Rice as Strategic Commodity

KOMPAS/PRIYOMBODO

A rice trader awaits buyers on Thursday (4/4/2019) at Tebet Timur market, South Jakarta. The trader said the retail price of rice was relatively stable, for example, starting at Rp 9,000 per liter for IR 64 rice.

The same problem has reoccurred in every great rice harvest season, namely the fall of the unhusked rice price. The farmer exchange value (NTP) is also pressured and this may affect farmers’ willingness to continue cultivating rice.This year’s great rice harvest season has been delayed to April-May. The decreasing price of rice and unhusked rice is reflected in the national inflation rate. Statistics Indonesia (BPS) data shows that the price index of all expense groups increased in March 2019, except for the food ingredient group, which experienced a deflation of 0.01 percent. The food ingredients with the highest levels of deflation are rice, fresh fish, broiler chicken and broiler eggs.

The decreasing price shows that production is greater than consumption. As rice is seen as a strategic commodity, the government creates policies to keep the rice price the same at the producer and consumer levels.

The government established state logistics agency Perum Bulog to regulate the balance between production and consumption of strategic food ingredients, including rice. Bulog is tasked with obtaining farmers’ unhusked rice during the harvest period to prevent its price from falling. Bulog then distributes the rice to the government and then to poor people as a safety net, in addition to releasing its rice stock to the market whenever the rice price moves higher.

When complaints emerged that the quality of rice distributed to the poor was not good and that not all assistance beneficiaries were properly targeted, the government changed its rice assistance plan for the poor by introducing cash assistance. This change is believed to be one of the reasons why Bulog has been less excited about obtaining farmers’ unhusked rice, to say nothing of the fact that the government’s purchasing price is no longer in line with the market price.

Bulog said the quality of unhusked rice was below its standards. There is also the possibility that Bulog is having difficulties in procuring rice as the government’s purchasing price is less than farmers’ production costs.

KOMPAS/PRIYOMBODO

A rice trader prepares rice for display on Thursday (4/4/2019) at Tebet Timur market, South Jakarta. The Agriculture Ministry’s Food Security Agency estimated that domestic rice production reached 14.1 million tons in January-March.

New strategies and policies are necessary to resolve current and future rice problems, as environmental conditions and people’s socioeconomic problems have changed drastically since 30 to 40 years ago.

Rice has to be part of the national food strategy and policy. Rice is a source of carbohydrates and Indonesia has a high diversity of rice types.

We need to evaluate rice by observing the cultures, age ranges, genders, socioeconomic conditions and professions of members of society. Furthermore, we need to properly handle the production, post-production and distribution of rice, especially as we are facing climate change, a scarcity of agricultural land and a ballooning population.

The national rice policy is implemented with pricing and non-pricing approaches with the aim of providing production incentives for farmers. This way, production sustainability can be achieved.