Djarot Kusumayakti: Bulog Should Not Be Equated With Bad Rice

TEMPO.CO, Jakarta - Barely 10 days into his new job, Bulog (State Logistics Agency) CEO, Djarot Kusumayakti faces his first big test: the holy month of Ramadhan. Measures are in place to anticipate uncontrolled price hikes of food items. Bulog, which normally just provides supplies of rice, now has been given the additional task of supplying beef.

Speaking to Tempo reporters, Retno Sulistyowati and Pingit Aria at his office, Djarot shared his views on solving the difficult problem of supplying rice, and Bulog's plans to restructure itself. "It's been a real headache," said the Yogyakarta-born Djarot. Excerpts of the interview:

Why has rice consumption been low this year?

That's what people say. When there were rumors that we would not be importing rice, many people took special measures. Private companies usually provide supplies for 1-2 months, now the stocks are available for 5-6 months time. It confused the market.

So, what has been the rate of rice consumption so far?

Right now, it stands at 1.37 million tons. That's about 2.7 percent of national production, which means that if in a year our consumption is 5.4 percent, that would be quite low. Ideally, if the President says 4 million tons, that would be about 10 percent. Then, Bulog would have the ease to act as regulator, not a player.

The peak of harvest season has passed, is there still a chance to achieve that 4 million tons target?

Yes, we still can do it. The big harvest has passed, so very little is left but there's the side harvest, which is also rice. So I will try to get that included, so that there will be no confusion.

Have you come to an agreement with the traders?

Well, we agreed to retain peace among each other. Clearly, prices have gone over the government's purchase price and it's not easy to suppress it. The government has allowed Bulog to handle premium rice, so we manage more than just public service obligation (PSO) rice, valued at Rp7,300 per kilogram

How much funds have been allocated to the premium rice segment?

There's a small sum of internal funds, also bank loans. I would like to have 500,000 to 1 million tons. So multiply that with the price of rice, maybe Rp7,500-8,000 per kilogram. This is important because the type of rice which prices tends to vary is the medium-plus type. The solution must not be to suppress the PSO rice. I would like to have a variety of ammunition (to defend myself against attacks). So if a bird comes to attack me, I'll use an air rifle; but if a wild boar comes at me, that air rifle would be useless. I do not want Bulog to be equated with bad rice.

For this month of Ramadhan, Bulog has been told to stabilize the price of beef.

That is correct. I want to make sure that the price of beef does not fluctuate too much.

So, there will be no imports?

If we have enough, we wouldn't need to import. I notice the price of Australian beef when it reaches Tanjung Priok port, after taxes and customs, can be expensive. The difference between imported beef: imports cost Rp90,000 per kilogram, while locally produced is Rp83,000 per kilogram. Maybe people used to say it was cheap, when the rupiah-dollar exchange rate was Rp10,000. Today, it's Rp13,000.

Have you received instructions from the President on where Bulog is going?

Not personally. I have only received instructions from the people in charge of tasking. From there I got the picture that Bulog will be expanded, not just to handle rice. There has been no decision yet, but I hear it will include corn, soy beans, sugar and others.

What will Bulog's position be after there's the National Food Board? 

I don't know exactly. We are ready to do what we are told to do. (*)