Red and White Village Co-ops Must Sell Goods Cheaper Than Market Prices, Minister Says

Minister of Cooperatives Ferry Juliantono has stressed that the Red and White Village/Sub-district Cooperatives (Koperasi Desa/Kelurahan Merah Putih) must be able to provide goods at prices cheaper than the market rate, particularly for subsidised items. “Especially subsidised goods such as 3-kilogram LPG cylinders, cooking oil, rice, and fertiliser must be cheaper,” Ferry stated during a working meeting with Commission VI of the House of Representatives (DPR RI) in Jakarta on Thursday. Ferry noted that offering more affordable prices is a key performance indicator for the cooperatives. Beyond providing basic necessities at lower prices, the village cooperatives are expected to facilitate public access to financing through microfinance services. He stated that the financing schemes channelled through the cooperatives must offer lower interest rates. “The President has directed a maximum rate of 6 percent,” he said. Ferry added that to keep the prices of goods competitive, the government will encourage the cooperatives to obtain supplies directly from producers or principal brand-holding companies. “For non-subsidised goods, we will certainly procure items from manufacturers or major principals so that we can sell them at more affordable prices to the public,” he remarked. However, Commission VI member Darmadi Durianto cautioned that adequate working capital support is needed so that the cooperatives can purchase goods from suppliers. He noted that if only around Rp300 million remains for working capital out of a financing ceiling of Rp3 billion per cooperative, this amount could be insufficient to meet the procurement needs of thousands of product types in cooperative outlets. He added that most suppliers generally require cash payments, meaning the cooperatives need sufficient liquidity to stock goods. He argued that the current allocation of working capital needs to be reviewed, given that the cooperatives are projected to provide thousands of items for the public. “Rp300 million is needed to fill 4,500 to 6,000 stock keeping units. How much capital is really needed? Who will provide it? This must be thought through,” said Darmadi. The government is accelerating the operationalisation of the Red and White Cooperatives in various regions after previously launching operations for 1,061 cooperatives in Central Java and East Java as the initial phase of the programme’s implementation.