The extreme El Nino phenomenon in Indonesia has disrupted the rice production in the largest economy of South-East Asia, which has resorted to imports to secure domestic stocks.
A prolonged drought resulting in lower rice production has pushed the rice price to soar, which could be directly felt by the public.
Yanto, the owner of a warteg, a kind of food stall that sells various cheap meals, in East Jakarta, said that the profit of his business had been significantly declining since August.
As most of his customers were lower class people, he said he could not increase the selling prices. He eventually chose to reduce the portion of rice he served to customers.
“I have many customers because I sell cheap food. If I raise the prices, they will go. But even when I have reduced the portion, that does not really help. I lose profits by around one million rupiah (US$64) each month,” Yanto told Xinhua last Thursday.
Strong El Nino phenomenon typically means less rainfall for the thirsty crop. It affects Asia in particular, where rice is a staple food for most people.
Chairman of the Indonesian Rice Millers and Traders Association, Sutarto Alimoeso, said that grain supply at the end of this year was still far from the national milling needs.
Inevitably, some mills have chosen to stop production until the supply would return to normal.
The rice scarcity period was also projected to be longer than usual. As a result, the high price of rice would be felt longer by the public, said Alimoeso.
Arief Prasetyo Adi, the acting agriculture minister as well as head of the National Food Agency, confirmed in mid-October that the impact of El Nino reduced Indonesia’s rice production by 1.2 million tonnes, from this year’s production target of 30 million tonnes.
The disturbed rice production also contributed to the rising inflation rate. According to Statistics Indonesia (BPS), the consumer price index was recorded at 2.56% year-on-year in October, up slightly compared to the previous month of 2.28%, due to raised prices of necessities such as rice.
“Rice was the biggest contributor to inflation from August to October,” said Pudji Ismartini, deputy for distribution and services statistics of BPS, at a press conference, adding that El Nino triggered a long drought, resulting in lower rice production.
Experts estimated that rice would be the main determining factor for overall inflation in 2023, as the impact of El Nino will still be felt until the first months of next year even though Indonesia has started to enter the rainy season.
According to the statement made by Finance Minister Sri Mulyani in Jakarta last Wednesday, the government would distribute rice assistance and Direct Cash Assistance (BLT), in a move to maintain people’s purchasing power, price stability, and inflation rate.
The rice assistance is expected to be handed over to 21.3 million beneficiary families, ensuring 10 kgs to each family, in December, with a total budget of 2.67 trillion rupiah.
The BLT will be channelled to 18.8 million beneficiary families, or 200,000 rupiah per family per month, from November to December with a total budget of 7.52 trillion rupiah.
In early October, President Joko Widodo said in a press statement that Indonesia needed to import another 1.5 million tonnes of rice while anticipating a poor harvest.
This is in addition to the two million tonnes of rice the government had already assigned the State Logistics Agency (Bulog) to procure from overseas earlier this year.
“The rice stock currently controlled by Bulog is 1.45 million tonnes.
“With the additional import assignment from the government, the stock will be even stronger for distribution needs until next year in order to maintain rice price stability,” said Mokhamad Suyamto, director of supply chain and public services of Bulog, in a statement released last Thursday.
Furthermore, Suyamto added the agency would be willing to import rice from any country that is possible and meets all standard requirements.
“Currently we have contracts with several countries where rice production is still large, namely, Thailand, Vietnam, Pakistan and Myanmar.
“We will also talk with business partners of India, Cambodia and other possible countries,” he said.
Source: The Star
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<p>Time: 2024 By: Ministry of Industry and Trade</p>
