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View all search resultsPolicy gaps, crackdowns squeeze rice millers as prices soar
Perpadi and expert observers point out that many rice millers have been unable to sustain operations as their margins narrowed due to delayed interventions and sweeping crackdownsm compounded by the State Logistics Agency (Bulog) continuing to stockpile grain at higher prices.
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A worker carries sacks of rice aid on March 3, 2024, at the warehouse of the State Logistics Agency (Bulog) in Talumolo village, Gorontalo city, Gorontalo. (Antara/Adiwinata Solihin) (Antara/Adiwinata Solihin)
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ocal rice millers have been under pressure due to the narrowing gap between the government’s price ceiling, farm gate prices and retail prices for the grain, with many reducing or halting operations as profit margins narrow, leading to supplies tightening and market prices creeping above the cap in recent months.
Industry experts say the situation is compounded by the State Logistics Agency (Bulog) continuing to stockpile the staple food at higher prices and the government stepping up enforcement against illegal rice mixing.
According to the Indonesian Rice Millers and Traders Association (Perpadi), the mismatch between procurement and pricing has disrupted the country’s rice supply chain.
The government purchase price (HPP) for unhusked rice was increased in February, but the retail ceiling price (HET) was only adjusted months later. This policy gap wiped out workable margins, especially for small and medium-sized rice millers, leaving many unable to sustain production.
“The government raised the HPP from Rp 6,000 [36 US cents] to Rp 6,500 per kilogram, but the HET was left unchanged [at Rp 12,500 per kilogram]” in February, Perpadi head Sutarto Alimoeso told The Jakarta Post on Sept. 16.
“Since the old HET was based on the old benchmark, the adjustment created an obvious gap” in margins for millers, he added.
Perpadi also said Bulog’s aggressive buying deepened the squeeze instead of stabilizing the market, noting that during the year’s first harvest season, the agency absorbed up to 3 million tonnes of rice, creating additional competition for millers.
