Lower Class Bears Biggest Rice Price Increase
Currently, lower class people are bearing the brunt of rice price increases compared to upper middle class people. On the other hand, rice price increases of more than 10 percent occurred in a number of national rice barns.
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The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Kelas Bawah Tanggung Kenaikan Harga Beras Terbesar
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Residents collect rice from the Food Aid program at the Sumbermulyo Village Office in Bambanglipuro, Bantul, DI Yogyakarta, on Wednesday (12/4/2023).
JAKARTA, KOMPAS — Rice prices continue to soar. Low-income or lower class people bear the biggest rice price increases. For this reason, the government is expected to focus on distributing rice to lower class people and ensure smooth distribution to areas where rice prices are high.
Based on data from the National Food Agency's Food Price Panel (NFA), as of September 10 2023, the national average price of medium rice at retail level is IDR 12,700 per kilogram (kg). The price of rice rose 6.09 percent monthly and 15.98 percent annually. The price of this commodity is also above the highest retail price of IDR 10,900 per kg.
Researcher at the Center for Food, Energy and Sustainable Development, Institute for Development of Economics and Finance (Indef), Rusli Abdullah, Sunday (10/9/2023), said that over the last 21 months , namely from the beginning of January 2022 to 8 September 2023, the price of medium rice in traditional or people's markets is lower than in modern retail markets. However, the increase in rice prices in people's markets is actually higher than in modern markets.
During that period, the increase in the price of rice in the traditional market was Rp 2,250 per kg or about 19.15 percent, while in modern markets it was Rp 1,150 per kg or 9.55 percent. The higher price increase of rice in the traditional market narrowed the price difference or gap between the two types of markets, from Rp 1,700 per kg on January 3, 2022 to Rp 600 per kg on September 8, 2023.
"That shows that the lower middle class bears a greater impact from the increase in rice prices compared to the upper middle class. The lower class who usually buy medium rice in the traditional market bear a higher increase in rice prices compared to the upper middle class who buy rice in modern markets," he said when contacted in Jakarta.
Lower-income groups who typically buy medium rice from the traditional market are experiencing a greater increase in rice prices compared to the upper-middle class who buy rice from modern markets.
Price difference of medium rice between traditional or people's markets and modern retail markets during the period from early January 2022 to September 8, 2023.
On the other hand, according to Rusli, several major rice-producing areas in Indonesia have experienced an increase in medium grain rice prices of more than 10 percent at the local market level. This is an anomaly that there is a significant increase in rice prices in the national rice barn.
Rusli noted that from the beginning of January 2022 until September 8th 2023, three of the biggest rice producing provinces in Indonesia, namely East Java, Central Java, and West Java, experienced a rise in rice prices above 10 percent. The increase in rice prices in West Java's market reached 16.53 percent, while in East Java it increased by 11.54 percent and in Central Java it rose by 10.83 percent.
This is happening because a lot of rice that comes from that province flows into the DKI Jakarta and surrounding areas. A similar situation also occurs in South Sulawesi Province and South Sumatra, where the increase in rice prices is 11.63 percent and 14.11 percent, respectively.
Therefore, Rusli hopes that the government will focus on distributing rice directly to low-income citizens. The distribution of rice should not only be centered in Jakarta, but also in regions where the price of rice has significantly increased.
In addition, in the future, it is hoped that rice-producing regions can build strong food barns so that not much rice leaks into the DKI Jakarta and surrounding areas. If DKI Jakarta and surrounding areas really need it, the rice in the barns of each producing region can be rolled out.
"In the midst of this rise in rice prices, the Food Task Force is also expected to ensure that there are no individuals trying to take advantage of the situation. Meanwhile, to reduce the psychological impact on the rice market, it is hoped that Perum Bulog will soon realize the 400,000-ton rice import quota to add to the government's rice reserves," said Rusli.
Several of the largest rice-producing regions in Indonesia are experiencing an increase in medium-quality rice prices of more than 10 percent at the local market level. This is an anomaly, given the relatively high national rice stocks.
Also read: Delays in CBP procurement also trigger rice price increases
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Governor of East Java, Khofifah Indar Parawansa (left), discussed with the Head of Bulog Kanwil Jatim, Ermin Tora, while inspecting the rice stock in the Bulog Warehouse Divre Jatim Subdivre Surabaya Utara Banjar Kemantren II, Sidoarjo, on Wednesday (6/9/2023). The visit was to check the rice stock in the Bulog warehouse. The impact of El Nino in Indonesia has caused an increase in the price of paddy and rice.
