On 2010, the Food and Agriculture Organization (FAO) predicts a tendency in the rising of the world’s rice prices. In its report entitled “FAO Rice Price Update” which was published on January 2010, the tendency is begun in December 2009. This fact alone indicates a rise on 2010 as well.
In Indonesia, the price in several regents in Central Java Province, such as Purwokerto and Mojokerto which have already a 10% rise. Prior to Ramadan and Eid, the price of rice and other basic necessities are also rising significantly. The Central Statistics Agency (BPS) monthly report on August 5, 2010, noted the average price of rice on July is Rp 8,037 (US$ 0.9), increased 5,74% compared to June 2010—or increased about 21,04% compared to July 2009. (1)
The sky-rocketing price around Ramadan and Eid is going to seriously hit the poor people. This increase, among others, is caused by the stockpiled supply rise by speculators—usually they who have a huge amount of stocks and those who are more capable of purchasing rice from farmers without too many requirements, unlike what usually happens in State-owned Logistical Agency’s (Bulog) purchase.
In this case, speculators are more than willing to purchase rice above the Government Purchasing Price (HPP), which is around Rp 2,640 per kilogram. On the other side, farmers should face the expensive production cost in regards of the soaring fertilizer’s Highest Retail Price (HET) and the extra cost the farmers should spend to combat the extreme change of climate this year.
A decrease in production is also expected due to extreme climate in several regions. The members of Indonesian Peasant Union (SPI) in the Central Java province admitted that that the decrease is quite substantial. Last year, they got 70 sacks (about 4 ton) per hectare. This year, only 17 to 20 sacks. Meanwhile, In West Java, production also declined 3.1% compared to last year.
The food price problem—especially rice that 95% of Indonesians are consuming, do have harming impacts, especially for the poor people. About 73% of their household expense is allocated only for food.
We can now see the impact for the people who live below the poverty line (Rp 212,210 per capita per month). They have to cut down meat or other nutritious food. Other than that, in many cases this situation is a blow for education and health care of the poor. Many will divert their household expense just to fulfill their daily staple food. They are prone to ignore their health if they sick and many of their children are revoked from education.
The policies, the obstaclesSome policies have been issued by the Government of Indonesia (GOI). The Market Operation (OP) is the one, with the objective to stabilize food price in the market. OP has been a long panacea for the dire situation since the new order era.
History has taught us that OP is actually a short term instrument. The idea is to flood the market with torrential stock of food (in this case, rice). The result expected is that the market then would balance the supply and demand—thus the price. In OP, the GOI assume they have enough stock, coming from Bulog buffer and if not, they can always import.
By doing this action, GOI forgets that the poor is the most affected. The injustice side of OP is that not only the poor, the rich—and even speculators—can enjoy the normal or discounted price.
OP is also potential in spending more state budget, as we have to supply torrential stocks to normalize the price (yet we do not have enough of them). Bulog only handles rice in the meantime, and has limited authority. On the other hand, it has to concentrate on the profit-making as well. In some areas, only supplying the market with medium quality rice —like the GOI usually conduct—will not do the trick, because there are too many types of rice needed. The effectiveness of OP to influence the price also depends on so many factors such as the merchant and speculator’s supply, volumes, the types/varieties of rice, and the public’s psychology at the time.
GOI is also establishing a ‘cheap market’, in some areas that are needed to stabilize the price. According to the scheme this year, cheap markets will be concocted in 50 locations and in 10 provinces concurrently. This temporary solution is being undertaken to predict the market symptoms. The current price hike is also caused by the production and distribution problem in several places. No need of rocket science to understand that damage road and infrastructure will affect the retail price of the food. The difference in distribution has been higher than the price hike at farm gate. (2)
The price hike has always been a big blow to peasants. Even though the farmers are supposed to enjoy some margin from the situation, in fact they still have many difficulties to fulfill their basic needs. This is because the peasants in the country mostly sell dry-husked rice.
