Distribution Disruption Triggers Price Anomaly

KOMPAS/PRIYOMBODO

Workers unload sacks of rice from Madiun, East Java, at Kebayoran Lama Market in South Jakarta, Monday (14/10/2019). The government is optimistic that it has sufficient rice stocks to meet demand for the next few months, despite the prolonged drought that has affected rice production this year.

JAKARTA, KOMPAS— The difference in the price trend of a number of commodities in the market and in the farm gate indicates that there has been a disruption in the distribution of commodities. The social restrictions imposed by the government to prevent the spread of the new coronavirus have affected the distribution system.

Rice prices in the market, for example, have tended to rise in the last three months. The average price of rice, according to the National Strategic Food Price Information Center, rose from Rp 11,800 (about 75 US cent) per kilogram in early January 2020 to Rp 11,900 per kg on Monday (6/4/2020). The relatively high increase in rice prices occurred in Jakarta, from Rp 12,750 per kg to Rp 13,500 per kg.

The upward trend in rice prices is also seen in the Tjipinang Jaya Food Station data. The average price of rice in the Cipinang wholesale market, Jakarta, rose from Rp 10,082 per kg in January to Rp 10,552 per kg in April as stocks fell from around 43,250 tons to 25,960 tons during  the same period.

However, the price trend at the farm gate is in contract with that in the market. According to data from Statistics Indonesia (BPS),  the price of unhusked rice at the farm gate dropped from Rp 5,273 per kg in January to Rp 5,176 per kg  in February  and Rp 4,936 per kg in March. The decline occurred due to the expansion of the area of rice harvest, which is expected to reach its peak in April 2020.

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.

The distribution of a number of other food commodities, such as vegetables and chicken, was also affected. Ananda Dwi Septian ,25, a horticultural farmer in Purwakarta, West Java, for example, complained about the falling demand for vegetables from traders in the wholesale market. As a result, prices at the farm gate fell.

According to Guntur Subagja, the chairman of the Indonesian Farmers and Fishermen Association, the difference in price trends in the market and in the farm gate indicates there has been a disruption in distribution. "The closure of many hotels and restaurants in cities has led to a decline in demand for agricultural products," he said.

The decline in demand from hotels, restaurants and cafes due to the COVID-19 pandemic, said Guntur, had caused a decline in distribution of the commodities. The reduction affects the transportation of the agricultural products at the farm level.

In the market or at the consumer level, according to the chairman of the Association of the Traditional Market Traders,  Abdullah Mansuri, there has been an increase in rice demand by 20-25 percent at the consumer level. However, market traders are concerned that social restrictions will hamper the distribution of the commodities.

The smooth distribution is supported by the coordination between Bulog, the port authority, the National Police, and the Food Task Force.

The director  for operations and public services of the State Logistics Agency (Bulog), Tri Wahyudi Saleh, said that the logistics distribution of Bulog was running smoothly because it had been prioritized for the past week. The smooth distribution is supported by the coordination between Bulog, the port authority, the National Police, and the Food Task Force.

The president director of PT Food Station PT Food Station Tjipinang Jaya,  Arief Prasetyo Adi, said  his office is working with the Food Task Force to support the distribution. "So, even if the rice demand doubles, our stock is still sufficient for the people," he said.

When opening a limited Cabinet meeting on Thursday (2/4), President Joko “Jokowi” Widodo called for the need to ensure the availability and smooth distribution of food commodities ahead of Ramadan and Idul Fitri. He asked the people not to block the roads  which could hamper logistics operation and the distribution of the commodities. (JUD/MKN/MEL/NIK/NSA/IDO)