During the three years of government, rice price fluctuations have occurred in 2015. At that time, the national average price of rice rose sharply from Rp 9,646 in January and peaked at Rp 10,375 in March 2015.
Prices then go back down in April and May. After May 2015, prices rebounded sharply and there was no moon without a rise in rice prices amid the irony of the remarkable increase in production from 70.8 million tons of unhulled milled rice (GKG) in 2014 to 75.4 million tons of GKG by 2015 or an increase of 6.42 percent (Central Bureau of Statistics / BPS, July 2016).
Not according to reality
The claims of production and large surplus are not in accordance with the fact that there is at the same time an El Nino phenomenon that disrupts rice production. At that time, the Association of Seed Banks and Indonesian Farmers Technology (AB2TI) conducted a field study and concluded production in 2015 lower than in 2014 (DA Santosa, “Drought Threatens Food”, 10/8/2015). The government finally decided to import rice in September 2015.
Large imports of rice entered in November and December 2015, 318,925 tons and 291,981 tons respectively. Total rice imports in 2015 amounted to 861,630 tons (in 2014 amounted to 844,191 tons) in the form of rice for public use of 505,290 tons and broken rice (broken rice) 353,453 tons. Rice imports have shown impact so that although rice prices continue to increase in January to March 2016, the increase begins to slop. Large amounts of imported rice entered again in early 2016, amounting to 382,546 tons, as well as 296,375 tons and 303,077 tons in January to March 2016.
The harvest, which started in March 2016, caused rice to be abundant in April so prices dropped. The price of rice is very stable until March 2017, supported by year-round production due to the La Nina phenomenon and rice imports in 2016 totaling 1,283,183 tons. Of that amount, nearly 1 million tonnes are in the form of general-purpose rice and 282,177 tons of brown rice and very little special rice.
Throughout the year 2016 to the first quarter of 2017 is a “golden age” of rice governance. The price of rice in January 2017 is even lower compared to January 2016 which has not happened in the last few years. As is the case with the general pattern, in April 2017 the price of rice fell sharply and then increased again although small.
In those months the pest attacks began to spread, especially the brown planthopper (WBC) and the dwarf grass. From the results of the AB2TI study and field review of authors and teams ranging from Bogor, Indramayu, to Tabanan, Bali, found massive pest attacks from rice cultivation without pause during 2016 and early 2017. By July 2017 it was estimated that WBC and dwarf attacks reached 407,000 hectares in Java and Bali, which were then reported by a number of national media at the time. The results of the study with similar data were also presented by the IPB Plant Protection Department. Based on this, AB2TI concludes that rice production in 2017 is lower than in 2016.
At the same time another incident occurred, namely PT IBU raids which became a new phenomenon of food governance in Indonesia. Rice traders are afraid to dare to do stock management because they can be accused of hoarding. At that time many small-scale rice mills were dead. In August, the government issued the highest retail price (HET) regulation for medium rice in producer areas of Rp 9,450 / kg and Rp 9,950 / kg and Rp 10,250 / kg outside producer areas. Disobedient business actors are threatened with revocation of business licenses.
The HET is determined when the national average price of rice has reached Rp 10,617 / kg and the price of dry unhulled rice (GKP) has reached Rp 4,509 / kg (BPS, September 2017), which far exceeds the government purchase price (HPP) of Rp 3,700 / kg. HPP is used as one of the basic calculations of HET determination. As a result, medium rice is becoming scarce in the market because traders are afraid to sell above the price of provision and / or convert it into premium rice. HET has no impact whatsoever and prices continue to rise until September 2017 despite a relatively small increase.
The potential for decline in production and the new policy of rice trading raises concerns. This is evident when price increases began to sharpen since October. In that month, AB2TI held a review of GKP price in 36 districts in producer area. GKP prices rose sharply from Rp 4,509 / kg in August to Rp 4,908 / kg or 8.8 percent in just two months. At that time, there was no action from the government to examine more details related to the national rice stocks because it was lulled with a production claim of 81.57 million tons of GKG and a rice surplus of 17.6 million tons (Ministry of Agriculture, 2017).
Concerns then materialized in early January 2017 when the national average price of rice crossed the psychological limit of Rp 11,000 / kg. Various efforts were made through market operations (OP), but did not succeed in reducing the price of rice. OP usually works well when stocks in traders still exist. Grain stocks in most of the AB2TI farmers are also empty and they have become net consumers affected by price hikes.
In early January 2018, AB2TI again conducted a study related to the price of GKP at the farmers level and found that the price of GKP has reached Rp 5,667 or an increase of 15.4 percent compared to October 2017. GKP price continues to increase and reach a new record as high as Rp 6.000 / kg GKP in mid-January 2018. If the GKP is converted to rice, the price of medium rice will touch Rp 13.000 / kg.
Facing the uncontrolled risks of rice price increases, the government decided to import 500,000 tons of rice. The government’s decision is understandable. Even if there is a harvest in January and February, the amount is usually not sufficient to meet the needs. Prices will continue to rise until February and March. In normal production patterns, March is usually a high harvest, but prices are still high because rice is not yet available to consumers. Only in April rice prices usually fall.
Unfortunately, the import decisions are very late as the signs of stock shortage have been evident since October 2017 and the potential for decline in production is evident since July 2017. The government through Bulog needs to work hard so that imported rice can actually come in mid-February 2018 so it can be used for market intervention. Market intervention can be done when the price of medium rice has reached Rp 13.000 / kg. Imported rice should be stored as reserve for 2018 when it is already in March because if it is distributed it will affect the decrease of grain price at farm level.
This event is also an important lesson for better food governance in the future. As repeatedly stated, the accuracy of production and stock data is key to good food governance. The President needs to take firm action on this matter.
In the current situation and situation, the private sector plays an important role in responding to high prices and avoiding the food crisis (Gilbert, University of Trento, Italy, 2012). Almost all food stocks are in the hands of business actors, farmers and the general public. Thus, efforts to build mutual trust between government and business actors are key to good food governance. Unfortunately, for the past three years we have been treated to a wider drama of distrust between the private and government sectors. The problem-solving efforts end in the search for “business scapegoats” when food price volatility occurs, which makes the situation worse.
In relation to government-held stocks, the government’s capacity to control food stocks needs to be increased by 10-20 percent of total production so that it is effective when market intervention. HPP for grain at the farm level of Rp 3,700 / kg is unreasonable and injures farmers. The production cost to produce 1 kilogram of grain has reached Rp 4,199 (AB2TI study, September 2016) so that the government should immediately raise the HPP above Rp 4,200 / kg for GKP at farm level before the harvest in March 2018. Determination of the HPP is too low and not considering inflation and the welfare of farmers are the main causes why Bulog uptake continues to decline every year.
Finally, food sovereignty as mandated in Nawacita has turned into food self-sufficiency. Farmers are placed as objects through various programs, assistance and subsidized inputs in order to produce the highest possible and forget the greatest essence of food sovereignty, that is to place the farmers as subjects that determine the direction and policy of agriculture, increase the rights and sovereignty of peasants, and glorify farmers. One of the pragmatic efforts that can be taken is to change the various programs, assistance and subsidies, into a more prosperous output subsidy. Increased production is a blessing as we earnestly glorify farmers and improve their welfare.
Dwi Andreas Santosa Professor of IPB, Chairman of the Association of Farmers and Seed Banks of Indonesia Farmers and also a member of Bina Swadaya Foundation builder.
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