(Problem) Bulog's Rice Mountain

The government's rice reserves at Perum Bulog are increasingly piling up. This is beneficial for national food security. However, behind the "bulking up" of Bulog's rice warehouses, there are several problems that need to be mitigated and addressed.

As of May 13, 2025, the government's rice reserves (CBP) at Bulog reached 3.7 million tons. Of this amount, 2.02 million tons are sourced from domestic rice paddy/rice absorption, while the remainder consists of imported rice from 2024.

The Ministry of Agriculture (Kementan) stated that the CBP is the highest in the last 58 years or since Bulog was established in 1967. The CBP also surpasses the government's rice stock achievement of 3.007 million tons when Indonesia achieved food self-sufficiency during President Soeharto's era.

By the end of 2025, the CBP is expected to continue to increase due to the potential rise in national rice production of around 32 million tons to 34.6 million tons. In addition, the realization of Bulog's domestic rice/paddy absorption is still below the government's target, which is 3 million tons.

There are at least four factors that make Bulog able to absorb that much domestic grain/rice. First, the government issued a government purchase price policy (HPP) for dry harvested grain (GKP) at the farmer level without fractionation and any quality (without special quality standards) of at least IDR 6,500 per kg.

The policy is regulated in Presidential Instruction Number 6 of 2025 concerning the Procurement and Management of Domestic Rice/Grain and the Distribution of CBP. The government also implements this policy not only to Bulog but also to all rice milling business actors.

Second, the increase in rice production is due to the acceleration of rice planting, the creation of new rice fields, and the optimization of agricultural land. Several programs initiated by the Ministry of Agriculture are also supported by normal weather conditions, as well as the timely addition and distribution of subsidized fertilizers.

Third, Bulog's capital for absorbing unhusked rice/rice is reinforced with additional funding assistance through the Government Investment Operator (OIP) mechanism amounting to IDR 16.5 trillion. Fourth, Bulog's partnership with the Indonesian Rice Millers and Rice Entrepreneurs Association (Perpadi) is strengthened through a memorandum of understanding for the purchase of dried unhusked rice and rice.

The success story of Bulog's rice mountain is not without problems.

The success story of Bulog's rice stockpiles is not without its problems. As Bulog warehouses in various regions of Indonesia begin to "bulk up," Bulog must provide additional warehouses to store the rice.

The government plans to build 25,000 improvised or emergency warehouses to accommodate the absorption of rice from Bulog. For the time being, Bulog has borrowed and rented warehouses with a total capacity of 1.1 million tons.

The warehouses include those owned by state-owned enterprises, such as Bhanda Ghara Reksa and ID Food, as well as those owned by rice mill entrepreneurs. In addition, Bulog also utilizes several military warehouses under a borrowing scheme. Thus, the total capacity of Bulog's warehouses currently stands at 4.93 million tons.

In addition to warehousing, there are at least two main problems with Bulog. First, the purchase of any quality rice from farmers has the potential to create a risk of loss for Bulog. This is because Bulog's capital to absorb rice comes from OIP funds. The use of OIP funds requires returns and accountability reports.

Bulog will be relatively fortunate if the quality of the rice harvested is still in a category that can be "saved." Nevertheless, there will still be additional processing costs to convert the rice into rice that is still fit for consumption.

However, what if the rice paddy that is absorbed falls into the damaged category? What if the rice paddy can only be processed into rice that is unfit for consumption or even cannot be processed into rice at all?

Second, the issue of the distribution of CBP in Bulog. So far, the distribution channel for CBP in Bulog has been in the form of rice assistance for low-income families and areas affected by disasters, as well as market operations through the Food Supply and Price Stabilization program.

Bulog also has a stock of commercial rice that can be sold both offline and online through various distribution channels of Bulog. However, the government and Bulog need to expand the distribution channels of Bulog rice to ensure that the quality of Bulog rice remains well maintained.

In April 2025, there was a report indicating that around 300,000 tons of Bulog rice showed signs of quality degradation. If calculated at a price of Rp 12,000 per kg, the potential loss could reach Rp 3.6 trillion. However, Bulog stated that the condition of the rice is still good despite being stored in the warehouse for six months.

In 2019, Bulog's rice distribution channel was also blocked. At that time, the government changed the direct rice social assistance mechanism to non-cash food assistance. As a result, CBP piled up in Bulog's warehouse (Kompas, 2/15/2019).

This year, the government has introduced the idea of exports as one of the options to expand the distribution channels of Bulog rice. This option must be accompanied by several considerations, particularly regarding the balance of rice production and consumption domestically and the price of rice in the international market.

The problem is actually the price of rice, where the price of rice at Bulog is more expensive than the international price of rice.

If national rice production continues to increase year after year, rice exports will not pose a problem. The issue lies in the price of rice, where the price of rice at Bulog is higher than the international rice price.

In April 2025, for instance, the average price of Thai and Vietnamese rice with a broken grain content of 5 percent was respectively 415 US dollars per ton or approximately Rp 6,847 per kg and 377.8 US dollars per ton or Rp 6,234 per kg. The prices of rice from these two countries are significantly lower compared to the price of rice at Bulog, which is Rp 12,000 per kg.

Will the government through Bulog export rice at such a high price? It is certain that Indonesian rice will struggle to compete with rice from Thailand, Vietnam, Myanmar, Cambodia, India, and Pakistan. Moreover, currently, India is slashing its rice prices, which puts pressure on the prices of Thai rice that have long been a reference for global rice market players.

Remember, the euphoria over the increase in rice production and the accumulation of government rice reserves is acceptable. However, several problems accompanying the mountain of rice from Bulog also need to be mitigated or solutions sought.

Do not let Bulog rice deteriorate in quality and be discarded. Furthermore, do not allow this substandard rice to be distributed as assistance to low-income families.