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State intervention backfires as rice prices hit multiyear high
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A rice field in West Java is pictured on Dec. 17, 2007. (World Bank/Curt Carnemark)
R
ice, one of the most tightly regulated commodities in the country, increased in price throughout 2022, which has industry experts asking whether the protective measures themselves could be driving inflation.
According to the Information Center for Strategic Food Prices (PIHPS), the price of rice of the Medium I quality class reached Rp 13,200 (86 US cents) per kilogram on Tuesday, up 11.8 percent year-on-year (yoy).
Rice prices rose every month of 2022, with a noticeable increase starting in July, and with no signs of a slowdown seen since. The government has flooded the market with stockpiled supplies, to no avail.
“Even [distributing] 400,000 tonnes [of rice] in two months has not been effective enough to put the brakes on the price increase,” the National Food Agency’s (Bapanas) food supply and prices director Maino Dwi Hartono, said on Friday.
Maino revealed that the rice production forecast for 2023 was 55.4 million tonnes and that the preliminary projection pointed to nine months of deficit this year, complicating efforts to stabilize prices.
Presidential Regulation (Perpres) No. 125 of 2022 puts Bapanas in the driver’s seat of the price stabilization program, with the State Logistics Agency (Bulog) acting as stock manager and distributor.
The program is called Stabilization of Food Supply and Prices (SPHP), and the rice distributed under the program is marketed under the same label. The purpose of the SPHP program is essentially the same as that of the Supply Availability and Price Stabilization (KPSH) program, which was effective from 2018 to 2022.
