Mismanagement of Premium Rice

The drama of premium rice scarcity is currently unfolding. The story begins with the discovery of mixed rice that violates regulations. It then continues with plans to eliminate rice classification, monitoring the potential for hoarding, and the establishment of a new maximum retail price for medium rice. Is this a mismanagement?

In recent weeks, premium rice has become difficult to find in modern retail stores. Fortified rice is widely available. This type of rice is enriched with micronutrients, such as vitamins A, B1, B6, B12, folic acid, iron, and zinc.

The price of fortified rice is significantly higher than that of premium rice. In a 5-kilogram (kg) package, the price of fortified rice ranges from Rp 90,000 to Rp 130,000, while premium rice is priced between Rp 74,500 and Rp 79,000 per kg, depending on the zoning.

The Chairperson of the Indonesian Consumer Foundation (YLKI), Niti Emiliana, on Thursday (11/9/2025), stated that fortified rice is not premium rice, but rather special rice. This type of rice has appeared quite massively in modern retail stores due to the shortage of premium rice.

The price of fortified rice is higher than that of premium rice. Until now, its price has not been regulated by the government, resulting in the absence of a highest retail price (HET).

"This can mislead consumers. Its price, which is higher than premium rice, can burden and erode consumers' purchasing power," said Niti.

Instead of improving the national rice climate, the policy has backfired on the government. This policy also reflects mismanagement in rice governance.

The drama of premium rice scarcity began with the discovery of adulterated rice that violated regulations by the investigative team of the Ministry of Agriculture. Referring to the results of the investigation conducted from June 6 to June 23, 2025, 85.6 percent of the 136 samples of premium rice traded did not meet quality standards. Meanwhile, 59.8 percent were sold above the Highest Retail Price (HET) and 21.6 percent had their volume reduced.

The drama continued with legal action against the rice producers. As of August 26, 2025, the police have handled 25 cases of alleged adulterated rice that violate regulations. The police have also named 28 suspects in the case, including several members of the management of large rice companies.

The government even granted a two-week period for producers to rectify their products in accordance with regulations. They complied with this directive, resulting in a decrease in the circulation of premium rice in the market, particularly in modern retail.

In response to the situation, the government rolled out a series of policies. Instead of improving the national rice climate, these policies have turned into a boomerang for the government. The policies also reflect mismanagement in rice governance.

The first policy introduced is that premium rice that has already circulated does not need to be withdrawn and can simply be sold at a lower price. Second, the supervision of mixed rice that violates regulations is expanded to include the potential for rice hoarding.

Thirdly, the classification of medium and premium rice will be eliminated and replaced with regular and special rice. The price of regular rice will continue to be regulated by the government, while the pricing of special rice will be left to market mechanisms.

Until now, the government has not released policies regarding regular and special rice, including the HET for regular rice. Instead, the government only increased the HET for medium rice on August 22, 2025. This step was not accompanied by an adjustment of the HET for premium rice.

This results in a narrowing gap between the HET of medium rice and premium rice. In Zone 1, which includes the regions of Java, Lampung, South Sumatra, Bali, West Nusa Tenggara, and Sulawesi, for instance, the HET for old and new medium rice in that zone is Rp 12,500 per kg and Rp 13,500 per kg, respectively.

Meanwhile, the highest retail price (HET) for premium rice in zone 1 is set at Rp 14,900 per kg. Compared to the old medium rice HET, the difference is Rp 2,500 per kg. If compared to the new medium rice HET, the difference narrows further to Rp 1,400 per kg.

In fact, the production cost of rice has increased. This rise in production costs is driven by two factors. First, the increase in the government purchase price (HPP) of harvested dry grain (GKP) at the farmer level from Rp 6,000 per kg to Rp 6,500 per kg.

Second, the policy of purchasing unhusked rice of any quality or with a minimum quality standard that meets the production cost. Those who receive low-quality unhusked rice will automatically incur additional costs to process it into edible rice.

To produce medium rice alone, the production cost has already exceeded Rp 13,000 per kg. Moreover, if producing premium rice, the production cost can surpass Rp 15,000 per kg.

The uncertainty surrounding the new rice policy certainly has the potential to cause rice producers to reduce or even cease the production of premium rice. It is possible that while continuing to produce medium rice, they may shift the production of premium rice to fortified rice.

On September 3, 2025, member of the Indonesian Ombudsman Yeka Hendra Fatika assessed that the recent increase in rice prices is not due to a shortage of stock, but rather the suboptimal management of rice distribution. The Ombudsman even found potential maladministration in the national rice management.

The potential for maladministration includes the risk of disposing of government rice reserves (CBP) at the State Logistics Agency (Bulog), the distribution of substandard rice through the Food Supply and Price Stabilization (SPHP), and limited rice availability in modern retail outlets. Furthermore, the potential for rice prices remaining above the Highest Retail Price (HET) and abuse of authority in CBP management (Kompas, 5/9/2025).

What are the consequences of the scarcity of premium rice in modern retail? The government must inevitably address the scarcity of premium rice in modern retail networks. There are two options currently being pursued by the government.

The first option that has been implemented is to supply modern retail stores with SPHP rice. The second option that the government is currently refining is to convert CBP into commercial rice.

The Head of the National Food Agency (Bapanas), Arief Prasetyo Adi, stated on Wednesday (10/9/2025) that Bapanas has facilitated cooperation between Perum Bulog and the Indonesian Retail Entrepreneurs Association (Aprindo). As a result, Bulog will distribute 800,000 tons of SPHP rice to modern retail networks until December 2025.

SPHP rice distributed through modern retail must be sold at a price of Rp 12,500 per kg in zone 1, Rp 13,100 per kg in zone 2, and Rp 13,500 per kg in zone 3. The price of SPHP rice is below the HET for medium rice, which is Rp 13,500 per kg in zone 1, Rp 14,500 per kg in zone 2, and Rp 15,500 per kg in zone 3.

"This step is expected to strengthen the effectiveness of the rice supply and price stabilization program, while also serving as a solution to the accumulation of government rice reserves in Bulog warehouses," he stated.

Regarding the second option, Arief explained that the government is currently discussing the conversion of imported CBP into commercial rice. Currently, out of 3.9 million tons of CBP, 1.5 million tons are sourced from imports.

The quality of imported CBP rice is equivalent to premium rice, with a broken rice content of 5 percent. Therefore, it is necessary to discuss whether the imported CBP can be mixed with other rice and sold commercially by rice mills.

According to Arief, the discussion is important. This is considering that Bulog will incur losses if it sells at a price of Rp 11,000-Rp 12,000 per kg or even at the price of imported rice at Rp 10,400 per kg.

"This needs to be studied and calculated thoroughly so that Bulog does not incur losses. There are state subsidies and bank interest that Bulog must pay there. We must not let the rice mills that distribute commercial rice be the only ones to benefit," he said.