Bulog president director Budi Waseso said recently that he would focus on monitoring efforts in Central and East Java, Lampung, North Sumatra and North Sulawesi as prices could quickly increase in those provinces.

“We are paying attention to price movements and [prices in] big cities are more volatile,” he said at an event in Jakarta, adding that the agency would keep the price stable by supplying medium-quality rice at Rp 8,950 (63.5 US cents) per kilogram.

Budi said that, currently, rice stocks at Bulog warehouses reached 1.5 million tons, an amount he claimed exceeded the commodity’s safety level. Current stocks, he said, were adequate as supplies remained high after the peak of the harvest season in March.

“We are still absorbing between 11,000 tons to 17,000 tons per day from farmers,” Budi said.

The Trade Ministry gave a permit allowing Bulog to import 500,000 tons of rice in January as the price was above the ceiling. In early May, the ministry permitted Bulog to import another 500,000 tons to maintain the price during Ramadhan and Idul Fitri festivities.

However, Budi was reluctant to accept the second import permit as supplies from local farmers remained stable. Currently, out of 1 million tons of imported rice, only 600,000 tons came to Bulog warehouses.

“The supply is still abundant in the market and our stocks are only for reserves. The reserves will be sold in the market when supplies from farmers slow down while public demand rises,” he said, adding that Bulog avoided disrupting the market competition.

Inflation was recorded at 0.21 percent month-to-month in May, or 3.23 percent year-on-year, thanks largely to controlled food prices, according to Central Statistics Agency (BPS) data.

As Bulog was also tasked with managing sugar, Budi said the agency currently had 189,000 tons of the commodity in stocks. However, some sugar stocks were not distributed after they failed to meet Indonesian National Standards (SNI).

“We have around 26,000 tons [of sugar] without the SNI certificate and around 163,000 tons of farmers’ sugar ready for distribution,” he said.

In order to obtain the SNI certificate, Bulog has to return the sugar stocks to sugar mill factories for reprocessing.

Bulog absorbs sugar from farmers at Rp 9,700 per kg, a price that farmers rejected. The Sugarcane Farmers Association (APTRI) met with Presidential Chief of Staff Moeldoko to voice out their complaints, saying that the current production cost of sugar was Rp 9,700 to Rp 10,500 per kg.

Moreover, they also objected the government’s income tax scheme, the rate of which is 1.5 percent for farmers with a tax number (NPWP) and 3 percent for those without one.

The Agriculture Ministry suggested in March that Bulog buy farmers’ sugar at Rp 10,500 per kg.

Sugar farmers argued that increasing costs and a non-competitive selling price had forced them to give up sugarcane farming in favor of rice.

After a recent meeting at the State Palace, Trade Minister Enggartiasto Lukita said the government decided to keep the state purchasing price (HPP) for sugar at Rp 9,700 per kg — as opposed to increasing it to Rp 10,500 per kg as suggested by the Agriculture Ministry — and remove the income tax obligation for sugar farmers.

“The purchasing price is still at Rp 9,700 per kg, but now without the tax,” he said.

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