Repeated Rice Price Spikes, First Test for Elected Presidential Candidates

The price of rice in Indonesia will rise sharply in early 2024. This issue will be the first test for the elected president.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Lonjakan Harga Beras yang Berulang, Ujian Perdana Calon Presiden Terpilih

KOMPAS/FABIO MARIA LOPES COSTA

One resident bought rice at Kosambi Market in Bandung, West Java, on Friday (16/2/2024). Traders at Kosambi Market complained about the reduced rice supply that has been happening since the beginning of 2024.

The end of rice planting season and issues regarding government management and communication have caused a surge in rice prices, reaching their highest point in early 2024. This condition, which started last year, is predicted to continue. Such fluctuations in rice prices could be the first test for the newly elected president.

Amid the flood of information regarding the presidential and vice presidential candidate vote counts as well as legislative members, several citizens must recount their expenses. How come? The price of rice, which is one of the main food staples for citizens, is increasing in the market.

In Kosambi Market, Bandung City, West Java, for example, the price of medium rice reached Rp 15,500 per kilogram on Friday (16/2/2024). However, the highest retail price (HET) for medium rice set by the government is Rp 10,900-Rp 11,800 per kg based on zoning.

"Usually, I sell medium rice for only Rp 12,500 per kg. Due to limited stock, the selling price of medium rice has reached Rp 15,500 per kg," said Andri Muhammad Thahir (35), a trader at Pasar Kosambi. He has already purchased rice at a high price from an agent.

Also read: Concerned that rice prices will continue to rise ahead of Ramadan

KOMPAS/FABIO MARIA LOPES COSTA

Medium type of rice in Kosambi Market, Bandung City, West Java, Friday (16/2/2024).

Not only have the prices skyrocketed, but the supply of rice is also limited. Normally, Andri is able to obtain 3 tons of rice per week. However, in the last month, the amount has decreased by 50 percent, or around 1.5 tons per week. The rice comes from several regions in West Java and Central Java.

The decrease in rice supply is caused by a shortage of harvested agricultural land. On the other hand, consumers are also cutting back on purchases due to high rice prices.

Muji's granddaughter (50), a resident of Bandung, is forced to reduce her purchase of medium-quality rice by up to 50 percent from the usual. For her, the increase in rice prices of up to Rp 3,000 per kg is quite burdensome.

KOMPAS/FABIO MARIA LOPES COSTA

Andri Muhammad Thahir, rice merchant in Kosambi Market, Bandung City, West Java, on Friday (16/2/2024). The price of medium-quality rice reached Rp 15,500 per kilogram.

"I usually buy medium quality rice in quantities of up to 10 kg per week. Due to the skyrocketing price of rice, I can only afford to buy 5 kg," said Cucu.

Rice prices have also spiked for premium quality. Currently, it is priced at Rp 16,500 per kg, while typically the commodity is only priced between Rp 12,000 to Rp 13,000 per kg. In addition to being more expensive, premium rice is also difficult to find in retail stores.

Corporate Communication branch manager of Alfamart Bandung, Elisa Refila, revealed that retail businesses are struggling to meet the demand for premium rice. "This situation is happening in our retail chain and other supermarkets. We are constantly trying to address this by coordinating with local government," she said.

Rice center

KOMPAS/ABDULLAH FIKRI ASHRI

Residents carry rice at Pasar Pagi in Cirebon City, West Java, on Monday (20/11/2023). The medium rice price in the market ranges from Rp 10,900 to Rp 12,000 per kilogram. The Local Inflation Control Team of Cirebon City launched a subsidized rice delivery program that provides subsidies for rice transportation costs from the Bulog warehouse to the market.

Not only in big cities, the scarcity of premium rice is also happening in rice centers, such as in Cirebon Regency. On Saturday (2/17/2024) afternoon, Artantiani Putri (32), a resident, had difficulty finding premium rice. At the Griya Jamblang supermarket, the place of sale, the shelves for rice were empty.

Only a notice board can be seen, containing the information "5 kg of all brand rice for Rp 65,000. Maximum purchase limit of 1 unit per customer."

"It has been around two days (that rice) has been out of stock. Its arrival is also uncertain," said Ajriyah, a supermarket employee, responding to Artantiani's question about rice.

"Since yesterday, the Whatsapp group for complex mothers has also been looking for rice. He said the supermarket was empty. "When I checked, it wasn't there," said Artantiani. Apart from the rice issue, the conversation group also contains requests for support from legislative candidates running in the elections.