Providing solution to this situation, GOI has the The Rice for the Poor (Raskin) program. The goal of this policy is to increase the poor’s accessibility to rice, a focused subsidy. Raskin is an incarnation of Special Market Operation (OPK) at the time of (Asian) economic crisis (1997-1998). GOI establish data on poor people in village or city, and then distribute subsidized rice for them.
This policy is like a double-edged knife. On one side, the government could eliminate food insecurity and hunger in a very short time. But on the other hand, on a longer term, there are more intricate problems arise. The case of Sapul Village in East Nusa Tenggara (NTT) province can be seen as an example.
According to GOI’s calculation, this village is included as one of the 13 impoverished villages. Like other villages, Raskin program is also conducted in this village.
The problem is that the Sapul village accustomed to consume corn as their staple food. The question is whether the Raskin program should conducted in the village (and most other areas in NTT province) where the people are used to eat corn? Moreover, the ecological and biophysical conditions in the province are not supporting for rice cultivation.
Raskin has also displaced a hundred-year food tradition in rural Papua. People of Papua have recognized local food such as sago, potato, cassava, taro and banana, as their staple foods. Two of these kinds are the most popular staple food for the indigenous people: Sago for the people who live in coastal area and cassava for the inland people. The main goal of Raskin Program is to help the poor and to eliminate the food insecurity. Nonetheless, the carrying out of rice in these villages is indeed a problem to local tradition and shifting pattern of staple foods. In a longer term, there is a question of rice supply in NTT, some areas in West Nusa Tenggara Barat (NTB) and Papua—as these areas are not rice producers.(3)
Aside these various ad hoc government policies, more intricate problems are still to come. The market policies are still conceived as quite liberal with the GOI only supervising very few. “Tengkulak” or middlemen are swarming the trade chain. Conseqeuently, the chain becomes longer and the rice price gets higher. Combined this with speculators, there will be a huge negative impetus for the price. The agricultural trade determined by free trade (especially by WTO rule and bilateral/regional FTAs) is also affecting the national food procurement, as it now quite dependent to international market.
Indonesia should have protected our agriculture and its domestic market from free trade. The agricultural production must be driven to the fulfillment of our basic needs, and not to export orientation that would only benefit the traders and the transnational corporations. It should be underlined that food sovereignty should prioritize the fulfillment of local and national market. The government should also empower the people in the rural area. (4)
The vulnerability of food condition is caused by the GOI’s incredulity towards the potentials of local food from local people. The fulfillment of our food using import mechanisms has ruined Indonesia’s local food potentials.
The government, aside from controlling the supply and the market price, should also facilitate Bulog to absorb dry-husked rice from farmers. This move could be conducted by also paying attention to the production cost in certain areas, giving subsidy and adequate incentives for rice and food producers. For this purpose, trade chain must be improved. The GOI needs to cut middlemen and directly connect farm gate to consumers. The supervision of the market should be improved by the Department of Commerce. Incentives such as drying facilities, storehouse and hulling machines can also be used as incentives to rice producers or its organizations, so they are not dependent to middlemen and can be able to produce rice.
Amid this erratic climate, we should give more trainings and supports to farmers so they could adapt with the climate change. Moreover we should combine this training and support with the local wisdoms the farmers have. These things, together with the effective technology, should be encouraged.
Food diversification program is also very urgent. With regional autonomy, GOI can design a food sovereignty scheme based on local foods. With a mature design and supported with adequate budget allocation, a lot of unique local food clusters could be formed. From these rooted and traditional food clusters, aggregately, the strong national food sovereignty will be formed and sustained. (5).
In addition, GOI should create an alternative program for food consumption other than rice and also to develop and to disseminate crops such as maize, sweet potato, sago, taro, bananas, and other locally-used varieties. This should be implemented gradually and becoming a sustainable program to tackle food crisis and food shortages. By fulfilling the food demands from local production, it reduces the risk of price hike and supply shortage.*****