Hendarsyah Tarmizi, Jakarta – Many of us are unaware that besides receiving a government subsidy of about Rp 2,500 (27 US cents) for every liter of gasoline we buy, we also get another Rp 2,000 from state-owned Pertamina for every kilogram of liquefied petroleum gas (LPG) we burn.

But, believe it or not, besides these subsidies, we also receive about Rp 1,500 in "extra money" from farmers for every kilogram of rice we consume.

With surging rice prices in the world market, Indonesian farmers should have received higher income from their crops. However, the government's strict controls over the country's rice exports have made it nearly impossible for them to take advantage of the rising international prices; at least for now.

In rice exporting countries such as Thailand and Vietnam, farmers have enjoyed windfall profits from the higher prices. In Indonesia, the situation is quite different. The government's control of the rice trade has left farmers the losing side in the rice business. As the government's main priority is to make the country's main staple food affordable for all, farmers have often been "victimized".

Global rice prices have more than doubled from the previous year's levels. High-grade rice reached US$10,000 per ton (about Rp 9,200 per kilogram) recently, while the price of medium-grade rice has risen to more than $750 per ton (about Rp 7,000 per kilo).

The government recently raised the floor price to Rp 4,300 per kilo from Rp 4,000 for state logistics company Bulog to buy rice from farmers. However, the increase is insignificant. The additional earnings are only enough to cope with surging costs resulting from the rise in fertilizer prices and other farming costs.

With the new floor price, the retail price in the market for medium-grade rice is about Rp 5,500 per kilo, as compared to about Rp 7,000 per kilo in the overseas market. This means there is still a gap of about Rp 1,500 between international and domestic prices. In other words, local rice growers provide a "subsidy" of Rp 1,500 per kilo for buyers.

Analysts say that with current international prices, farmers should sell their rice (for medium grade) to Bulog for at least Rp 6,000 per kilo to benefit from the higher prices in the world market.

Does the government dare to make such a price increase? The answer is obviously no, because letting the price of the rice reach such a level would surely prompt widespread protests, which could lead to nationwide chaos.

An increase in the price of rice is quite sensitive, especially in developing countries, as the larger part of people's incomes is still used to buy food. It is the same with Indonesia, where most people earn just enough to fill their stomachs.

However, keeping domestic prices far below international price levels is not fair for farmers. And more importantly, it will in the long run result in the diversion of rice farming to other crops. If it happens, the problems will be even worse, with the country having to rely more on imports to meet domestic needs.

The government should ideally establish a buffer stock agency to effectively bring the prices of main foods such as rice to levels that favorable for both growers and consumers.

The government has, in fact, assigned Bulog to maintain the stability of food supplies. But the company's activities are often ineffective due to the shortage of funds to support its market stabilization operations, which also include food procurement from farmers.

Financing has always been the government's main constraint in supporting such programs. Ironically, it continues allocating huge sums of money for the fuel subsidy, whose beneficiaries are mostly the middle class.

This year alone, the government has allocated nearly Rp 127 trillion for the fuel subsidy, and this could further swell to Rp 135 trillion if crude prices average $100 per barrel, which is very possible given current prices exceed that level.

For a comparison, the fertilizer subsidy for farmers is only about Rp 10 trillion this year, a slight increase from about Rp 9.5 trillion in 2007.

Due to the limited amount of subsidized fertilizer, only a small number of farmers benefit from the program. Most farmers buy the fertilizer at market price. The situation is almost the same with the sale of subsidized kerosene for the poor. Officially, the price of subsidized kerosene is Rp 2,800 per liter, but in the market, it sells for more than Rp 5,500 a liter.

Farmers – only a few of them can enjoy the luxury of the fuel subsidy – deserve more financial support from the government, either in the form of a higher subsidy or more favorable pricing scheme.

Farmers need real help, not empty promises like those made by politicians during election campaigns.

[The author is staff writer at The Jakarta Post.]