President Jokowi Guarantees Absorption of Farmers’ Harvests

BPMI SEKRETARIAT PRESIDEN

President Joko Widodo chaired a meeting on farmer and fisherman corporations from the Bogor Presidential Palace, Tuesday (6/10/2020).

In addition to ensuring no rice imports until June 2021, President Joko “Jokowi” Widodo emphasized that farmers’ rice will be absorbed by the State Logistics Agency (Bulog). The President has also urged for debate concerning imports to end as it is detrimental to farmers.

JAKARTA, KOMPAS  — After almost a month of weighing the pros and cons, President Joko Widodo confirmed that there would be no rice imports, at least until June 2021. The President also instructed the Finance Ministry to ready the budget needed to absorb rice from farmers.

“We don’t have the rice yet but I will ensure that the farmers’ rice will be absorbed by Bulog and I will immediately instruct the Finance Ministry to help with the budgeting,” said the President in an online press release from Bogor Palace, Friday night (26/3/2021).

Also read: Rejection of Rice Imports Intensifies

The President understood that as the harvest period approached, prices of rice at the farmer level was not meeting expectations. Therefore, the government will try to absorb or directly purchase rice harvested by farmers. “Thus, I ask that debate surrounding rice imports stop. These conversations could consequently cause the selling price of dry unhusked rice to drop even further,” said the President.

However, the President also acknowledged that there would be a memorandum of understanding (MoU) with Thailand and Vietnam regarding the provision of rice.

The President added that it had been almost three years since Indonesia last imported rice. However, the President also acknowledged that there would be a memorandum of understanding (MoU) with Thailand and Vietnam regarding the provision of rice. This was only done as a precautionary measure considering uncertainties caused by the COVID-19 pandemic.

KOMPAS/IQBAL BASYARI

Dozens of East Javanese people demonstrate in front of the East Java Governor\'s Office in Surabaya on Tuesday, Jan. 23, 2018. They expressed their opposition to the rice import policy when the harvest period was approaching as they considered it to be detrimental to farmers.

The government’s decision to import 1 million tons of rice had been a topic of controversy for the last month. Farmers, several community organizations and regional heads protested the plan. Their opposition was due to the fact that the rice importation plan was being discussed while farmers were in the middle of the harvest season and despite production surplus data and domestic rice prices being relatively stable in the last three years.

Price gap

The Indonesian Ombudsman suspects that the government came to this decision due to misadministration. This is because all the indicators show a lack of urgency to import rice, especially in terms of domestic production and prices. Meanwhile, several parties have been suspected of rent-seeking amid significant price disparities between the domestic rice market and the global rice market.

Also read: Questioning Rice Import Plan

The price of Thai rice with a level of 5 percent damage on the global market, according to data portal IndexMundi, reached US$557 per ton in February 2021. At an exchange rate of Rp 14,400 per US dollar, that figure is around Rp 8.02 million per ton or Rp 8,020 per kilogram (kg). Meanwhile, Vietnam’s rice as of February 2021, according to data from the Food and Agriculture Organization (FAO), is around US$486.6-507.3 per ton or Rp 7,000-7,300 per kg.

In fact, the average price of rice in the country, according to data from the National Strategic Food Price Information Center (PIHPS), has ranged from Rp 11,800 to Rp 11,850 per kg in the last month. This means that there is a difference of Rp 3,800 per kg to Rp 4,800 per kg between the global and domestic price of rice.

Political Economy and Policy Studies managing director Anthony Budiawan estimated that the price different between local and global markets ranged from Rp 1 million to Rp 4 million per ton. Thus, the price difference could range from Rp 1 trillion to Rp 4 trillion for every 1 million tons of imported rice compared to domestic rice prices.

Appreciation

Amid the controversy concerning the rice importation plan, the price of dry unhusked rice at the farmer level plummeted. Farmers in a number of rice centers, such as East Java, West Java, Central Java and Lampung, whom Kompas met with in the past week, said that the price of unhusked rice fell below the production costs, resulting in their loss.

Kompas/Raditya Helabumi

Workers unload sacks of rice from a delivery truck on Friday (5/1) at Bulog’s North Jakarta warehouse for distribution to Jakarta and Banten. The disrupted supply from a number of rice production centers has caused the market price of rice to increase recently. Throughout 2017, Bulog absorbed only 2.16 million tons of farmers’ rice, or 58 percent of its 3.74-ton target.

Agriculture Ministry food crops director general Suwandi said that as of Wednesday (24/3/2021), there were 459 subdistricts in 85 districts that reported cases of unhusked rice prices below the government’s purchasing price (HPP), which was at Rp 4,200 per kg. These cases were reported in South Sumatra, Lampung, Banten, West Java, Yogyakarta, Central Java, East Java and West Nusa Tenggara.

However, farmers in several regions have welcomed the President’s announcement to ensure that there will be no imports until June 2021 and the guarantee that domestic rice will be absorbed. Cirebon Indonesian Farmers Association chairman Tasrip Abubakar stated that the farmers appreciated the government’s decision to delay the imports.

Also read: Farmers Expect Govt to Absorb unhulled Rice

On the other hand, farmers had also urged the government to recalculate domestic rice production before deciding on imports in June-September. “If the harvests have been sufficient, the imports should be postponed,” he said.

The government should optimize the absorption of farmers’ rice to strengthen national food reserves.

Lampung Andalan Fishermen and Farmers Community (KTNA) secretary Jiwa Shofari is of the opinion that Indonesia does not need to import rice as rice surplus has been reported in several regions. The government should optimize the absorption of farmers’ rice to strengthen national food reserves. “Firs, absorb the farmers’ rice as much as possible. Then, if they are unable to fulfil the demand, can they import,” said Grobogan KTNA deputy chairperson Hardiono.

According to Hussein Sawit, a member of the Indonesian Agricultural Economics Association’s (Perhepi) advisory board, Bulog, needs to massively distribute the rice as well, such as through holding a welfare rice program. “Mass distribution will have an impact on its absorption as well,” he said in an online discussion at the Narasi Institute, Friday.

Perhepi member Lely Pelitsari added that Bulog needed an integrated rice policy form upstream to downstream, from its absorption to its distribution. An integrated policy will support the stabilization of prices at the farmers level or for downstream consumers.

Kompas/Abdullah Fikri Ashri (IKI)

A salt farmer carries salt in Waruduwur village, Mundu district, Cirebon regency, West Java, Wednesday (26/7/2017). Farmers are enjoying a high price of salt, reaching Rp 3,000 per kilogram and have expressed that prices do not decrease during harvest session

Previously, Bulog secretary Awaludin Iqbal stated that the company would be able to absorb the rice according to the quality determined by the government. Thus, companies still need a rice policy that is intact and integrated, not partial.

(This article was translated by Kesya Adhalia).