TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Why food price policies fail
Change Size
Daily life and the commercial activities at morning in the street market in Ubud, Bali, Indonesia. (Shutterstock.com/Muslianshah Masrie)
I
t is the beginning of 2018, and Indonesia’s ambition to achieve food security and to realize food sovereignty has already been distorted by food price uncertainties.
The retail price of one food commodity, medium-quality rice, has reached its peak, hovering between Rp 10,500 (78 US cents) and Rp 11,500 (86 US cents) per kilogram. This is higher than the reference price set in the range of Rp 9,450-Rp 10,250.
The price regulation that has been implemented according to Trade Minister Regulation No. 57/2017 since September 2017 on specific food commodities, has been ineffective in stabilizing the rice price in Indonesia.
In the first two weeks of January, the Indonesian people were shocked by the Trade Ministry’s new policy agenda to implement a ceiling price policy for other food commodities, like chicken and eggs.
The imbalance in the selling price of chickens, eggs and chicken feed was the main reason a policy discourse was necessary to set ceiling prices for those commodities.
This new policy agenda should alert the government to be more cautious in implementing policies similar to that applied to the rice commodity. In fact, even though the government thought that the price ceiling policy would be able to stabilize prices, the rice price has fluctuated higher than the reference price.
Against this backdrop, President Joko “Jokowi” Widodo needs to remind his ministers and other relevant ministerial officials not to repeat the same mistake in implementing the price ceiling policy on any food commodity. The literature and many case studies show the absence of success stories in many countries of a price regulation policy that was able to stabilize food prices.
