Economist: Community-Based Food Supply Chains Can Help Keep Food Prices Stable

Jakarta (ANTARA) — Galau D Muhammad, a researcher at the Center of Economic and Law Studies (Celios), said strengthening community-based food supply chains could safeguard food availability and affordability while expanding market access for farmers, livestock breeders and local businesses.

He said rising demand for food on a large scale needed to be matched by the development of supplier networks involving local producers, so that the economic benefits could be distributed more widely without disrupting supplies to households.

“There are many micro, small and medium-sized enterprise (MSME) traders and livestock breeders who should be integrated proportionately at a micro scale,” Galau told ANTARA in Jakarta on Friday.

He said supply chains could be strengthened through more decentralised procurement models involving communities, traders, and farmers and livestock breeders near areas requiring supplies.

The approach was important, he said, to enable MSMEs to participate in line with their production capacity while strengthening links between food producers and local markets.

Galau cited the food requirements of the Free Nutritious Meals (MBG) programme, which have grown as the number of Nutrition Fulfilment Service Units (SPPGs) has increased.

He said the scale of procurement posed a challenge for small producers if they had to meet large orders on their own.

“Which MSME or small-scale livestock breeder could supply 1,000 to 1,500 portions for each SPPG?” he said.

For that reason, he said, the involvement of local businesses needed to be planned proportionately, so increased food demand could create economic opportunities without putting pressure on their production capacity.

Galau also stressed the importance of balancing large-scale procurement needs with the food supplies already available in community markets.

He cited a Celios study from May 2026 which found a statistical association between the addition of 10 Nutrition Fulfilment Service Units and an average food price increase of around 0.08 per cent at regency or municipal level.

The association with price increases for commodities commonly used in the MBG programme was around 0.12 to 0.13 per cent, he added.

The commodities examined included rice, eggs, chicken, fish, cooking oil, sugar, shallots and chillies.

Galau said the situation needed to be anticipated by strengthening production and distribution, so that increased food demand did not reduce the availability of staple goods for the public.

“One thing that can be done is to involve communities and school committees. There are many MSME traders around schools, as well as livestock breeders near the areas receiving the benefits,” he said.

Bank Indonesia (BI) recorded annual inflation in the volatile food category of 5.03 per cent in September 2026, up from 4.06 per cent in August 2026.

Statistics Indonesia (BPS) data showed that pressure in this category was driven mainly by broiler chicken, bird’s eye chillies, rice and beef.

Galau added that stronger supply chains also needed to take account of areas facing high food vulnerability, particularly disadvantaged, frontier and outermost regions (3T).

He said supplier networks should also be developed with consideration for production capacity, infrastructure conditions and demand continuity, so farmers and businesses could have long-term certainty about their markets.

In line with efforts to strengthen local supply chains, the National Nutrition Agency (BGN), through BGN Regulation No. 10 of 2026, has required SPPGs to involve local businesses as food suppliers, prioritising businesses in the sub-district where the kitchen is located.

On 14 October 2026, BGN announced plans to develop a digital food procurement system connecting SPPGs directly with producers, including livestock-breeder cooperatives, to improve price transparency and broaden market access.

On the distribution side, the National Food Agency (Bapanas) and state-owned logistics company Perum Bulog are also expanding the use of Merah Putih Village/Urban Ward Cooperatives (KDKMP) to distribute rice under the Supply and Price Stabilisation (SPHP) programme.

Bulog recorded the distribution of 53.5 tonnes of SPHP rice through 107 KDKMP outlets in seven provinces on 15 October 2026, as part of efforts to improve public access to affordable food.