{
    "success": true,
    "data": {
        "id": 1846659,
        "msgid": "if-only-farmers-sold-rice-not-unmilled-paddy-1783471891",
        "date": "2026-07-08 07:00:00",
        "title": "If Only Farmers Sold Rice, Not Unmilled Paddy",
        "author": "Ferry kisihandi",
        "source": "REPUBLIKA",
        "tags": "",
        "topic": "Agriculture",
        "summary": "Most Indonesian smallholder farmers sell their harvest as unmilled paddy (gabah) rather than rice due to immediate cash needs, lack of processing facilities, and risk aversion, despite losing potential profit margins. Government interventions, including subsidised credit for rice milling units (RMU) and a guaranteed purchase price by Bulog, aim to help farmers capture more value. The shift to selling milled rice requires overcoming key obstacles in capital, equipment, and market access.",
        "content": "<p>In a discussion, a question arose: is it true that most rice farmers\nin this country sell their harvest in the form of unmilled paddy? Yes,\nit is. Most farmers, especially smallholders, sell paddy directly, not\nrice. They are not yet able to sell it as rice. Why? There are at least\nthree reasons. First, the supply chain is set up that way. After\nharvesting, farmers typically sell paddy to middlemen, who then collect\nit and take it to rice mills. The mills themselves receive paddy from\nfarmers as raw material. Second, practical and economic reasons. Farmers\nneed capital and equipment: milling into rice requires paying for\nmilling services, usually 10 percent of the yield. Not all farmers want\nto bear the cost and risk of shrinkage or broken rice. Furthermore,\nfarmers need quick cash; harvest time is synonymous with needing money\nto pay debts, buy fertiliser for the next season, and meet household\nneeds. Farmers sell wet or dry paddy to middlemen and get paid\nimmediately. If they mill it first, they must wait and find buyers for\nthe rice themselves. Additionally, paddy is more durable and less prone\nto spoilage than rice. Small farmers usually lack proper warehouses to\nstore large quantities of rice. Third, even Bulog focuses on absorbing\npaddy. During harvest, Bulog prioritises absorbing dry harvested paddy\nat Rp 6,500 per kilogramme and rice at Rp 12,000 per kilogramme. This\nmeans paddy is the main form traded at the farm level. There are\nexceptions: farmers with large landholdings and their own milling\nfacilities, or those who sell directly to consumers, sometimes sell\nrice. But for small and medium farmers, the general pattern is to\nharvest, dry it into dry harvested paddy, and sell it. It is worth\nexamining why more farmers choose to sell paddy rather than rice. The\nadvantages of selling paddy include immediate liquidity; an afternoon\nharvest can be sold to a middleman that same afternoon without waiting\nin milling queues. There is no upfront capital needed for milling costs,\nwhich can be 10 percent of the rice yield, nor for sacks or transport.\nThe risk is also lower: if rice prices drop after milling, the farmer\nbears the loss, whereas selling paddy transfers the price risk to the\nmiddleman or miller. The disadvantages include a lower price per\nkilogramme. With the 2026 government purchase price for dry harvested\npaddy at Rp 6,500 per kg, and 1 kg of paddy yielding 0.6-0.65 kg of\nrice, the equivalent rice value should be around Rp 7,800 per kg if rice\nis Rp 12,000 per kg, meaning farmers lose that margin. Moreover, prices\nat the farm gate are often depressed due to the farmer\u2019s weak bargaining\nposition. Selling rice, typically done by farmers with capital or large\nlandholdings, offers higher margins, with retail rice prices at Rp\n12,000 to Rp 15,000 per kg, and allows farmers to set their own price\nwhen market conditions are favourable. However, it requires upfront\ncapital for milling, sacks, and transport; for a 2-tonne paddy harvest,\nmilling costs alone can reach Rp 1 million to Rp 2 million. There is\nalso extra work and risk, as rice is easily damaged, infested by\nweevils, or subject to shrinkage, and farmers must find their own\nbuyers. The process from harvest to sale can take one to two weeks,\nrequiring patience for the money to come in. A critical assessment\nsuggests that for farmers with less than 0.5 hectares needing quick cash\nand lacking transport, selling paddy is more practical and safer despite\na small loss. If a farmer has access to a mill or cheap milling\nservices, selling rice puts the margin directly in their pocket. If they\nhave market connections, selling rice at Rp 13,000 to Rp 14,000 per kg\nyields greater profit. To enable farmers to sell rice, the government\nmust address three main obstacles: capital, equipment, and market\naccess. Steps already underway include providing special KUR credit with\na ceiling of up to Rp 2 billion at 3 percent annual interest for\ncooperatives or farmer groups to purchase rice milling units,\nsubsidising agricultural machinery including mini RMUs so village\ncooperatives can offer cheaper milling, and simplifying licensing\nthrough the online OSS system where small-scale mills only require an\nenvironmental management statement. To guarantee a market and price,\nBulog now directly purchases not only paddy but also rice from farmers\nat the farm or mill gate at a price of Rp 12,000 per kg. The national\none-price SPHP rice distribution scheme stabilises prices and smooths\nthe flow from surplus to deficit regions, ensuring farmers in production\nareas can sell their rice.<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/if-only-farmers-sold-rice-not-unmilled-paddy-1783471891",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}