Improving rice distribution<\/p>\n
The government may risk taking a misguided measure if it
\nconsiders the current steep rice prices simply a result of
\nsupply-demand disequilibrium. Even under the most pessimistic
\nassumption of up to a 10 percent decline in output last year to
\n29 million metric tons, due to the severe drought caused by the
\nEl Nio weather pattern, the resulting shortage should not have
\ntriggered so sharp a rise in rice prices, given the huge subsidy
\nspendings already allocated for this staple.<\/p>\n
Based on a per capita consumption of about 135 kilograms,
\ndomestic demand is estimated at only 27.7 million tons for our
\n203 million citizens, while imports in the first seven months
\nhave exceeded 3.6 million tons. That is if official figures are
\nto be accepted as reliable.<\/p>\n
The problem of rice prices should be seen from a wider
\nperspective, taking into account the many dimensions of the 70
\npercent fall in the rupiah's value against the American dollar. A
\nviable, lasting solution to the problem should therefore address
\nall the economic, social, and security aspects of the rice sector
\nthat have been affected by the economic crisis.<\/p>\n
The currency meltdown has more than quadrupled the prices of
\nimported staple foods at a time when the purchasing power of most
\npeople has eroded and unemployment increases every day. The mass
\nrioting and looting in May extensively damaged the distribution
\nnetwork as rice millers and distributors, afraid of renewed
\nlooting, are wary of building up stocks. Bankers, already
\ndistressed with huge bad debts, virtually stopped new lending to
\nthe distribution sector, forcing it to work entirely on a cash
\nbasis. Consumers, worried about perceived supply shortages, are
\nbuying more than what they normally need.<\/p>\n
Even though the weather has been much friendlier since early
\nthis year, farmers, burdened by a steep rise in prices of farm
\nnecessities such as fertilizer and pesticide, have been forced to
\neconomize, resulting in lower yields. Rice growers are either
\nholding on to their stocks to make a killing on the market or
\nhave chosen to sell to the open market rather than to the State
\nLogistics Agency (Bulog), which is responsible for managing
\nnational stocks as a price stabilization measure.<\/p>\n
The gap between subsidized rice prices on the local market and
\nprices overseas has been so great that even officials have
\nstarted to suspect that smuggling rice out of the country may
\nhave become rife, given the difficulty in guarding our vast
\ncoastline.<\/p>\n
Hence the realignment and streamlining of the distribution
\nnetwork should be the core of any effort to make rice readily
\navailable at affordable prices across this vast archipelago.<\/p>\n
The reform of Bulog, which was started last week with the
\nfiring of its chief, Beddu Amang, and the realignment of the
\nagency, formerly directly under the President's Office, into a
\njoint coordination of the ministries of trade and industry,
\ncooperatives and food and horticulture could go a long way to
\nimproving the management of national rice stocks.<\/p>\n
Besides its resources being overtaxed with the task of
\nhandling so many commodities, Bulog, like the giant Pertamina oil
\ncompany, has long been perceived as a cash cow for high officials
\nand politically connected businesspeople. Its import procurement
\nsystem was tightly closed and its network of distributors
\noperates like a close-knit family headed by the Bulog chief
\nhimself. The tender system Beddu recently adopted for the
\nimporting of commodities was merely a cosmetic measure to present
\na token of transparency in the agency's operations.<\/p>\n
Minister of Industry and Trade Rahardi Ramelan, as Bulog's
\nacting chief, made the first, right move when he immediately
\ndecided to arrange an open competitive bidding system for the
\nagency's import procurements. But even this move could cause
\ncomplete chaos if bidders are not tightly selected, given the
\nspecial characteristics of the international rice market.<\/p>\n
Rahardi should realize that Bulog is responsible only for
\nmanaging national buffer stocks for market operations. More than
\n90 percent of the rice trade is done by the private sector. The
\nagency only buys whenever prices tend to fall below the mandated
\nfloor price to ensure reasonable earnings for farmers, and sells
\nat times of steep price rises. Bulog usually holds only between 8
\npercent and 10 percent of the national output in its stockpiles.<\/p>\n
Rahardi, in his capacity as the minister of trade and
\nindustry, should zero in his attention on removing distribution
\nbottlenecks by dismantling the old mafia-like distribution
\norganization, facilitating smooth land and inter-island
\ntransportation of food staples and improving his ministry's
\nmarket information system. Concerted efforts also are still
\nneeded to protect distributors from mass looting.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/improving-rice-distribution-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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