Jakarta, IO – A baffling and difficult decision was made by the Indonesian Government. On March 24, 2023, through the National Food Agency (Bapanas), the Government instructed the State Logistics Agency (Bulog) to import two million tons of rice, by the end of December 2023. The first 500 thousand tons must be imported immediately to strengthen the government’s rice reserves (CBP). This decision was made at a “Staples Availability and Preparation for the Eid Al-Fitr 1444 H Population Movement” meeting with President Joko Widodo.
This decision was somewhat confounding as the import permits were issued at a moment when Indonesia was blessed with an abundant harvest. Issuing import permits during the main rice season is a rare occurrence, because when crops are plentiful, there will be an oversupply of rice, and prices will fall.
Such a dilemmatic decision. On the one hand, the farmers are enjoying the high price of rice. On the other hand, due to the high cost, Bulog finds it difficult to absorb the rice supply. As of March 24, Bulog had only absorbed 48,513 tons of rice. Such an inconsequential amount.
This year alone, the Bapanas targets Bulog to absorb 2.4 million tons of rice from local farmers, of which 1.2 million will be allocated for year-end stock. Seventy percent of said target is expected to be taken from the great harvest, lasting until May.
Considering real on-the-ground conditions, it will be almost impossible to reach the target, including absorbing 70% of the 2.4 million tons of rice during the main rice season. In fact, Bulog’s most promising supply is during the great harvest. If it misses absorbing the harvest supply, the target will unlikely be achieved.
Last week, Bulog only had 280 thousand tons of rice in government rice reserves – an insignificant figure. From March to May, Bulog will have to distribute rice social assistance (bansos) to 21.35 million underprivileged families. Each will get 10 kg of rice. It means 630 thousand tons of rice will be needed.
If Bulog relies on domestic production, procuring rice in such a volume will be impossible, using the existing purchasing mechanism. Indeed, the Bapanas has raised the government’s purchase prices (HPP) for dry unhusked rice (GKP) from farmers, to IDR 5,000/kg and rice at Bulog warehouses at IDR 9,950/kg. However, the prices of unhusked rice and rice in the market are still higher than the HPP.