting on 4 Dec. 2019 at the Presidential Office, President Joko “Jokowi” Widodo asked for improved management of the government’s rice reserves, and that stockpiling should be anticipated well in advance.

The limited meeting also decided that the Trade Ministry would adjust its regulation to allow the government to sell its rice reserves under certain conditions. The current regulation restricts the use of the rice reserves for the rastra scheme, disaster aid and market operations.

According to Arif, Bulog would continue to absorb farmers’ rice, protect the government’s rice reserves and stabilize farm-level prices. (JUD/INA/MEL/IKI/XTI/HRS/MKN/REN)