"Red Carpet" for Perum Bulog

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JAKARTA, KOMPAS — The Social Affairs Ministry has tasked the State Logistics Agency (Bulog) with managing the food supply in the non-cash food assistance program (BPNT). The state-owned company must therefore establish certainty in distribution for more effective price stabilization efforts.The volume of Bulog’s rice distribution has declined since the government switched to the use of cards under the BPNT’s food aid distribution for low-income families. Aside from the growing stockpiles, the rice supply could become bad while storage costs could increase.

The decision to roll out the "red carpet" for Bulog was made on Thursday (4/7/2019) in Jakarta at a coordination meeting between the Social Affairs Ministry and Bulog. Social Affairs Minister Agus Gumiwang Kartasasmita, Bulog managing director Budi Waseso and State-Owned Enterprises Ministry agricultural and pharmaceutical businesses deputy Wahyu Kuncoro attended the meeting.

Agus confirmed that Bulog would be the food supply manager and supply 100 percent of the rice for the BPNT program. The decision was made because Bulog needed a channel to distribute the rice it manages. It was also expected that Bulog would maintain the turnover of rice stock.

Bulog was expected to supply good-quality rice at affordable prices to the BPNT’s beneficiary families. Agus said that around 1.5 million tons of rice was needed per year for the BPNT program. This meant that Bulog would distribute 750,000 tons of rice in the second half of 2019.

In its role as supply manager, Bulog will be coordinating the distribution of food, especially rice, to e-warong – special outlets where beneficiary families can purchase goods using government aid. The outlets expected to be ready to implement within a month.

Absorption

The new structure, Agus said, gave space for Bulog to invite private rice businesses to participate in the BPNT. Previously, food supplied by private businesses dominated e-warong and became the preferred choice among beneficiary families.

With certainty in distribution, said Budi Waseso, Bulog hoped to optimize the absorption of unhusked/husked rice. This year, Bulog had targeted absorbing 1.8 million tons of rice in government rice reserves (CBP). In the first half of 2019, Bulog claimed it had realized 1.004 million tons of rice, but -- according to the records of the Agriculture Ministry\'s Food Security Agency – realization had reached only 676,501 tons by 18 June 2019.

The change in the food aid mechanism was thought to have contributed to the sluggish absorption of unhusked/husked rice, because Bulog had lost its authority. Before the BPNT program was launched, the subsidized rice was distributed under the prosperous rice (rastra) scheme, in which Bulog distributed government rice reserves directly to the target families.

The switch from the rastra scheme to the BPNT program caused a decline in rice distribution from 2.78 million tons in 2016 and 2.54 million tons in 2017, to only 1.2 million tons last year. Meanwhile, the volume of domestic rice procurement declined from 2.96 million tons in 2016 to 2.16 million tons in 2017, and to 1.44 million tons in 2018.

Sapuan Gafar, the former Bulog deputy head and former secretary to the State Minister for Food Affairs (1993-1999), said that Bulog needed to regulate its rice distribution because rice could be stored for only three months. After that, the price would drop even if the rice was still fit for consumption.

Moreover, Bulog must cover increasing storage costs if distribution was prolonged. With regard to its role in stabilizing prices, Bulog could only buy and intervene in the market at government prices.

By designating the task to Bulog, the agency was unable to buy and sell rice freely, unlike the private sector. Therefore, expanding its distribution role in the BPNT program was expected to strengthen Bulog’s role, especially in stabilizing prices.

Bulog operations and public services director Tri Wahyudi Saleh said that expanding the agency’s rice distribution role in the BPNT to 100 percent was a ray of light. "With its capabilities in logistics network and distribution, Bulog will be able to manage the BPNT’s food supply," he said.

The BPNT transfers Rp 110,000 in aid to each beneficiary family every month, for use in buying rice and eggs at e-warong. Poverty management director general Andi Z.A. Dulung at the Social Affairs Ministry said that Bulog could also supply eggs in addition to rice.

The BPNT currently covers 15.6 million beneficiary families, of which 89.9 percent are under the BPNT mechanism, while the rest are under the rastra scheme. Each family purchases T2 kilograms of eggs per month on average. (JUD/MKN)

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Bulog kompascetak Rice