Prabowo Claims Village Cooperatives Could Cut Rp300 Trillion Middleman Margins

President Prabowo Subianto has revealed the potential for savings of up to Rp300 trillion by cutting intermediary trade chains for basic commodities through the ‘Merah Putih’ Village and Sub-district Cooperative (KDKMP) programme.

Prabowo stated that farmers currently have to pass through up to five intermediaries before their produce reaches consumers. This situation drives up the price of basic necessities, as each intermediary takes a margin from the distribution chain.

“Currently, farmers must go through one, two, three, four, five intermediaries before reaching the consumer. And those intermediaries enjoy an average margin of 30% to 40%,” Prabowo said during a media interview at his residence in Hambalang, Bogor, last week.

According to Prabowo, the margins enjoyed by these middlemen, when calculated from the trade of basic commodities alone, amount to approximately Rp300 trillion.

“That means the profit for middlemen from basic commodities alone is Rp300 trillion,” he added.

Prabowo expressed hope that the KDKMP could shorten this distribution chain. With cooperatives operating at the village and sub-district levels, farmers would only face a single intermediary before their products reach the consumer.

“So, with the Merah Putih Village and Sub-district Cooperatives, farmers will only have one intermediary before reaching the consumer, and this is a cooperative that they own,” said Prabowo.

He estimated that this change could benefit both farmers and consumers. Of the total Rp300 trillion margin currently enjoyed by intermediaries, approximately Rp50 trillion is expected to be passed on to consumers through lower prices.

“I believe that Rp50 trillion can be enjoyed by consumers. However, the remaining Rp250 trillion will be enjoyed by the farmers themselves as additional income, while consumers also save money,” he noted.

Prabode stated that the Merah Putih Cooperative programme is currently underway, with approximately 6,000 cooperatives already operational. He expressed hope that this number would increase by the end of the year.

He described the Merah Putih Cooperatives as a significant step, as it marks the first time Indonesia is building a supply chain down to the village level.

“In my view, the Merah Putih Cooperatives will be a very crucial step. Because for the first time in the history of our republic, we have a supply chain reaching the villages,” he said.

With a shorter supply chain, the government hopes to reduce logistics and distribution costs. However, Prabowo noted that the full impact of the programme may only be felt several years after implementation.

“This means we can cut a vast amount of logistics costs, and I believe the effects will be felt perhaps a few months to a year later, around late 2027 or 2028,” Prabowo concluded.