KSP: Rice Prices Drop, but Still Above HET

Rice prices in RI have fallen, but are still above the HET. The FAO reported that the world food price index rose again.

KOMPAS/HENDRA A SETYAWAN

Officials in charge of public infrastructure and facilities are helping to distribute the second stage of 10-kilogram rice aid in Pela Mampang Subdistrict, South Jakarta, on Friday (3/5/2024).

JAKARTA, KOMPAS — Presidential Staff Office or KSP questioned retail rice prices which have fallen, but are still above the highest retail price or HET even though it is already the rice harvest season. This non-structural institution also assesses that adjustments to the reference prices for several staple foods have caused the prices of these commodities to be in safe status even though they are still high.

This was raised during the Coordination Meeting for Regional Inflation Control, held by the Ministry of Home Affairs (Kemendagri) in a hybrid format in Jakarta on Monday, May 6, 2024. The meeting was attended by representatives from regional governments, as well as relevant ministries/agencies in the food industry, and was led by Inspector General of Kemendagri, Tomsi Tohir Balaw.

Deputy III of the Economic Affairs KSP Edy Priyono stated that the prices of medium and premium rice have indeed decreased. However, the prices of both types of rice are still above the HET even though it is already the harvest season.

For medium rice, for example, the national average price for this commodity last month was around IDR 16,000 per kilogram (kg). As of the first week of May 2024, the average price has dropped to IDR 15,250 per kg. However, the price is still above the temporary or relaxed HET National Food Agency (Bapanas), namely IDR 12,500-IDR 13,500 per kg depending on zoning.

"What is happening here? Has the price reached its lowest point or something else? Or perhaps the maximum retail price needs to be reviewed?" he said.

Therefore, Edy requested that related ministries/agencies monitor and find solutions to this issue. He also reminded that the issue is related to law enforcement conducted by the Indonesian Police Food Task Force.

What's this? Can the price not go down any more or what? Or could it be that the HET needs to be reviewed again?

During the meeting, Bapanas also reported that prices of medium and premium rice in each zone are still above the HET (maximum retail price). For example, medium and premium rice in zone I had a national average price of Rp 13,327 per kg and Rp 15,151 per kg, respectively, on May 5, 2024.

The price of medium rice is 6.62 percent above the benchmark price, while medium rice in zone I costs Rp 12,500 per kg. The same goes for premium rice, which is priced 1.69 percent above the benchmark, while premium rice in zone I costs Rp 14,900 per kg. Zone I includes Java, Lampung, South Sumatra, Bali, West Nusa Tenggara, and Sulawesi.

In addition, the prices of both types of rice for consumers at the set price in zones II and III are still significantly higher than the set price. The national average price of medium rice in zones II and III is respectively 8.71 percent and 22.91 percent higher than the set price for those zones. Meanwhile, the average price of premium rice in zones II and III is respectively 6.7 percent and 27.335 percent higher than the set price for those zones.

Also read: Rice Deflation “Drama”

Bapanas Secretary Main Sarwo Edhy admitted that rice prices in a number of regions are still very volatile. Bapanas will continue to monitor rice price movements and will still place premium rice in zone I in the alert zone.

"Besides rice, some food commodities that fall into the high-alert category are shallots, consumable sugar, soybeans, and bulk cooking oil,” he said.

KOMPAS/TOTOK WIJAYANTO

Traders are cleaning red onions from Brebes that have just arrived at the Kramat Jati Wholesale Market in East Jakarta on Monday (22/4/2024). The wholesale price of red onions is between Rp 60,000 and Rp 70,000 per kilogram (kg), much more expensive compared to the price at the beginning of the month, which was around Rp 28,000 per kg.

In order for rice prices to continue to decrease towards the HET (reference price), Perum Bulog is implementing the Supply and Food Price Stabilization (SPHP) program in several areas where rice prices are still high. As mandated by the government, Bulog is also continuing the Food Assistance Program in the form of rice for 22 million low-income families in May-June 2024.

Epi Sulandari, Head of the Operational Planning and Public Service Division of Bulog, stated that the realization of rice procurement commitments in several regions of Indonesia up until May 5, 2024 has reached 678,030 tons. The phase I rice assistance (January-March 2024) has also been realized as much as 660,122 tons or 99.06 percent of the distribution plan.

"At present, we are continuing the distribution of phase II rice assistance (April-June 2024). The realization is only 2,065 tons or 1.26 percent of the monthly allocation of 220,040.77 tons," he said.

