Celios Warns of Risks Behind the Food Self-Sufficiency Presidential Instruction

President Prabowo Subianto has issued Presidential Instruction (Inpres) No. 2 of 2026 on Accelerating Food Self-Sufficiency in Agriculture to Realise National Resilience and National Independence.

Through this regulation, Prabowo has instructed the Minister of Agriculture, the Minister of Finance, the Head of the SOE Agency, and the Head of Danantara to accelerate domestic production and improve food distribution. The instruction also covers special assignments given to SOEs such as PT Agrinas Pangan Nusantara, PT Perkebunan Nusantara III, and Perum Bulog to support the self-sufficiency targets.

However, the research institute Center of Economic and Law Studies (Celios) assesses that the policy harbours several risks for the economy. Celios Economics Director Nailul Huda stated that assigning tasks to SOEs could trigger unhealthy competition with private sector players, particularly small and medium-sized enterprises in the food sector.

“One example is egg farming or broiler chicken businesses that could compete with SOEs receiving full state support. SOEs get government guarantees, mandatory assignments, access to state capital participation, and direct connections to technical ministers in the food sector,” said Huda, quoted from a written statement on Sunday, 19 April 2026.

He added that more than 50 percent of SMEs operate in agriculture, plantations, livestock, forestry, and fisheries. Therefore, SOE dominance in the self-sufficiency programme risks narrowing business opportunities for small players.

Meanwhile, Celios Executive Director Bhima Yudhistira Adhinegara highlighted the potential for dual risks, both fiscally and in market distortions. He assessed that SOE assignments could burden state finances if not run effectively.

Bhima cited Perum Bulog, which has faced financial pressure due to the burden of market operations not fully compensated. PT Rajawali Nusantara Indonesia (RNI) has also recorded repeated losses due to price stabilisation assignments, while PT Pupuk Indonesia faces subsidy burdens with frequently delayed payments.

“It is understandable that the public has concerns about assigning tasks to Agrinas as a new player without a track record in the food sector. The long-term effects of operational losses borne by Agrinas and Danantara, as well as the state budget, could complicate matters further. Widening the state budget deficit is one of the consequences,” said Bhima.

In addition, Bhima viewed the legal basis of the Inpres as relatively weak because it can be revoked at any time. This situation creates uncertainty for SOE and private business models, particularly in long-term contracts in the food supply chain.

“As soon as there is a regulatory change, private parties have already committed to contracts with SOEs, and then the rules change again. This creates business uncertainty for all players in the food supply chain,” he said.

Bhima also highlighted the potential for price distortions if SOEs not only regulate but also become active market players. Such steps risk lengthening the distribution chain and driving up prices at the consumer level.

“What guarantees that the prices obtained by retailers will be more affordable? Do not let SOE food assignments instead lengthen the supply chain, ultimately increasing food inflation. If the problem is high distributor margins, that should be addressed, not by adding new players,” he stated.