Bulog: Imported Rice Arrives This Month

The government has realized rice imports to cope with the increasingly critical availability of rice nationwide toward year-end.

IVAN DWI KURNIA PUTRA

Workers carry rice from the warehouse to the buyer's vehicle at the Cipinang Rice Main Market, East Jakarta, Friday (02/11/2022). The supply of rice at the Cipinang Rice Main Market has decreased. The government through Perum Bulog has imported rice which is targeted to arrive this month.

JAKARTA, KOMPAS — In addition to addressing the dwindling national rice stock, the imports are expected to keep prices at the consumer level under check, according to the State Logistics Agency (Bulog). The policy to ship in foreign rice is also believed to be able to deter price speculations and rice hoardings.

“These imports will put the brake on speculations. It means, [the prices of rice] will remain to trickle up, or in other term, increase at a decreasing rate, until February,” former Bulog deputy Sapuan Gafar said when contacted on Sunday (4/12/2022). “If the arriving imported rice is confirmed in terms of quantity and time, market operation would need to be expanded," said former secretary to the state agriculture ministry from 1993-1999.

Bulog president director Budi Waseso said that his party was trying to secure the government's rice stock (CBP) at an adequate level even though it would remain short by 1.2 million tonnes of the government’s year-end target.

"God willing, this December there will be additional [rice] from imports that will secure our stock. I will disclose it when [the rice] gets here," he said at his office in Jakarta on Friday (2/12).

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With Bulog’s rice stock at around 450,000 tonnes by the end of the year, and 150,000 tonnes of it having been absorbed in the domestic market, Budi said the imports would increase the stock to above 500,000 tonnes.

Statistics Indonesia (BPS) reports the rice commodity had experienced inflation in the last five months due to the drop in production with the average rice price being Rp 11,877 per kilogram in November.

According to Zulkifli Rasyid, head of the Cipinang main rice market (PIBC) cooperative, the distribution of rice to traders at wholesale markets has fallen by more than 50 percent, with the price of medium rice increasing from Rp 9,793 per kg in July to Rp 10,743 per kg in November.

December is the most straining period [to procure rice] because harvests are limited.

He said the government's decision to realize the imports would help bring down the rice prices in the market. He hoped the imported rice could arrive in Indonesia in mid-December 2022 or a week before the new year at the latest.

The Indonesian Agricultural Economics Association (Perhepi) sees December as the right moment to bring imported rice to Indonesia. “December is the most straining period [to procure rice] because harvests are limited. Downstream, demand increases due to Christmas and New Year," Bayu Krisnamurthi, member of the association’s advisory board, said.

KOMPAS/TOTOK WIJAYANTO (TOK)

Loading and unloading of rice at the Warehouse of Regional Division of Bulog Regional Division for DKI Jakarta and Banten, Friday (25/11/2022).

Commercial scheme

Budi Waseso said rice imports used the market price-based commercial scheme to enable the procurement of rice amid the tendency of partner countries to hold back from releasing their food crops. He said he would ensure accountable distribution of the rice according to the CBP scheme.

He said Bulog had caught the signal about the need to import rice as early as July, when it was becoming difficult to absorb domestically produced rice at a price stipulated in Trade Minister Regulation No. 24/2020, which was Rp 8,300 per kg. The government later issued a policy of price flexibility and commercial absorption of rice. However, it failed to increase Bulog's absorption capacity.

Rice import was one of the issues discussed in a hearing between the House of Representatives’ Commission IV, overseeing agriculture, fisheries and food production; Bulog; the Agriculture Ministry; and the National Food Agency (BPN) on Wednesday (23/11). The plan drew pros and cons. Citing BPS data, the Agriculture Ministry argued that national-rice production, which was estimated to amount to 31.9 million tonnes this year, would be sufficient to meet the consumption needs of 30.2 million tonnes.

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The debate over whether or not Indonesia should import rice culminated in one of the meeting's decisions, which was to allow the Agriculture Ministry to quantify the rice provision at milling centers that were ready to supply Bulog. On Thursday (1/12), the Agriculture Ministry came up with data that 610,632 tonnes of rice were ready for absorption from the milling centers spreading in 24 provinces, with the prices ranging between Rp 9,359 and 11,700 per kg.

However, as already disclosed in the previously presented data, price and quality appeared to be the impeding factor in the absorption. Bulog and BPN had agreed that the price benchmark for absorption should be at a maximum of Rp 10,200 per kg. If too high over the benchmark, the price was feared to jack up inflation.

BPN chairman Arief Prasetyo Adi had previously warned of the threat of food crisis in the event Bulog was unable realize the 1.2 million tonnes projection. "Bulog's stock would risk bleeding down to around 342,000 tonnes. Bulog would become unable to intervene [with market operation] when [rice] prices are high, or in the wake of an extraordinary event like what happened in Cianjur," he said.

Bulog's stock would risk bleeding down to around 342,000 tonnes.

He urged Bulog to take precautionary measures when it came to domestic absorption with commercial and cautioned against buying at too high prices for fear of provoking price escalation at the consumer level and subsequently, inflation.

Throughout November, based on BPS data, the average price of dry unhusked-rice grains at the farmers’ level was Rp 5,397 per kg, while the price at the milling centers was Rp 11,877 per kg. The figures were above the government's purchasing-price benchmark, which was set at Rp 4,250 per kg and Rp 8,300 per kg respectively.

This article was translated by Musthofid.