Also read: Responding to Rising Food Prices

In addition, Bulog continues to increase the government's rice reserves (CBP) through the absorption of rice or grains domestically. As of the procurement target in May 2024 of 600,000 tons of equivalent rice, the realization of grain or rice absorption domestically as of May 4, 2024 has reached 46.89 percent or 278,333 tons of equivalent rice.

As a result, the total stock of rice from Bulog's domestic intake and import reaches 1.7 million tons. The rice stock consists of 1.68 million tons of CBP and 16,585 tons of commercial rice.

We are currently continuing the distribution of the second stage of rice aid (April-June 2024). The realization is only 2,065 tons or 1.26 percent of the monthly allocation of 220,040.77 tons.

KOMPAS/HENDRIYO WIDI

Screenshot of the Head of Operational Planning and Public Services Division of Perum Bulog, Epi Wulandari, who was explaining the stock of Bulog rice at the Regional Inflation Coordination Meeting held by the Ministry of Home Affairs in hybrid format in Jakarta on Monday (May 6th, 2024).

Prices are relatively high

During the meeting, it was also revealed that the prices of several staple foods have gone down, although they are still relatively high compared to previous years. The adjustment of reference prices for food is one of the contributing factors.

Edy conveyed that the prices of some other food commodities, such as meat and commercial chicken eggs, have entered a safe zone despite still being relatively high-priced. This is due to the adjustment of the reference selling price (HAP) for both commodities at the consumer level.

The national average price of chicken eggs, for example, on May 3, 2024 was Rp 31,350 per kg or a decrease of 1.26 percent monthly. With the establishment of the new chicken egg HAP, which is Rp 30,000 per kg, the gap between market prices and HAP is not too high. The same applies to the price of chicken meat.

On April 25, 2024, Bapanas raised the HAP (Harga Acuan Patokan) for chicken meat and eggs at both the consumer and producer levels. At the consumer level, for example, the HAP for eggs increased by Rp 3,000 from Rp 27,000 per kg to Rp 30,000 per kg, while the HAP for chicken meat increased by Rp 3,250 from Rp 36,750 to Rp 40,000 per kg. This policy is regulated in Bapanas Regulation Number 5 of 2024.

Also read: Reference prices for eggs and purebred chicken meat increase by an average of IDR 3,000 per kilogram

KOMPAS/AGUS SUSANTO

Residents were buying chicken eggs at Kranji Baru Market in Bekasi City, West Java, on Tuesday (9/4/2024). Chicken eggs were sold for Rp 28,000 per kilogram.

Meanwhile, in the last two months, the world food price index has continued to rise after seven consecutive months of decline. The Food and Agriculture Organization (FAO) on May 3 2024 local time released, the world food price index in April 2024 was 119.1, up 0.3 percent monthly and 7.4 percent on an annual basis.

The index has experienced a decline throughout August 2023-February 2024. However, in March and April 2024, the index rose again. Geopolitical tensions in the Middle East, which caused turmoil in world oil prices, became the main factor for the increase in the index. Other triggering factors include prospects of declining production and logistical disruptions in several producing countries.

The FAO reported that the increase in the global food price index in April 2024 was influenced by the rise in the prices of meat, vegetable oil, and cereal. The rise in commodity prices offset the decrease in sugar and milk indices.

The cereal price index in April 2024 amounted to 111.2, or increased by 0.3 percent monthly and decreased by 18.3 percent annually. The increase in the index was triggered by the rise in wheat and corn prices, which was balanced by a 1.8 percent monthly decrease in the rice price index.

The price of wheat has once again risen due to market concerns over the decline in production in several areas of the European Union, Russia, and the United States. In addition, the fierce competition among major exporters of the commodity continues.

Also read: Prospects for Commodity Prices that Make Profits and Losses for RI

The same goes for corn, which has seen an increase in price due to high import demand. This occurs amidst the prospect of a decrease in corn production in Brazil as a result of weather impacts and infrastructure damage in Ukraine.

Meanwhile, the index price of vegetable oil in April 2024 was 130.9. The index rose by 0.3 percent on a monthly basis and was also at its highest level in the past 13 months.

The increase in the index is due to the rise in the prices of sunflower seed and turnip oil, which balance the decline in palm oil and soybean prices. The prices of both commodities continue to rise due to increased import demand amidst prospects of decreasing production due to the impacts of climate change.

SUMBER: FAO

Development of the world food price index as of April 2024, released by the Food and Agriculture Organization on May 3 2024.