The government needs to raise the purchasing price of unhusked and milled rice to ensure farmers will not suffer losses.
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·5 minutes read
JAKARTA, KOMPAS — The government needs to raise the purchasing price of unhusked and milled rice to ensure farmers will not suffer losses. Purchase prices are now lower than production costs, which have not increased in quite some time.
An increase in the government’s purchasing price is needed to prevent the price of unhusked rice from further falling. It will also help the National Logistics Agency (Bulog) procure rice from farmers and at the same time increase, the government’s rice reserves.
The current government’s purchasing price (HPP) is based on Presidential Decree No. 5/ 2015 on the policy of rice supply and distribution by the government.
Agricultural University of Bogor professor Dwi Andreas Santosa said on Friday the HPP was already below production costs. Based on a study on the association of seed banks and Indonesian farming technology carried out in 36 districts in January, the production cost of dry unhusked rice (GKP) has already reached Rp 4,286 (31 US cents) per kilogram at the farm level. It is lower than the prevailing HPP price of Rp 3,700 per kg at the farm level.
According to Andreas, the current HPP is only 12 percent higher than in 2012. It is far higher than the inflation rate, which reached 28 percent in the 2012-2017 period.
Besides being unfair to farmers, the low purchasing price also hampers Bulog in procuring rice from farmers. Last year, rice procurement totaled only 2.1 million tons, or 57 percent of the target, even though Bulog had raised the purchasing price by 10 percent in August 2017.
According to Andreas, without the increase in the HPP, Bulog will find it increasingly difficult to absorb the unhusked rice from farmers.
"The low HPP is the reason why the rice procurement of Bulog is getting lower," he added.
The chairman of the Association of Indonesian Rice Millers and Rice Traders, Sutarto Alimoeso, said that the government needed to review the HPP to ensure that farmers would receive a profit.
“Most farmers sell their unhusked rice before or during the harvest season. Therefore, it is important for the government to ensure farmers get a profit that is not affected by market pressures," he said.
Earlier, Agriculture Minister Andi Amran Sulaiman said that Bulog could implement several schemes to absorb farmers\' rice. For example, it has the authority to increase the purchasing price by 10 percent if the market price is higher than the HPP.
The agency also has the flexibility to purchase below-standard rice, if the quality of unhusked rice is mostly below standard. With several such schemes available, procurement should be smooth, and the target can be achieved.
Separately, Bulog procurement director Andrianto Wahyu Adi said that Bulog was currently buying from farmers both for social and commercial purposes. However, according to him, the procurement is still low because not all farmers have started to harvest their rice crops, and because Bulog must compete with other buyers.
Andrianto said the price of unhusked rice was still relatively high: Rp 4,500 to Rp 4,700 per kg for medium-quality rice. However, prices are expected to fall during the harvest. The rainy season will also affect the quality of the grain. Bulog’s procurement target is lower than last year’s.
Winarno Tohir, chairman of the Farmers and Fishermen Association, said in Jakarta on Friday that rain in some areas had affected the quality of unhusked rice. To keep the price of unhusked rice from falling during the harvest, the number of drying machines in rice production centers or rice mill should be increased.
Rice stocks
In some traditional markets in Jakarta, rice prices are still relatively high. The chairman of the Association of Rice Traders at Cipinang rice market (PIBC), Zulkifli Rasyid, said rice stocks at the market had declined. Data from PT Food Station Tjipinang Jaya shows that rice supply in PIBC totaled 21,484 tons as of Feb.8.
Meanwhile, in Pasar Serdang in Central Jakarta, the price of rice with IR64-II quality reached Rp 12,500 per kg, higher than the normal price of Rp 10,000 per kg. In the Rawamangun Market, East Jakarta, the price of the IR64-II rice stood at Rp 13,500 per kg.
"The price of rice is still the same as last week, but the quality is better," said Pasar Serdang trader, Wati.
In Kertasura Village, Kapetakan, Cirebon district, West Java, several rice mills had begun to dry newly harvested rice in the past week.
"Two months ago, we closed our mills, because the price of unhusked rice was so high. Now, we can no longer operate because of the rain," said Aas, the owner of Putra Bungsu rice mill on Friday.
Most of the small medium-scale rice mills on the northern coast of Java still dry unhusked rice under the sun. As a result, rice production is not predictable.
“Production is about 5 tons of rice per day, if it does not rain. Usually, production is between 8 and 9 tons per day," said Aas.
In Semarang, Central Java, Bulog Regional Division head Djoni Nur Ashari said the price of rice would gradually decline when the harvest began.