TEMPO.CO, Jakarta - The furor began when Agriculture Minister Amran Sulaiman stated that Indonesia has a rice surplus last year, which would continue this year. The claim turned out to be unreasonable: in reality, rice supply on the market was so limited, it triggered a price hike. The rocketing price
has prompted the trade ministry to import 500,000 tons of rice by the end of this month.
The muddled data on rice as the staple food of Indonesia's 262 million people is central to the bad management of the national rice affairs. The agriculture ministry, for instance, said that rice production covered a total area of 16.4 million hectares, with remaining stock of a million tons at the end of 2017. The Central Statistics Agency mentioned different figures: until 2015, paddy harvests only came from an area of 14.1 million hectares. It is hard to believe that within two years, the area of rice fields increased by two million hectares. As for the rice stock, the State Logistics Agency (Bulog) only registered a reserve of around 950,000 tons.
The core point of the rice predicament is the way the government views the problem. So far, rice has been seen from the viewpoint of politics and ideology while ignoring economic calculations. The pursuit of rice self-sufficiency with the illusion that Indonesia is a land of gemah ripah loh jinawi (prosperity)- has become a bombastic dream. Based on this illusion, Indonesia strives for self-sufficiency through various means, including ways that disregard economic principles. During the administration of Susilo Bambang Yudhoyono, for example, this kind of standpoint which opposes modern economic thinking was also adopted. As a consequence, the rice problem has never been resolved.
Indonesia has an open economic system. Thus, a policy that ignores economic norms is difficult to apply. Rice is a key commodity, so the number of transactions for this product is massive. Therefore, it is impossible for the Indonesian government, with its limited economic capacity, to regulate price movements.
What the government should prioritize is to ensure rice is available at an affordable price. With this demand, the government should not put a taboo on imports as an instrument to safeguard supply and absorb price fluctuations. Allowing imports will give shock therapy to delinquent traders accustomed to making big profits by hoarding rice when domestic rice production is inadequate.
Refraining from importing rice or not announcing import plans to give a pro-farmer impression- is obviously a mistaken stance. It has been proven that imports always serve as an effective government move to halt price hikes. One thing to be understood is any decision to delay the stockage of rice supply will spark off price fluctuations that harms the public interest. Farmers will also be put at a disadvantage because they also have to purchase rice at a high price.
Permitting imports does not mean making the rice price at home equal to the rate on the international market. For farmers' protection, the local rice price should be made higher. Importing rice should be intended more to build the perception in society that domestic rice supply will always be maintained under any circumstances. This import policy is not necessarily in conflict with local production promotion efforts. Such endeavors should be supported especially through land productivity increase and post-harvest technological improvements.
Rice imports have indeed become a profit-making arena for interest seekers. But this illegal practice should not make the government doubtful. Several preventive measures should be taken, such as realizing imports in a transparent manner and by open tenders. Imports should also be conducted on the basis of legitimate data. Through these procedures, the government does not need to run in circles to secure the national rice supply. Also, these methods can prevent regional heads and ministers from playing politics by disseminating vague information- for the sheer purpose of being regarded as pro-farmers.
The government must not make rice a means of enhancing its image. A World Bank study indicates that every 10 percent increase in the price of rice will raise the poverty rate by 1.1 percent. Without rice management improvement, the target of lowering the poverty rate from 10.2 percent (2017) to 9.5-10 percent (2018) will be in vain.
Read the full article in this week's edition of Tempo English Magazine
