T

he government has found indications of rice hoarding at more than 10 rice production centers at the start of the festive month of Ramadhan, when traders often seek to take advantage of peaking food demand to increase prices, which analysts say could trigger inflation.

Agriculture Minister Suswono said on Tuesday that most of the centers were in Java — including in Suradadi, Tegal, East Java — with each storehouse hoarding about 5,000 tons of rice. Rice hoarding is normally done by traders to reduce supply in the market so that prices increase.

“I have urged business players, especially traders, not to take advantage of Ramadhan or other holidays to get as much profit as possible. With huge [production] volume, they can get high profits, so they shouldn’t complicate things for the public with high prices,” he told reporters after a meeting at the
Office of the Coordinating Economy Minister.

“They should be sympathetic to the poor people that would suffer the most from rising prices.”

Indonesia’s population of 240 million people consumes about 270,000 tons rice per month. Indonesian officials have been promoting a “one day without rice” campaign to reduce this dependency on rice and shift to other affordable staple foods.

Rice prices have gone up in recent weeks as traders have anticipated surging demand for food during the Ramadhan fasting month, when consumption peaks as people get together to break their fast every day and celebrate Idul Fitri upon completion of the month.

Soaring prices of rice contributed the most to July’s 0.67 percent inflation, or at 0.22 percent, the Central Statistics Agency (BPS) announced on Monday.

Danareksa Research Institute head of research Purbaya Yudhi Sadewa told The Jakarta Post that although rice prices were expected to increase during Ramadhan, the pressures on inflation would be relatively limited, as the increase would unlikely surpass the price increase last year when extreme weather resulted in crop failures.

“On the international market, rice prices have been steady and are even going down, so if traders here increase prices, rice will be imported,” he said, estimating a monthly 0.99 percent inflation in August, therefore slightly pushing up the year-on-year figure to 4.8 percent.

“So, rice hoarding will have little impact [on inflation]. But, still, the government needs to be tough on speculators.”

Coordinating Economic Minister Hatta Rajasa said on Tuesday that the government would inspect storehouses where suspected hoarding was taking place.

“If [they] intend to hoard so that prices increase, [law] enforcement is needed. It’s not allowed,” he said, adding that it was important to ensure Indonesia had enough food reserves during Ramadhan so that the public would not be panic and allow traders to speculate on price increases.

Sutarto Alimoeso, State Logistics Agency (Bulog) president director, said the firm’s stockpile was sufficient to meet public consumption for the next seven months, following the completion of a 500,000 ton rice import from Vietnam this month. Bulog is obliged to maintain a minimum stockpile of 1.5 million tons of rice to ensure the country’s supply and stabilize prices at times of irregular price increases.