Downstream Supports for Better Access of Rice for All

Rice for All

After the long road from the field, people can finally afford rice on their plate after paying an amount of money. For many consumers, the price of the goods usually acts as the limiting factor to obtain things. As a staple food, the price of rice in Indonesia can be said as volatile, especially on the downstream segment. This directly affects consumers. Although people with high income assume rice as inferior good and therefore insensitive towards the change of price, people with low-income attribute rice as normal good so they are very sensitive towards the change of price. In the downstream segment of rice distribution in Indonesia, a number of stakeholders exist to maintain the stability of the price.

 

In our country, Badan Usaha Logistik (BULOG) is responsible to maintain the state of the four food security pillars, particularly for the staple food, including rice. As a state-owned enterprise, BULOG has a mandate to accept and store rice yield of all farmers across Indonesia. The main function of storing is particularly to maintain price of the rice all year long and to avoid skyrocketing price during emergency. Each BULOG’s warehouse store 100 tons of rice at the regional level and 200 tons of rice at the province level. Although it is often perceived that BULOG holds the control the price of rice, in a reality, BULOG’s commercial function holds only 20% of rice trade in Indonesia since the rest of the trade occurs elsewhere. In some areas, BULOG even has difficulties to ‘enter’ the local markets since some regions have regional rights. BULOG’s rice products are often labelled as low-quality due to its association as rice for low and middle-income families (for example, via BPNT – Bantuan Pangan Non-Tunai). In fact, BULOG has already segmentation to match the vast varieties of rice, different preferences and demands. BULOG’s rice products in pangan.com and Tokopedia are not explicitly stamped as BULOG’s to avoid stereotypes. Also, some BULOG’s rice products that are only sold online. These are all done as efforts in meeting the varieties of existing demand.

 

Meanwhile, market and retail shops are usually the endpoints of rice supply chain before reaching the consumers. Some measures have been taken by multiple stakeholders to make the chain more efficient. Asosiasi Pedagang Pasar Seluruh Indonesia (APPSI), for example, conducted project to enable traditional market sellers to utilize technology in obtaining food commodities to be sold. However, they apparently are unfamiliar with the mobile application, especially since e-commerce uses pay-first policy. In reality, sellers are used to ‘bon+1’, i.e. payment after the next delivery request. Another way to improve the current state of rice supply chain’s endpoints is by providing financing schemes to fund the operational activities. As one of loan providers, Bank Rakyat Indonesia (BRI) has various products of loans for retailers, and this includes farmers. Besides from retail size, the loan size from BRI can be based on the products, whether it is agricultural or nonagricultural. However, based on their experience, the nonperforming loan (NPL) for agriculture products such as rice is high. This could be due to the nature of agriculture products that depend on independent variables, e.g. weather events.

 

Even before reaching the endpoints, there are more measures can be taken to ‘smooth’ the distribution chain. The relevant stakeholders should intervene in some of the main factors that hamper efficient rice distribution: issues in rice-milling sector and weighing processes throughout the chain of transportation. Furthermore, the policy on determining highest retail price is particularly very relevant to both producers and consumers, yet there is a lot to consider. Knowing the long the process of improving the system, it is also vital for the consumers to have a mindset that this issue needs efforts from all relevant stakeholders, to empower the endpoints of rice supply chain, that leads to improvement of the access to food for all.

 

Source: Presentation of spokespersons during Food Security Forum, Mandarin Oriental Hotel Jakarta, 28 August 2019.

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