Unhusked Rice Prices Decline

KOMPAS/TOTOK WIJAYANTO

Workers move rice from Pamanukan who just arrived at the Cipinang Rice Main Market, East Jakarta, Thursday (21/5/2020). Perum Bulog estimates that rice stocks until June will reach at least 1.8 million tons.

The fall in the price of unhusked rice to below the government’s reference price (HPP) in the last 16 months could indicate a change in consumption patterns.

The price dip occurred from April 2020 to July 2021, according to data from Statistics Indonesia (BPS). Such a lengthy decline had never occurred before the COVID-19 pandemic hit Indonesia, with the first cases detected on March 2, 2020.

The price of unhusked rice fluctuates from time to time. During the rendeng (wet) harvest season between February and June, the price of unhusked rice usually falls below the HPP because production is higher. Between July and November or December, the farm gate price of unhusked rice usually rises above the HPP as national rice production falls during the dry season.

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The drop in the unhusked rice price to below the HPP (Kompas, 27/8/2021) may indicate changes in the people\'s consumption patterns. Thus, the cause of the change should be studied in depth, including whether it will continue.

In 2020, sales of instant noodles rose by more than 10 percent from the previous year.

It can be predicted that restrictions on public activities have caused workers and students to spend most of their time at home. While at home, people may not only consume rice but also other carbohydrate sources, such as noodles or bread, which are easier and more practical to prepare than rice. In 2020, sales of instant noodles rose by more than 10 percent from the previous year.

There is also a possibility that the fall in rice consumption is the result of switching to local carbohydrate sources, such as corn, tubers and sago. People may also be reducing the amount of rice they consume and replacing it with vegetables, meat, fruit and snacks.

Kompas/Iqbal Basyari

A rice seller in Genteng Market, Surabaya, East Java, selling Perum Bulog market operation rice priced at Rp 9,000 per kilogram, down compared to yesterday’s price of Rp 9,350 per kilogram, Wednesday (10/1/2018). The price has been cut because sellers are concerned that the rice from Bulog may not sell well.

If there is indeed food diversification, it is good, as it will have a positive impact. From the environmental perspective, the decline in rice consumption is good. Rice fields usually need a lot of water. To produce one kilogram of rice, rice fields need an average of 1,432 liters of water. The diversification of food is also good for health. Food crop farmers have been encouraged to switch to other commodities with a higher economic value.

However, the fall in the unhusked rice price needs to be watched because it may be caused by a decline in purchasing power. Low-middle income households spend the largest share of their resources on food, mostly rice. Food prices are the largest contributor to inflation. In his remarks during the 2021 National Coordination Meeting on Inflation on Wednesday (25/8/2021), President Joko “Jokowi” Widodo noted that the low year-on-year inflation of 1.52 percent in July 2021 could indicate a decline in purchasing power due to social restrictions.

We need to understand why there has been a consistent dip in unhusked rice price. BPS needs to be given special funds to conduct a study on the COVID-19 pandemic and on changes in people’s consumption patterns and purchasing power.

With accurate data, changes in policy and strategy can be carried out appropriately. The right strategy in managing food and agriculture will make the use of economic and natural resources more efficiently and, at the same time, improve the welfare of farmers and the public as whole.

(This article was translated by Hendarsyah Tarmizi).