Anticipating 2023 Food Price Hike

KOMPAS/TOTOK WIJAYANTO

A worker carries a sack of rice at the Cipinang Rice Main Market, Jakarta, Sunday (18/9/2022).

The government has announced that it is implementing measures to anticipate an increase in the price of food, especially rice.

The anticipatory measures are intended to deal with the food supply towards the end of the year. However, it will be more important to anticipate food price inflation next year, when the political situation warms up.

The government, as reported in this daily, has underlined the need to anticipate a potential spike in rice prices amid public concerns regarding the price of rice, which has begun to increase in the past week. State logistics agency Perum Bulog, which has 800,000 tons of rice as government reserves, has been conducting market operations to curb the rise in prices (Kompas, 26/9/2022).

Although the prices of medium and premium quality rice have begun to increase, the rise is not significant. According to data from the National Food Agency, the price of medium quality rice has risen from a nationwide average of Rp 10,990 (75 US cents) per kilogram on 17 Sept. 2022 to Rp 11,000 per kilogram on 23 Sept. 2022. In the same period, the price of premium quality rice rose from Rp 12,510 per kilogram to Rp 12,520 per kilogram.

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Food prices often increase at the end of the year, because agricultural production during the dry season is not as high compared to the rainy season. Production becomes more constrained when the dry season lasts longer than usual. However, this year’s dry season has tended to be wet, so production has not been significantly affected.

Considering the current increase in rice prices, the government should conduct a more in-depth investigation in the field. The government needs to check for any supply problems, because the rice prices must be stable for a period of five to six months until the next harvest season (for crops planted in October).

KOMPAS/BAHANA PATRIA GUPTA

A farmer evicts birds in his rice field that are ready to harvest in Buduran District, Sidoarjo Regency, East Java, Wednesday (14/9/2022).

We need to pay more attention to this issue because the political situation will start heating up next year. Food price inflation at such a time could lead to social unrest and exacerbate problems as a result. The problems could be exacerbated even further as the political environment heats up alongside problematic food supplies.

The government’s measures to secure food supplies for this year should be extended until early 2024, when the elections will take place. These anticipatory measures need to begin with more accurate seasonal forecasts, because agriculture relies heavily on meteorological data. This is a key factor in calculating food production output.

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Armed with this data, various possibilities can be identified, such as data related to land area, the need for production facilities/infrastructure, potential incentives for farmers, and improvements to agricultural infrastructure. The relevant authorities must present the various possible opportunities so that all parties are prepared.

The food reserve must be increased so the government can control prices. However, we also remind those involved in the rice trade and those with the power not to rush to import rice. Many people know that rent-seeking is always involved in importing rice.

Government officials must focus on anticipating food production and not be tempted to take advantage of the situation for personal gain.

This article was translated by Hendarsyah Tarmizi.