Regarding the rice fields that have already been planted during the long dry season, according to Rusli, the government is expected to provide water pumps to optimize the remaining water resources. This is important to anticipate the potential crop failure.
The Ministry of Agriculture predicts that the impact of El Nino may result in a decrease in rice production of up to 380,000 tons. However, if the El Nino is strong, the lost rice production could reach up to 1.2 million tons.
Also Read: Indonesia Will Lose 1.2 Million Tons of Rice Due to El Nino
World rice prices
In two reports released on Friday (8/9/2023) by the Food and Agriculture Organization of the United Nations (FAO), it was stated that world rice prices have reached their highest level in the past 15 years. The Food Price Index in August 2023 amounted to 121.4 or decreased by 2.1 percent monthly.
The decline in the index reflects a decrease in the prices of several commodities, such as milk, vegetable oil, meat, and cereals including wheat. However, on the other hand, there is an increase in the prices of rice and sugar.
Development of the Food Price Index of the Food and Agriculture Organization (FAO) of the United Nations in August 2023.
FAO reported that the Rice Price Index in August increased by 9.8 percent on a monthly basis, reaching the highest level in the last 15 years. The price of broken rice rose by 5 percent, especially those originating from Vietnam, in August 2023, reaching 624.25 US dollars per ton or IDR 9.57 million per ton, up 62.25 percent annually. Fifteen years ago, in May 2008, the price of rice reached its all-time high of 996 US dollars per ton.
This reflects the disruption of trade that occurred after India banned the export of certain types of rice in July 2023. In addition, the increase in rice prices was also influenced by negative market sentiment due to the decrease in rice supply caused by a long drought from El Nino.
The FAO estimates that the global rice stock by the end of the 2023/2024 marketing year will decrease by 435,000 tons. However, the stock will still reach an all-time high of 198.1 million tons or a 1.4% increase compared to 2022/2023.
Nearly three-quarters of the world's rice stocks in 2023/2024 will be dominated by China and India. Meanwhile, the stocks of countries other than China and India are expected to fall to the lowest level in the past four years, amounting to 51.4 million tons.
FAO also projected that international rice trade will decrease by 600,000 tons in 2023 and 3 million tons in 2024, starting from July 2023. This is largely due to the increase in rice export restrictions imposed by India, the largest rice exporter in the world.
Also Read: FAO: World Rice Prices Reach Highest Point and Trade Expected to Decline
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The activity of unloading imported rice from Thailand that has just arrived at Tanjung Priok Port, Jakarta, using the Vimc Unity Ship, on Monday (29/5/2023). The government has allocated an import quota of rice amounting to 2 million tons throughout 2023 to Perum Bulog. 500,000 tons of which have been realized until May 2023.
The situation will make it difficult for Indonesia to import rice from several rice-producing countries. Furthermore, even if it can import it, Indonesia will be burdened with high import prices for rice.
Head of NFA, Arief Prastyo Adi said that CBP in Bulog will indeed be reduced by 640,000 tons from 1.52 million tons to 880,000 tons. However, the government will add 650,000 tons of CBP to it.
"Of that total, 400,000 tons will be imported from Vietnam and Thailand. Meanwhile, 250,000 tons will be imported from Cambodia. Regarding the imported rice from Cambodia, we will immediately explore and establish a memorandum of understanding with the government and rice industry players there," he said.
In addition, the NFA, through Bulog, has begun rolling out rice for 21.3 million financially challenged families gradually through the Supply and Food Price Stabilization Program (SPHP). Each family will receive 10 kg of rice at a price of Rp 10,900 per kg in September, October, and November 2023.
The NFA has also begun integrating the Balanced, Nutritious, and Safe (B2SA) program with village-owned enterprises (BUMD) in order to maintain food and nutrition availability in every village in Indonesia.
Head of the Central Java Food Security Agency, Dyah Lukisari, said that by 2023, the integration program will have been rolled out in 4 regencies using the Central Java Provincial Budget and 2 regencies using the NFA budget. The store will supply eggs, meat, rice, as well as processed food products made by local communities at a lower price.
"According to the plan, the store will also be supplied with agricultural products from a local farmers' group," he stated via a press release.
Also Read: The Story of the ASEAN+3 Emergency Rice Granary and RI Rice Reserves
