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Rice import may harm local farmers as price gap widens, warns Kadin

Jakarta Post - December 30, 2022

Deni Ghifari, Jakarta – Indonesian Chamber of Commerce and Industry (Kadin) chairman Arsjad Rasjid said on Wednesday that the government needs to pay more attention to its decision to import rice and the impact of deeper price disparity it may bring.

"If the difference between domestic and foreign prices gets too big, there will arise the tendency of import rice to be cheaper, which in turn increases the demand for import. This situation would be a threat for [local] farmers," said Arsjad in a statement.

According to World Bank's Indonesia Economic Prospect, a report on the country's trade and economy released on Dec. 15, Indonesia's rice retail prices have consistently been the highest in the Southeast Asian region over the past decade.

Based on the data from Food and Agriculture Organization's Global Information and Early Warning System on Food and Agriculture (FAO-GIEWS), World Bank estimated that rice retail price in Indonesia is 28 percent higher than the price in the Philippines and more than double that of Vietnam, Cambodia, Myanmar and Thailand.

The State Logistics Agency (Bulog) received the mandate to import 200,000 tonnes of rice this December to fill the national reserve, of which 60,000 tonnes have reportedly arrived as of Monday. The Trade Ministry said at most 70,000 of the import would arrive this December and more will be shipped in January.

This import decision was taken after the reserve depleted from 1 million tonnes in early 2022 to 587,000 tonnes in November, while the safe stock limit is 1.5 million tonnes. The government tried to provide that from the domestic market to no avail, so import is inevitable to stabilize the rising retail price.

Information Center for Strategic Food Prices (PIHPS) recorded as of Thursday that the price for medium-quality rice is at Rp 12,600 (US$0.81) per kilogram, a figure that has been steadily increasing from July's range of Rp 11,550 to Rp 11,750 per kilogram.

The government said the imported-rice stocks would only be used in certain conditions such as for disaster management and market intervention when necessary. The use would be watched closely to ensure none enter the market.

"This problem of rice import and the high prices must not divert us from the focus of sustaining food security," said Arsjad, emphasizing the importance of food security in the light of potential global crisis.

The archipelagic country has essentially achieved rice self-sufficiency in 2019 to 2021, a period wherein Indonesia only imported a special type of rice that was not available in the territory – one that was generally used by hotels, restaurants and catering businesses.

Responding to the World Bank's assertion about Indonesia having the highest rice-retail price, Agriculture Minister Syahrul Yasin Limpo said the claim was not accurate, given that Indonesia had the second-lowest price in the region.

"According to experts, [the World Bank's report] was not right. Where does [the World Bank] take the sampling from? When? [...] According to FAO, ... [our price is] the second lowest," Syahrul told CNBC Indonesia on Dec. 21.

Source: https://www.thejakartapost.com/business/2022/12/30/rice-import-may-harm-local-farmers-as-price-gap-widens-warns-kadin.htm