TEMPO.CO, Jakarta - Since Indonesia gained its independence seven decades ago, one seemingly unsolvable problem has been rice, the national staple that has become, over the years, both an economic as well as a political commodity. Governments come and go, but inevitably all of them have had to face, at one time or another, the challenges of efficiently managing the supply and demand of rice.
It is fair to say that issues concerning rice or the price of rice, to be exact can make or break a government. According to the Central Board of Statistics (PBS), the price of rice this year has increased by 12 percent, and a World Bank study estimates that every 10 percent increase in the price of rice adds 1.1 percent to those falling below the poverty line. The results of this latter study lead us to the conclusion that the successes of the poverty reduction program could be wiped out simply by an increase in the rice price. In other words, the government's target of reducing the poverty rate from 11 percent in 2014 to 9.5-10.5 percent in 2015 could turn out to be a vain hope.
The government has announced that it planned to import 1.5 million tons of rice from Thailand and Vietnam to meet domestic demand until the beginning of next year. This decision is not expected to restore prices to their normal levels. Rice imports, observers maintain, will only slightly reduce the price.
Although the import policy has only just come into effect, it turns out that Vietnamese rice has long entered the Indonesian market. Tempo has discovered that major traders in Vietnam routinely exported rice to Indonesia despite the ban. Smuggled through small ports on the eastern coast of Sumatra, it is then transported to markets in Java.The large price disparity means that smuggling rice is a lucrative business. Concealed behind the opaque rules distinguishing premium and medium-quality rice, and with the negligence of the authorities, this illegal trade goes on undisturbed.
In fact, it has been going on for at least two years, largely due to the government's hesitation in determining its import policy. Because this has allowed traders to play games, opening the door to imports does not mean the domestic price will be the same as that on the international market. Domestic prices need to be kept higher to provide an incentive for farmers. What is happening now creates the perception among traders that whenever it is deemed necessary, the government will import rice to forestall price hikes.
There is no need for imports to be seen as a failure of efforts to achieve self-sufficiency. Domestic rice production still needs to be increased, especially through improvements in land productivity and post-harvest technology. One other key element in the whole process that needs to be put right is data related to national rice production and consumption, which varies widely from one agency to another.
The agriculture ministry should seek a better way to calculate national rice production. The current ubian method counting unhusked rice from a small area and extrapolating this to the total number of hectares does not produce accurate results. This method ignores the loss of agricultural land due to changes in usage, such as for housing or industrial complexes.
Similarly with consumption, it is also inconsistent. The government assumes that national annual rice consumption is 139 kilograms per head, while the PBS uses a figure of 113 kilograms per head. Without the facts on demand and consumption, it will always be difficult to come up with the right policy. As a consequence, the temptation will always be there for speculators to play their games.
We cannot allow this problem to continue from one administration to another. If President Joko Widodo is to achieve the goal of food self-sufficiency under his watch, he should consolidate all stakeholders and ensure they share the same objectives, using the same sets of references to arrive at the same numbers that can then be used to support the appropriate policy on rice management and production. (*)
Read the complete story in this week's edition of Tempo English Magazine
