Crumbs of Abundant Rice Problems

National rice production in 2025 is indeed abundant. However, this does not mean there are no homework tasks to address. There are still remnants of issues when examining production data, farmers' exchange rates, and current rice prices more closely.

Referring to the results of the Rice Area Sample Framework observation in April 2025, the Central Statistics Agency estimates that national rice production from January to July 2025 will reach 21.76 million tons. This rice production represents an increase of 2.83 million tons or 14.92 percent compared to the 18.93 million tons produced from January to July 2024.

Quite fantastic, isn't it? However, wait a moment. What if the rice production from January to July 2025 is compared to the same period in 2023 and 2022, which were 21.11 million tons and 21.37 million tons respectively?

The increase in their production was only 0.65 million tons and 0.39 million tons, respectively. These figures are far below the increase in rice production comparing January-July 2025 with January-July 2024, which reached 2.83 million tons.

If rice production in January-July 2025 is compared to the same period in 2023 and 2022, the increase in production is only 0.65 million tons and 0.39 million tons, respectively.

Referring to the comparative data, it is indeed true that there has been an increase in rice production over the past four years. However, the volume of the production increase is not as abundant as has been recently proclaimed.

Remember, from June 2023 to May 2024, Indonesia experienced a prolonged drought due to the effects of El Niño. This resulted in a decrease in rice production in 2023 and 2024 by 645,090 tons and 760,000 tons, respectively.

Therefore, it is less appropriate to compare the increase in rice production from January to July 2025 solely with that of January to July 2024. It would be more fitting to reference the comparison against the rice production periods under normal weather conditions or without weather anomalies, such as those experienced in 2022.

However, it cannot be denied that there is potential for an increase in rice production at least until January-July 2025. This indicates that the relevant stakeholders, particularly the Ministry of Agriculture, are capable of guiding Indonesia through the phase of recovery in rice production following El Nino.

The Ministry of Agriculture is not only designating this year as the year of rice production normalization but also as the year for increasing rice production towards self-sufficiency by 2027. The Ministry targets rice production to reach 32 million tons by 2025. Furthermore, the United States Department of Agriculture (USDA) predicts that Indonesia's rice production in 2025 could reach 34.6 million tons.

"Initially, the President targeted self-sufficiency in rice to be achieved within four years. It was then accelerated to three years. Hopefully, this year there will be no rice imports," said Minister of Agriculture Andi Amran Sulaiman after attending a limited meeting at the Merdeka Palace, Jakarta, Monday (2/6/2025), through a press release.

In addition, the government is also trying to improve the welfare of farmers. One of the efforts is to implement 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 kilogram.

Indeed, the government will again complete the GKP HPP at the farmer level with the requirement of grain quality to reduce the decline in rice quality in the future (Kompas, 5/26/2025). However, at least, the policy is able to maintain the farmer's exchange rate (NTP), especially the food crop subsector, above the threshold of 100.

NTP is an indicator that measures the purchasing power of farmers in rural areas. NTP indicates how well farmers can exchange agricultural products for the goods and services they need. NTP is calculated by comparing the price index received by farmers (income) with the price index paid by farmers (expenditure).

Based on BPS data, the average NTP for the food crop subsector or NTPP from January to May 2025 is 108.34. Although it remains above the index threshold, the NTPP has decreased by 3.39 percent compared to the average NTPP from January to May 2024, which was 112.14.

Looking at the price margin structure of rice, farmers only receive 43 percent of the added value of rice. Approximately 50 percent of the added value of rice is absorbed by distribution and retail business actors.

The Head of the Food, Energy, and Sustainable Development Center at the Institute for Development of Economics and Finance (Indef), Abra PG Talattov, opined that, in fact, farmers' income tends to be stagnant. Meanwhile, production costs and the living expenses of farmers are increasing.

The average wage of workers in the agriculture, forestry, and fisheries sectors in February 2025 is Rp 2.25 million per month. This income has only seen a slight increase compared to the average wage in the sector in February 2024, which was Rp 2.23 million per month.

On the other hand, Abra continued, looking at the structure of rice price margins, farmers only receive 43 percent of the added value of rice. Approximately 50 percent of the added value of rice is absorbed by distribution and retail business actors.

"This confirms that the inequality in the rice value chain is not just a seasonal issue, but a systemic structural issue. Farmers remain price takers with a weak bargaining position in an unfair market," he said.

Now, the harvest season for the first planting has concluded. Although rice production is abundant, the price of rice at the retail level has actually increased. Therefore, the government is striving to stabilize rice prices while ensuring the welfare of farmers.

BPS recorded that as of May 2025, the national average price of various types of rice at the retail level was Rp 14,784 per kilogram. This average price increased by 0.2 percent month-on-month and 2.46 percent year-on-year.

In fact, in May 2025, rice contributed 0.1 percent to inflation on a yearly basis and 0.01 percent on a monthly basis. In that month, Indonesia experienced an inflation rate of 1.6 percent year-on-year, while on a monthly basis, it experienced deflation of 0.37 percent.

The Ministry of Agriculture acknowledges that rice prices have indeed started to rise, necessitating stabilization through government rice reserves that are projected to reach 4 million tons by the end of May 2025. On the other hand, the increase in the Farmer's Exchange Rate (NTPP) in May 2025 also needs to be maintained. The NTPP for farmers in May 2025 is recorded at 107.64, an increase from the NTPP of 104.63 in May 2024.

According to Amran, the government will distribute food assistance in the form of rice to stabilize rice prices. In June-July 2025, a total of 360,000 tons of rice assistance will be rolled out for low-income families.

"The strategy for distributing rice assistance will be carried out in a measured and selective manner. We are committed to maintaining a balance between the welfare of farmers and the affordability of rice prices for the community, especially for the poor and vulnerable groups," he said.

Therefore, Amran continued, to maintain the NTPP, the rice distribution strategy will be focused on non-rice-producing areas, such as Papua and Maluku. In addition, rice distribution will also target major urban areas that do not produce rice and rice-producing regions where market prices have exceeded the highest retail prices set by the government.