Slamet Susanto and Oyos Saroso H.N., Yogyakarta/Bandarlampung – Authorities have responded to rising rice prices by releasing stocks of the subsidized commodity to the market, but Yogyakarta Governor Sultan Hamengkubuwono X expressed concern Friday the effort has failed because of hoarders and speculators.

Speaking in Yogyakarta, the governor said much of the subsidized rice was snapped up by speculators and never reached the poor people it was designed to help. He said speculators bought up the cheap rice and then turned around and resold it at marked up prices.

"The speculators bought the subsidized rice for Rp 3,900 (38 US cents) per kilogram and then resold it for Rp 4,000 to Rp 4,500 per kilogram. This has really hurt those people the subsidized rice was intended to help," he said.

By comparison, rice prices in the ordinary market have reached more than Rp 6,000 per kilogram.

The governor said in the future, subsidized rice should be released directly through village head offices, village halls or other locations near residential areas, to prevent this sort of hoarding.

Adding weight to the governor's remarks was a recent study by the University of Lampung, which found hoarding was common in these types of subsidized rice operations, with the rice then being resold in different locations.

"In coordination meetings with teams in charge of the rice operations in regencies and mayoralties, it was reported that all the rice was sold out. When the situation in the field was checked, however, rice prices were still high," Marselina Jayusinga, a researcher at the university, said in Bandarlampung, Lampung, on Thursday.

Marselina said that in Bengkunat, Lampung, a kilogram of rice was selling for as much as 7,000.

The failure of these operations to bring down prices, she said, was caused mainly by hoarding by speculators and a lack of public information about the operations themselves.

"Speculators buy up the entire stocks for resale in other locations. Officials in regency administrations later simply say that all the rice stocks were sold," she said.

Marselina urged regional administrations to do a better job of letting the public know when a rice operation was going to be held. She said officials also had to be more careful in choosing which stores the subsidized rice would be sold from.

"Regional administrations have to be selective when it comes to choosing the kiosks for channeling the rice. These kiosks should be located in poor residential areas."

In Cirebon, West Java, it is feared rising rice prices will drive up the prices of other basic commodities. People in the areas have complained in recent days of a jump in rice prices.

Yayat, who owns a small stall in Mundu district selling basic goods, said that increases in rice prices were usually followed by increases in the prices of other products.

"Even though the prices of other products have not increased yet, if the price of rice stays high it will affect other prices as well," she said.

[Nana Rukmana contributed to this report from Cirebon, West Java.]