Also read: The postponement of the rice planting period triggers an increase in rice prices

KOMPAS/ABDULLAH FIKRI ASHRI

Workers are transporting sacks of rice from the warehouse to a truck at Bulog Tuk Warehouse on Brigadier General Dharsono Road, Cirebon, West Java, on Tuesday (19/9/2023).

If there is indeed any rice available, it is said that the price would increase to Rp 69,500 per 5 kg package. In fact, their neighbor buys premium rice for Rp 18,000 per kg.

"Earlier someone told me that the price of rice was IDR 16,500 per kg at the stall. "I'll just buy it there later," said the mother of one child.

Siti Khodijah (39), a rice trader at Pasar Pasalaran, Cirebon, stated that medium and premium rice are still available in the market. However, their prices are far above the HET and have reached their highest point in the last year. She often receives complaints from consumers about the increase.

”Buyers wereshocked when they saw the price of rice. Sometimes, buyers try other (traders). "But, the price is also the same," he said. Currently, he has reduced rice spending from four cars or 10 tons to only three cars per day.

Infrastructure

KOMPAS/ABDULLAH FIKRI ASHRI

Residents are carrying rice at Pasar Pagi, Cirebon City, West Java, on Monday (20/11/2023).

Rice price hike is attributed to the El Nino phenomenon, marked by last year's drought. This condition caused a decrease in rice production in Cirebon. In 2023, the rice harvest reached 534,777 tons. This number decreased compared to the previous year, which was 573,911 tons.

"Although (its production) has decreased, Cirebon still has a surplus of rice," said Samsina, Head of Crop Field Department of Cirebon Regency Agriculture Office.

Rice production in the region with a population of 2.3 million inhabitants was recorded at 342,846 tons last year. Meanwhile, the rice demand in Cirebon is 248,400 tons per year. This means that there is a surplus of 94,446 tons of rice in Cirebon.

However, according to Samsina, rice from Cirebon often leaves the region because it is bought by outside merchants. Conversely, Cirebon merchants also commonly take rice from outside the region.

KOMPAS/ABDULLAH FIKRI ASHRI

Rice in the Bulog Warehouse on Brigadier General Dharsono Street, Cirebon, West Java, Tuesday (19/9/2023).

Head of the Trade and Control of Basic and Essential Commodities Section at the Cirebon District Industry and Trade Office, Sidik Wibowo, said that the increase in rice prices is a national phenomenon. This is because El Nino has occurred in many areas and triggered a decline in planting seasons.

"Finally, rice production has decreased. Even if there is paddy, its price is already high," said Sidik. The price of harvested dried paddy at the farmer level in Cirebon is above Rp 7,000-Rp 8,000 per kg. Meanwhile, the government's purchase price for paddy is Rp 5,000 per kg."

The agency will hold a cheap market operation next week in three locations in order to suppress prices. "At least, we hope that this effort can prevent the increasing price trend of rice," said Sidik.

KOMPAS/ABDULLAH FIKRI ASHRI

Farmers are attempting to repair a breached levee in Kali Wates, Panguragan Kulon Village, Panguragan District, Cirebon Regency, West Java, on Wednesday (24/3/2021).

However, Chairman of the Leading Farmers and Fishermen Contact in Cirebon Regency, Kuryadi, stated that the rice price hike has not been enjoyed by all farmers. This is because most farmers who were supposed to start planting in November have delayed until January. Some even just started planting their crops.

"The planting season is delayed due to waiting for rain. When it's finally raining, floods occur. In several districts, around 2,000 hectares have been affected by floods, resulting in the need for replanting," he stated.

As a result, the harvest season which is usually in March is delayed until April and May.

According to Kuryadi, the situation demonstrates that El Nino is not the only trigger for the price increase. Agricultural infrastructure, such as irrigation during the dry season and flood prevention during the rainy season, is also key to maintaining the rice supply. Farmers are also delayed in planting due to difficulties with fertilizers and seeds.

"The most patient job in the world is farming. Even income has to wait for three months. So, please make it easier and show love to the farmers," he said.

In addition to providing agricultural facilities and infrastructure, he hopes that the government will also support farmer regeneration. "In those departments, the department heads are already young. If you go to the rice fields, everyone is elderly. There are millennial farmers, but they are just doing it ceremonially," he said.

The current profitable price of rice could be a momentous opportunity to attract young people to this sector. Moreover, according to Jumair (52), the owner of a rice mill, the farmers' rice is being sought after by mill owners, including major investors.

