The (Bitter) Smile of Rice Self-Sufficiency

The potential for rice production in 2025 is indeed abundant. Other countries and international institutions acknowledge this as well. The government's promise not to import rice is also certain to be fulfilled. The annual dream of having a strong rice reserve is also assured to be realized.

However, do not be too quick to smile with pride. The rise in rice prices has not yet subsided. Perum Bulog still faces the problem of "overweight" rice stocks. The quality crisis of rice in the market has also emerged. Moreover, behind these various problems, a rice market oligopoly has surfaced.

Based on the results of the Rice Area Sample Framework observed in July 2025, the Central Statistics Agency (BPS) estimates that national rice production from January to October 2025 will reach 31.04 million tons. This potential production figure represents an increase of 5.84 million tons or 12.17 percent compared to January to October 2024.

The government is becoming increasingly confident that it will not import regular rice (as opposed to special rice) in 2025. In fact, the targeted self-sufficiency in rice, which is aimed to be realized in 2026, is claimed to be achievable in 2025.

By the end of December 2025, the Ministry of Agriculture (Kementan) estimates that national rice production could reach 33 million tons. In fact, the United States Department of Agriculture (USDA) and the Food and Agriculture Organization (FAO) predict that Indonesian rice production could reach 34.5 million tons and 35.6 million tons, respectively.

Not stopping there. Through the strengthening of Bulog's capital amounting to Rp 15.15 trillion, the government is able to maintain an abundant rice reserve. As of September 1, 2025, the government's rice reserve (CBP) reached 3.93 million tons.

The government is becoming increasingly confident that it will not import regular rice (as opposed to special rice) in 2025. In fact, the targeted self-sufficiency in rice, which is aimed to be realized in 2026, is claimed to be achievable in 2025.

Nevertheless, the state of national rice production is not as smooth as that. Amidst the abundant production of rice and CBP, the price of rice has actually increased. BPS recorded that the average price of various types/qualities of rice in August 2025 at mills, wholesalers, and retail increased both monthly and annually.

At the milling stage, the price reached Rp 13,596 per kilogram (kg), an increase of 1.87 percent month-on-month and 6.15 percent year-on-year. At the wholesale level, the price was Rp 14,292 per kg, reflecting a month-on-month increase of 0.64 percent and a year-on-year increase of 5.56 percent. Meanwhile, at the retail level, the price was Rp 15,393 per kg, which is a month-on-month increase of 0.73 percent and a year-on-year increase of 4.24 percent.

This resulted in rice experiencing an inflation rate of 4.24 percent year-on-year in August 2025. This inflation rate is higher than the general inflation rate for that month, which stood at 2.31 percent year-on-year.

Several observers, academics, and rice business players have stated that the increase in rice prices is inextricably linked to the policy of purchasing harvested dry unhusked rice (GKP) of any quality, or without quality standards/refractions. The policy, introduced on January 24, 2025, requires Bulog and rice mills to purchase GKP of any quality at a minimum of the government purchase price (HPP) of Rp 6,500 per kg.

On one hand, the policy has a positive impact on the welfare of farmers as their rice is purchased at above Rp 6,500 per kg. The Farmer Exchange Rate for the Food Crops subsector (NTPP) in August 2025 reached 113.65, exceeding the ideal threshold of 100. This NTPP figure increased by 2.4 percent month-on-month and 2.9 percent year-on-year.

On the other hand, the policy has resulted in several negative impacts. First, it triggers fraud at the upstream level. For instance, rice is harvested prematurely; there is intentional wetting of high-quality grain; and there is mixing of hollow grain, straw, stones, iron scraps, and used buckets.

Secondly, the production cost of rice has increased significantly. The production cost of medium rice, which was originally around Rp 11,000-Rp 12,000 per kg, has surged to Rp 13,000 per kg. At that time, the production cost of rice exceeded the HET of medium rice, which is Rp 12,500 per kg.

The price of GKP for farmers has even increased, reaching up to 8,500 per kg in several regions. Only large-capital rice mills are able to purchase this GKP and process it into rice. Small and even medium-sized mills can only raise their hands in surrender.

