Jayanty Nada Shofa, Jakarta – President Prabowo Subianto officially launched 80,081 rural cooperatives on Monday as Jakarta waged war against food cartels that had caused an annual state loss of up to Rp 100 trillion or $6.1 billion.
Preparation for this nationwide program, dubbed the "Red and White Rural Cooperatives", has been in full swing over the past few months. The cooperatives are expected to cut the distribution chain by taking out the middlemen in an effort to make food prices more affordable. They will also partner with state-owned enterprises in absorbing unhusked rice from local farmers as Indonesia struggles with money-hungry food entrepreneurs.
"The cooperatives are part of our effort to shorten the distribution chain of key commodities and medicines," Prabowo told the program's launch ceremony in Klaten.
According to Prabowo's estimates, Indonesia has lost Rp 100 trillion from food cartels each year in a phenomenon that he called "serakahnomics" – a play-on-words that combines the Indonesian term for greedy ('serakah') and "economics". His statement came not long after Indonesia flagged 212 rice brands for mislabeling and price violations. Rice is a staple food in Indonesia, making its supply and price a highly sensitive topic.
Farmers usually sell their harvests to rice milling businesses to have them processed into marketable rice. Prabowo accused the country's rice mills of buying the farmers' unhusked dry rice below the government-set price of Rp 6,500 per kilogram. A rice mill could even enjoy a profit of up to Rp 2 trillion a month from this unfair food trade, according to Prabowo.
"I remember threatening such businessmen that I would hand over their rice mills to cooperatives if they didn't follow the rules. It worked. They eventually followed [our base price]. ... But then here we are, we have businesses passing off regular-quality rice as premium ones. ... Our estimates show that Indonesia loses Rp 100 trillion from such practice each year," Prabowo said.
The government reported that these 80,081 cooperatives already had their own legal status, and about 108 of them are ready to operate.
Senior minister Zulkifli Hasan said that the rest of the cooperatives would begin operating within the next three months. Aside from unhusked rice purchases, the cooperatives can also team up with government-run businesses on distributing low-cost 3-kilogram gas canisters, fertilizers, and affordable medicines.
The newly launched rural cooperatives can apply for loans of up to Rp 3 billion at state-owned banks to grow their business starting Tuesday. These loans will have an interest rate of 6 percent.