InfoSAWIT, JAKARTA – "The devil is in the detail"—this adage seems fitting to describe the current situation in Indonesia's food policy. Small changes in the system, if not deeply considered, can lead to major problems. The National Food Agency’s (Bapanas) decision to eliminate the rafaksi (price reduction) for unhusked rice (gabah) prices at the farmer level through Bapanas Head Decree No. 14/2025 is starting to show its impact.
This new regulation replaces Bapanas Head Decree No. 2/2025, which previously categorized rice prices based on water content and quality. What is striking is the gap between the two policies is only nine days—too short for a strategic policy concerning the livelihoods of millions of farmers and national food security. The hasty change suggests that the government has not fully matured its design for a sustainable food policy.
A Double-Edged Sword at the Farmer Level
The removal of the price reduction for gabah is expected, on one hand, to improve farmer welfare through higher selling prices. However, on the other hand, it creates a new dilemma. When gabah quality is not uniform, collectors and rice mills face difficulties in further processing the grain. Gabah with high water content requires additional drying, which adds to production costs. This is where the "double-edged sword" operates—a policy intended to help farmers may end up pressuring the next link in the rice industry chain.
Surplus That Signals Danger
Data from the Central Statistics Agency (BPS) until June 2025 showed Indonesia had a rice surplus of about 3.3 million tons. While this initially seems encouraging, the basic law of economics applies: when supply is abundant without corresponding demand, prices will fall. Farmers, as the weakest players in the value chain, once again become victims. The same pattern seen during the abundant harvest of 2018, where gabah prices plummeted by up to 20%, seems poised to repeat.
Market Anomaly and the HET Domino Effect
Ironically, amidst the surplus, rice prices are creeping up. Production costs are rising, while the raw material gabah is now purchased at a minimum of Rp 6,500 per kilogram according to the Government Purchase Price (HPP). Consequently, many small mills are closing down, with only larger-capitalized players surviving. This distortion creates a dead weight loss (DWL)—an efficiency loss not enjoyed by either producers or consumers. When the government restricts prices, producers withhold stock, while demand remains high.
Uncompetitive Exports and Bulog's Limited Role
Under surplus conditions, exports should be a logical solution. Unfortunately, Indonesian rice is not yet competitive in the global market. Its quality often falls short of international standards, and its price is 30–50% more expensive than Thai or Vietnamese rice. The government's protective stance on exports also exacerbates the situation.
Furthermore, the State Logistics Agency (Bulog) faces limitations. Of its maximum capacity of 3.8 million tons, Bulog's warehouses are currently filled with about 2 million tons of rice. This means there is only 1.8 million tons of remaining space—not enough to absorb the entire farmer gabah surplus.
Reorganizing the National Rice Strategy
To maintain stability, the government must take concrete steps: expand warehouse capacity, improve stock management, and strengthen cross-sector cooperation for market operations and social assistance. More broadly, the government must be willing to review the rice export ban. As long as the policy remains reactive and patchwork, the national food system will continue to be vulnerable to price volatility and value chain imbalance.
As the adage states, the devil is in the detail. When the details are ignored, a well-intentioned policy can backfire—and the ones who feel the impact first, as usual, are the small farmers in remote areas of the country. (*)
Author: Rama Kurniawan / Postgraduate Student in Agricultural Economics, IPB University (Bogor Agricultural University)
Disclaimer: This article is the personal opinion of the author and is entirely the author’s responsibility. It is not affiliated with InfoSAWIT.
