A long-costly journey for Indonesian rice

Anton Hermansyah & Arif Gunawan S.

This Indonesian main staple food, consumed by almost all 250 million of the people in daily basis, has ironically longer main supply-chain, almost twice than that of in neighboring countries. Consumers must pay a high cost which most of the margin unfortunately not enjoyed by the farmers.

Indonesia produced 70.4 million tons of rice in 2014, and the Central Statistical Agency (BPS) has predicted that the number would rise around 6 percent to 70.8 million tons in 2015, upholding position as the third largest rice producer in the world after India and China--where the first rice are domesticated here 10,000 years ago.

However, as the highest rice consuming countries—with 114 kilogram of rice consumption per capita, Indonesia recorded, up until now, the longest supply chain in the region. The staple foods must first exchanged six times by different entities in the country.

From the farmers in rural areas, the rice bought by local collectors, and then taken to the big distributors. Next, the distributors channel the rice to their sub distributors, who sell it to agents. The agents have sub agents that take the rice to the wholesales market. The retailers buy the rice from the whole sellers, and put it in their store for the consumers.

"In Central Java, the commodity has to go through six distribution channel. Producers-collectors-distributors-sub distributors-agents-wholesales-retailers-customers," said BPS Head Suryamin during a press conference in Jakarta, a while ago on 1 February.

One of the problem is the margin. Despite a long chain, each entities just put 0.40 to 16 percent margins making the rice average margin just 10.42 percent. The lowest among the main food commodities.

"In the red pepper the margin varied from 20 percent to even 60 percent, other commodities is still having the same problem due to moral hazards," Sasmito Hadi Wibowo Distribution and Service Statistic Deputy said.

The average margin for the red pepper is 25.33 percent, a second to the corn [jagung pipilan] with 31.90 percent. Shallot and chicken meat [daging ayam ras] are 22.61 and 11.63 percent respectively.

"We performed this commodity supply chain survey once in a year and  will bring this findings to the government," Suryamin said. (ags)