Indonesia’s Ambiguous Rice Policies Hurt Farmers

Logistics agency at the center of problems

By: Ronny P Sasmita

Despite a recent projection by Indonesia’s Central Statistics Agency that domestic rice production would be sufficient to meet 2021 needs, government officials announced that they intend to import a million tonnes to increase reserves – only to have President Joko Widodo countermand the order.

Behind both the request by the agency and the March 26 refusal by Jokowi, as the president is known, is a story going back decades – of manipulation of rice stocks, import permits granted for cash, distortion of the rice market and government incompetence.

The focal point is Bulog, Indonesia’s national logistics agency, which was formed in 1967 to secure food supplies following the chaos of Sukarno’s fall, when inflation reached 650 percent and rice prices went out of control. The agency was designed to act as a buffer to keep prices manageable, controlling rice imports and exports as well as buying up domestic stocks.

It has functioned imperfectly at best, with perennial widespread allegations that it has peddled permits to favored importers to enrich officials. Although both the World Bank and the International Monetary Fund have vainly urged the government to shut it down along with other monopolies, it has been called the most powerful such agency in Asia and has resisted all attempts.

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