Every year, Indonesia often faces a rice deficit as production counts do not meet consumption at that time. On the other hand, the fluctuation of rice prices is a result of producers' cost adjustments. (Dwi Andres Santosa)

KOMPAS/ABDULLAH FIKRI ASHRI

H Jumair displays a stack of rice at his rice milling factory in Bulak Village, Arjawinangun District, Cirebon Regency, West Java, on Friday (15/9/2023).

This situation has been going on since early last year, when El Nino had not yet spread. For example, at the end of February 2023, the price of rice had already reached Rp 6,000 per kg.

The winner of this rice competition is a big investor. Jumair has not been buying rice for two months because the price has skyrocketed, while his capital has been floating. His warehouse, which can grind 50 tons of rice, is currently only filled with about 5 tons of rice.

The high offer price of unhusked rice by large investors will increase the price of rice. "These large investors should not seek unhusked rice from farmers, but rather purchase rice. Or if they want to, they should create their own land so that they can increase their production and set their own prices," he said.

Government communications

KOMPAS/TOTOK WIJAYANTO

Dwi Andreas Santosa

Apart from the El Nino phenomenon and the struggle for grain, Professor at the Faculty of Agriculture, IPB University, Dwi Andreas Santosa, assessed that fluctuations in rice prices were also triggered by panic buying. This means that people buy a lot of rice in a short time because they are worried that the item will be scarce.

”What causes (panic buying)? Because the government's communication was wrong. "The government always states that in January-February there will be a rice deficit of 2.8 million tonnes," he said. He considered that the news was to justify the government's decision to import 3 million tons of rice.

However, according to him, every beginning of the year, Indonesia often experiences a rice deficit due to production calculations not matching consumption at that time. On the other hand, rice price fluctuations are a producer cost adjustment.

The agency recorded that in July 2019, the cost of farming was Rp 4,523 per kg of unhusked rice (GKP). In September 2022, the figure rose to Rp 5,667 per kg of GKP. Similarly, the price of paddy farmers which is now above Rp 8,000 per kg reflects the high production cost.

Andreas assesses that the balance of rice prices has been formed at the beginning of this year.

"The price of rice is expected to remain at a minimum until December 2024," he said.

However, the price of rice can decrease with the arrival of the harvest season and rice imports. Although beneficial for consumers, this condition threatens to plummet the prices of farmers' paddy.

Various issues will be the first test for the elected president who will be inaugurated next October. If they choose affordable prices for consumers, said Andreas, the producers or farmers will surely be sacrificed. This policy is evident from the decision to import and the reduction of import tariffs.

"But, if the government wants to improve the welfare of producers, yes, consumers must be willing if the price (of grain) rises. "So far, the first choice has always been (consumers) so that (farmers' businesses) soybeans are destroyed, garlic is destroyed, sugar is destroyed, rice can also be destroyed," he said.

Moreover, the consumption of citizens is slowly being replaced by wheat, which is much cheaper. Just look at the average 5 percent annual growth of instant noodle consumption. The problem is that wheat is a commodity that is imported and tends to rise every year.

The future president must address the recurring food issue. Moreover, one of the flagship programs of Prabowo Subianto-Gibran Rakabuming Raka, which received the highest number of votes according to quick count, is free lunch. Especially in the midst of an increasingly unfriendly climate change challenge, the increase in prices is quite rapid.

KOMPAS/FABIO MARIA LOPES COSTA

Pedestrian activity was seen in Kosambi Market, Bandung, West Java, on Sunday (18/2/2024) as rice traders were conducting their business. Traders at Kosambi Market have been lamenting the scarcity of rice since the beginning of this year.

On Sunday (2/18), the price of medium-grade rice at Kosambi Market has soared up to Rp 17,500 per kg. In just two days, there has been an increase of Rp 2,500 per kg.

Fadhil (24), a trader at Kosambi Market, acknowledged that this increase is relatively high. Normally, the price of medium-grade rice is only Rp 13,000 per kilogram. From their distributor in Sragen, Central Java, they do not have much stock to sell.

The price of premium rice has yet to be controlled. It has gone up from its usual Rp 16,000 per kg to Rp 18,000 per kg. Fadhil hopes that the government can find a way out of this problem.

"All types of rice are difficult to obtain. I have ordered three tons of rice from a distributor in Central Java since two weeks ago. However, until now the goods have not arrived," said Fadhil gloomily.

Also read: Prices Drop, Premium Rice Still Limited Sale in Jakarta