The production cost of medium-grade rice, which was originally around Rp. 11,000-Rp. 12,000 per kg, has jumped to Rp. 13,000 per kg.

This situation has led the government to require every milling operation to purchase farmers' GKP at a price range of Rp 6,500-Rp 7,000 per kg. The government has also increased the HET for medium rice to 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 as of August 22, 2025.

Third, rice production suffers. Low-quality unhusked rice, including low-yielding rice, will reduce the quality and volume of rice production. This could even cause Bulog's rice from GKP of any quality to rapidly decline in quality.

Professor of the Faculty of Agriculture, IPB University, Dwi Andreas Santosa, estimates that 100,000 tons of Bulog rice will decline in quality and become unfit for consumption (disposal), potentially causing state losses of Rp 1.2 trillion. Member of the Indonesian Ombudsman, Yeka Hendra Fatika, projects that 300,000 tons of Bulog rice are at risk of disposal, potentially causing state losses of Rp 4 trillion (Kompas, 26/8/2025).

Fourth, the policy of purchasing GKP of any quality has triggered cases of adulterated rice, which violates regulations. According to the Ministry of Agriculture's investigation from June 6-23, 2025, 85.6 percent of 136 premium rice samples traded did not meet quality standards. Meanwhile, 59.8 percent was sold above the highest retail price (HET), and 21.6 percent was underpriced.

The situation became even more grim when the Indonesian National Police issued a telegram regarding monitoring and taking action against potential rice hoarding.

As of August 26, 2025, the police have handled 25 cases of alleged mixed 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 case has resulted in a shortage of premium rice supply in modern retail networks. This is due to many premium rice producers withdrawing their products. The situation became even more bleak when the Indonesian National Police issued a telegram regarding the monitoring and enforcement of potential rice hoarding.

The Institute for Development of Economics and Finance (Indef) emphasized that a crisis in rice quality and trade is imminent. This crisis is evident in the negative impacts of the policy of purchasing unhusked rice of any quality.

The crisis in rice trade is indicated by the emergence of oligopolistic practices within the structure of the national rice market. A small number of large rice mills dominate a significant portion of national paddy production and the modern retail network.

According to Ministry of Agriculture data, there are currently 124,506 small and medium-sized rice mills in Indonesia, while there are 1,056 large mills. Large mills account for approximately 60 percent of national annual rice production (Kompas, August 29, 2025).

Large mills control around 60 percent of national rice production per year.

Instead of improving the quality and trade system of rice, the government plans to eliminate the classification of medium and premium rice. Through this policy discourse, in the future, there will only be two types of rice in Indonesia, namely regular rice and special rice.

The government will also only regulate the HET for regular rice, while the prices for special rice will be left to the market. This policy has the potential to stifle national rice innovation, reduce the quality of rice, and narrow the options available for the public to purchase rice.

Currently, the government, through Bulog, is making efforts to lower rice prices. This is being carried out through the Stabilization of Supply and Food Price (SPHP) rice market operations and rice assistance for 18.3 million low-income families.

Although it could be one of the solutions to prevent Bulog rice from piling up in warehouses, the efforts are still not optimal. Rice prices are still slow to decrease. Even when they do drop, there are two factors causing this.

First, the harvest of the second planting season or gadu rice occurs in several regions. This will also be temporary, as the rice scarcity season will arrive after the gadu harvest, specifically from October 2025 to February 2026.

Secondly, the increase in the highest retail price (HET) of medium rice. The increase in HET will reduce the price disparity of medium rice at the consumer level as the HET decreases. This is considering that the old HET for medium rice has been replaced with the new HET for medium rice.

Meanwhile, rice entrepreneurs are still awaiting the realization of the policy plan to eliminate the classification of medium and premium rice. As long as this policy has not been released, the rice business remains haunted by uncertainty. Ultimately, it is the consumers who will bear the consequences.

Once again, it is permissible for the government to claim that rice self-sufficiency can be achieved more quickly by 2025. However, there are still a multitude of issues that cause the public to smile wryly when Indonesia is able to achieve rice self-sufficiency.