Bulog overextends itself<\/p>\n
The National Logistics Agency (Bulog), prompted by an
\noverriding concern about inflationary pressures, is setting
\nitself a formidable task which, we think, is doomed to fail and
\nwill waste scarce resources. At a time when the government has
\nincreasingly opened the economy to market forces, Bulog is
\nexpanding its market intervention from its officially-sanctioned
\nresponsibilities -- rice, wheatflour, sugar, soybean -- to meat,
\neggs, cooking oil, chili and popular kinds of vegetables. The
\nagency even plans to open chili plantations in a joint venture
\nwith PT Indofood, the publicly-listed company which mills over 80
\npercent of the wheatflour sold in the country.<\/p>\n
We appreciate Bulog's role in maintaining the stability of the
\nprice of rice, sugar and salt but we don't see any urgency for
\nthe agency to use the subsidized loans it regularly secures from
\nthe central bank for managing the market of cooking oil, meat,
\neggs, chili and other foodstuffs. Besides such intervention being
\ncostly it will never solve the root problems. The market
\nintervention might curb price rises but only for a short time. In
\nthe meantime the root problems-- inadequate production and
\nmarketing programs and distribution bottlenecks remain unsolved.<\/p>\n
Over the past three decades, we have been accustomed to annual
\nupward trends in the price of several commodities, notably
\nfoodstuffs, during the fasting month and the Idul Fitri
\ncelebrations as the demand in those few weeks is always greater
\nthan normal. Hence, trade offices throughout the country are
\nsupposed to have built up adequate market data to predict the
\nsupply\/demand ratio and to take any necessary measures to cope
\nwith seasonal price volatility. The trade offices in turn are
\nsupposed to always keep the agricultural ministry well informed
\nof the market trends.<\/p>\n
The agricultural offices in turn are supposed to disseminate
\nthe market information to the farmers who, thanks to the well-
\norganized program of agricultural extension services over the
\npast 25 years, have become more capable of responding correctly
\nto market signals.<\/p>\n
However, experience shows that Bulog has always found itself
\nresponding to individual alarms, acting like a fire squad
\nresponding to a ringing fire alarm bell, during the annual
\nfasting month and the Idul Fitri celebrations, rather than
\npreventing these alarms occurring. That, we think, implies that
\ncommunications between the trade and industry ministry and the
\nagricultural ministry have not been as effective as they should
\nbe to allow for effective production and marketing plans. The
\nconsequence is that the farmers often miss the opportunity to
\nbenefit from the seasonal upward market trend.<\/p>\n
The inadequate production and marketing programs have been
\nexacerbated by what traders see as distribution bottlenecks.
\nOutstanding in the barrier are the problems encountered in the
\nmovement of commodities from one place to another. Trucks
\noperating from one province to another, sometimes even from one
\ndistrict to its neighboring district, are often subject to such
\nfrequent checks either by the police or officials of other
\ndepartments along the way that they look like international
\nborder checkpoints.<\/p>\n
Obviously, the checks add to the costs of the commodities
\ntransported, and for sure, the additional costs are borne by
\nconsumers. So large are the costs incurred in the distribution
\nchains that the retail prices are often twice as high as the
\nprices enjoyed by the producers (farmers).<\/p>\n
We suggest therefore that Bulog refrains from jumping into the
\nmarket whenever food prices tend to fluctuate. The agency should
\ninstead improve communications between the trade and industry and
\nagriculture ministries to work out effective production and
\nmarketing programs. On the other hand, the Armed Forces and the
\nministry of transportation should work together to facilitate the
\nmovement of goods from one area to another.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bulog-overextends-itself-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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