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New scheme introduced to help Bulog buy more rice from farmers
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Workers unload rice from a truck at Cipinang Market in East Jakarta. (The Jakarta Post/Ben Latuihamallo)
T
he government will begin the implementation of a new rice procurement scheme in January that is designed to ensure stable rice stocks and to absorb more rice produced by farmers.
Coordinating Economic Ministry food and agribusiness undersecretary Musdalifah said in Jakarta on Tuesday that under the new scheme, the government would allow the use of funds originally allocated to procure the government’s rice reserve (CBP) to cover the difference between the market price and the rice price under the government program.
As an example, she explained that the State Logistics Agency (Bulog) had to sell rice for Rp 8,000 per kilogram under the government program, while the market price was Rp 10,000 per kilogram.
“For that, Bulog will receive Rp 2,000 for each kilogram of rice it sells,” she said as quoted by kontan.co.id, adding that the fund to pay the price difference was taken from the fund allocated for procuring the CBP.
Through the scheme, Bulog can absorb as much rice as possible without incurring any losses because of the price differences.
The new scheme was stipulated at Office of the Coordinating Economic Minister Meeting No 5/2018 on the coordination of the CBP management to stabilize the rice price issued in October.
Article 4 of the regulation rules that the finance minister will allocate in the state budget funds (a) to pay the price differences and (b) to pay compensation to Bulog for carrying out the government program to distribute rice.
To support the implementation of the new mechanism, the Finance Ministry will issue a regulation next week. (bbn)
