Full Warehouses, Unyielding Prices: Reassessing the Rice Stabilisation Strategy

There is an anomaly in the national rice landscape throughout 2026. On one hand, the government has repeatedly announced that the Government Rice Reserves (CBP) managed by Perum Bulog surpassed 5 million tonnes in April, rising further to 5.17 million tonnes by the end of June, the highest level in the history of the Republic. Compare this to the national stock at the start of 2024, which was only around 1.3 million tonnes; the national stock at the beginning of 2026 alone has surged by 164 percent from that point. On the other hand, data from the Central Statistics Agency shows that rice prices have continued to creep upwards and have been a contributor to inflation for six consecutive months since the start of the year. From the mills to the dining table, prices have not fallen, and in several eastern Indonesian regions, the price of premium rice has been recorded at up to 97 percent above the Highest Retail Price (HET). The question is simple yet fundamental: if abundant stock is the cure for high prices, why is the medicine not working effectively now?

2024 left an important lesson. At that time, national stocks were relatively thin, yet the government was still able to withstand price volatility through a combination of measured interventions, even though annual rice inflation had touched 5.28 percent (February 2024). This comparison confirms that the size of the stock in warehouses is not the single determining factor for market prices. What is far more decisive is ‘how’ the stock is managed, how quickly it is channelled back to the public, and how aligned the distribution rate is with real public demand.

This phenomenon is not new in food economics. India’s experience, for example, is often used as a reference that food issues are not always about the availability of stock, but rather about distribution. Full warehouses do not automatically curb inflation if the release is slow, distribution channels are clogged, or the volume released is far smaller than the scale of the stored reserves.

Why do large stocks not automatically suppress prices? There are several problems causing this year’s record stocks to not correlate directly with controlled prices. First, competition for unhusked rice upstream. To pursue the target of absorbing 4 million tonnes of rice equivalent in 2026, Bulog has been an aggressive buyer at the farmer level, with the Government Purchase Price (HPP) for dry harvested unhusked rice raised from Rp6,000 to Rp6,500 per kilogram. In the field, unhusked rice prices often far exceed the HPP, with the national average even surpassing Rp6,900 per kilogram in the middle of the year. As a result, private millers who are obliged to sell rice at a maximum price according to the HET struggle to obtain raw materials at reasonable prices, while Bulog’s own procurement costs have soared to nearly Rp19,500 per kilogram, far above the selling price allowed for private businesses. This increase in upstream basic prices eventually trickles down to the prices paid by consumers.

Second, the distribution volume is not yet proportional to the scale of the reserves. The Food Supply and Price Stabilisation (SPHP) programme in 2025 only realised 802,938 tonnes of a 1.5 million tonne target, due to a halt in distribution from February until it resumed in July. In 2026, SPHP is set at around 828,000 tonnes (following the 2025 realisation) with a subsidy support of Rp4.97 trillion. This figure looks small compared to the reserves of more than 5 million tonnes sitting in warehouses. It is like a full reservoir with only a dripping tap; the price pressure in the market does not truly ease.

Third, inter-regional distribution is uneven. Ministry of Trade data shows that while prices in Zone I (Java, Lampung, South Sumatra, Bali, West Nusa Tenggara, and Sulawesi) are relatively maintained below the HET, prices in Zone II (most of Sumatra, East Nusa Tenggara, and Kalimantan) and Zone III (Maluku and Papua) far exceed the set ceiling, and this has persisted for months without significant correction.

To ease this pressure, the government, through the National Food Agency (Bapanas) and Bulog, has taken a number of concrete steps. SPHP distribution this year is designed to run throughout the year with volume adjustments during the harvest season, so as not to suppress farmers’ unhusked rice prices. A single national price scheme for SPHP rice of Rp12,500 per kilogram has also been implemented starting in 2026 so that residents in Sumatra and eastern regions do not pay more. Distribution channels have been expanded through state-owned and regional-owned enterprises, modern retail, and traditional market retailers, with purchases limited to a maximum of 25 kilograms per consumer to prevent hoarding and resale by third parties.

These steps deserve appreciation. However, as shown by the persistent rice inflation data, these interventions appear to be insufficient to counterbalance the upstream pressures.

The swelling of the CBP is essentially an expensive fiscal asset if not managed efficiently. In order for these large reserves to truly translate into competitive prices at the consumer level, while not burdening Bulog’s balance sheet in the long term, several policy steps need to be taken immediately. First, accelerate and increase the volume of SPHP releases, prioritising regions with the widest price gap against the HET, such as Papua and other eastern Indonesian regions. Holding stocks that have exceeded Bulog’s own warehouse capacity without accelerating distribution is not only counterproductive to price stabilisation but also increases the opportunity cost of the funds tied up in inventory. Second, conduct regular evaluations of Bulog’s warehouse capacity and logistics. With its own capacity of only around 3 million tonnes, while having to be supported by additional rentals of more than 2 million tonnes, the carrying cost structure has the potential to continue swelling and suppress rotation efficiency.