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Bulog finds 20,000 tons of rotten rice
The State Logistics Agency (Bulog) estimates it has about 20,000 tons of rotten rice in its warehouses, in addition to another 100,000 tons that are in poor condition
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span>The State Logistics Agency (Bulog) estimates it has about 20,000 tons of rotten rice in its warehouses, in addition to another 100,000 tons that are in poor condition.
Bulog president director Budi Waseso said the rice, which had previously been worth about Rp 160 billion (US$11.3 million), would be first tested by the Food and Drug Monitoring Agency (BPOM) before the agency decided what to do with it.
"When the results come out, we will see which of the rice needs to be disposed of and which rice can be processed into other food products," he told the press in Jakarta on Tuesday.
In addition to the decayed rice, the other 100,000 tons of Bulog’s existing stocks of 2.3 million tons are in poor condition after being kept in warehouses for more than four months, the agency said.
Separately, Bulog operations and public service director Tri Wahyudi Saleh confirmed on Nov. 29 that the rotten rice had been worth about Rp 160 billion based on a price assumption of Rp 8,000 per kilogram.
He said that the 20,000 tons of the rotten rice has been kept in warehouses for more than a year because of changes in the government’s Rice Assistance Program (Rastra) for poor people, which is part of the noncash food assistance program (BPNT).
Under Rastra, the government assigned Bulog to be the sole distributor of 10 kilograms of rice to each low-income family. Meanwhile, under the BPNT scheme, each family would receive Rp 110,000 monthly through a special debit card that they can use to buy rice at designated e-shops.
The shift has aggravated Bulog’s long-standing rice distribution concerns as the free-market concept under the BPNT has cut its market share to 49 percent in the distribution of the rice to the poor as of early June.
However, the change in the policy was also seen as an opportunity for Bulog to tap into the commercial market and gain more profits.
Budi said that in the future, Bulog wanted at least 50 percent of its total income to be generated from commercial activities, while previously 80 percent of its revenues were from government assignments.
"Actually, if we do not have to fulfill the government's assignments, we are able to increase our distribution to the general market and Bulog can become much more profitable,” Budi said. “In fact, if there are no government assignments, we are a profitable company."
Furthermore, with a larger proportion of total revenues coming from commercial activities, Bulog can also gradually pay off its sizable Rp 28 trillion debt, as of September, through the procurement and sale of various commodities, including rice, Antara news agency reported.
According to the Finance Ministry's data per December last year, Bulog had a bankruptcy vulnerability Z-score of 0.93, which falls in the 'red zone' category. In other words, Bulog is losing money.
In its press release on Tuesday, Bulog announced that it has received a state capital injection (PMN) of Rp 2 trillion as the government's latest attempt to rejuvenate state-owned enterprises (SOEs) that have 'red flag' statuses.
The agency planned to spend the PMN on improving its commercial production by constructing new controlled atmosphere storage facilities, as well as modern soy and rice warehouses, among other things.
Budi also underlined that based on Law No.19/2003 on SOEs, state companies such as Bulog are entitled to receive compensation in the event of suffering losses when conducting government assignments.
Meanwhile, a University of Lampung professor of agricultural economics, Bustanul Arifin, said that the BPNT scheme would actually be beneficial for Bulog as the agency would not be stigmatized for only providing rice to the poor and disaster victims.
“This is an opportunity for Bulog to gain consumer trust and loyalty. They need to implement good marketing and branding, as well as open to business partnerships,” he said on the sideline of a discussion on the Effectiveness of State Trading Enterprises in Achieving Food Security.
Last month, Bulog launched its online marketplace, PangananDotCom, in partnership with e-commerce firm Shopee Indonesia and logistics company JNE, among other companies.
The marketplace currently sells mostly premium and specialty rice, but the agency planned to sell rice products with qualities ranging from medium to premium, as well as white, red, black and organic rice. (bry)
