Beware of the Impact of Reduced Production and Rice Recalls

JAKARTA, KOMPAS – The government needs to be vigilant about the impact of declining rice production in the second semester of 2025. The situation will worsen if the withdrawal of rice related to the alleged mixed rice case that does not comply with regulations becomes more widespread.

Referring to the results of the Area Sample Framework (KSA) for Rice Observation in June 2025, the Central Statistics Agency (BPS) estimates that national rice production from January to September 2025 will reach 28.22 million tons. This production potential represents an increase of 11.23 percent compared to the same period in 2024.

Rice production in the first semester, or January-June 2025, is estimated to reach 19.16 million tons, an increase of 13.53 percent year-on-year. Furthermore, from July to September 2025, the production potential is projected to reach 9.08 million tons, reflecting an increase of 11.17 percent year-on-year.

Despite an annual increase, rice production in the second semester is usually lower compared to the first semester. In 2024, for example, rice production in the first semester reached 16.88 million tons, while production in the second semester amounted to 13.74 million tons.

The increase in grain prices due to decreased production in the second half of 2025 will be followed by an increase in rice prices.

The Chairman of the Indonesian Farmers' Harmony Association (HKTI) of Demak Regency, Central Java, Hery Sugihartono, stated on Monday (4/8/2025) that rice production in the second semester is always lower than in the first semester. This is due to the fact that every second semester, Indonesia experiences the dry season and enters the beginning of the first planting season for rice.

In the midst of this situation, the prices of unhusked rice and rice typically rise. Currently, the price of dry harvested unhusked rice (GKP) at the farmer level in several rice-producing regions has exceeded Rp 6,800 per kilogram (kg).

"The increase in the price of unhusked rice due to a decline in production in the second semester of 2025 will be followed by an increase in the price of rice. Currently, this increase in rice prices has already occurred in various regions in Indonesia," he said when contacted from Jakarta.

According to the Food Price Panel of the National Food Agency (Bapanas), as of August 4, 2025, the national average price of GKP at the farmer level is Rp 6,832 per kg, which is 5.11 percent above the government purchase price (HPP) of Rp 6,500 per kg. The highest price of GKP for farmers occurs in Aceh, reaching Rp 7,800 per kg or 20 percent above the HPP.

Meanwhile, the national average price of medium rice has reached Rp 14,520 per kg. This price has exceeded 16.16 percent above the national average of the highest retail price (HET) for medium rice, which is Rp 12,500 per kg.

BPS even stated that the monthly inflation of rice in July 2025 was 1.35 percent, the highest throughout the current year. In July 2025, rice also contributed to food inflation, which reached 3.82 percent annually.

Hery believes that the situation could worsen if large producers withdraw their rice products. This follows the case of the discovery of mixed medium and premium rice that is suspected of not meeting quality standards, measurements, and being sold above the highest retail price (HET).

"Let us not allow the rise in rice prices to be followed by a shortage of rice. If that happens, will the government be able to effectively mitigate the impact?" said Hery.

Currently, the National Food Agency is intensifying the Cheap Food Movement (GPM) on a massive scale in various regions across Indonesia, particularly to reduce rice prices. The GPM involves local governments, Perum Bulog, ID Food, PT Perkebunan Nusantara, and business actors in the food and logistics sectors.

Don't let the increase in rice prices be followed by a rice shortage.

The Head of Bapanas, Arief Prasetyo Adi, stated that from the beginning of January to July 30, 2025, GPM has been carried out 4,692 times. The GPM activities are spread across 82 locations in DKI Jakarta, 1,102 locations in the provinces, and 3,508 locations in districts and cities.

The Bulog rice stock is also abundant, amounting to 3.97 million tons as of August 1, 2025. This stock consists of 3.95 million tons of government rice reserves and 11,900 tons of commercial rice. The realization of domestic paddy absorption has reached 2.78 million tons equivalent to rice, or 92.79 percent of the absorption target of 3 million tons of rice.

"So there's no need to worry, because the government has a large rice stock," he said in a press release, Monday (4/8/2025).

Arief also stated that the dynamics of rice prices and quality continue to be a primary concern for the government. Monitoring the circulation of rice that does not comply with regulations is also continuously carried out in collaboration with the Food Task Force of the Indonesian National Police, both at the central and regional levels.

Bapanas has also urged rice producers not to withdraw their products from modern retail or traditional markets to anticipate supply shortages. Bapanas has also requested that they lower prices in accordance with the quality of the rice that has already circulated.

In addition, Arief continued, the government is also evaluating the pricing policy and quality classification of national rice. Bapanas has been assigned to reformulate the quality classes of rice and the upper price limit for rice.

In the future, the quality and price of the rice will be positioned between medium and premium rice. Additionally, the price of rice in production centers in Central and Eastern Indonesia will be differentiated.

It is impossible for such a vast area of Indonesia to have only one price for rice without any price differentiation based on zoning. "Once the policy is mature and established, we will provide a transition period for its implementation," he said.

The new policy that is being refined is a revision of two regulations from Bapanas. First, Bapanas Regulation Number 2 of 2023 concerning Quality Requirements and Rice Labeling. This regulation governs four quality classes of rice, namely medium rice, submedium rice, premium rice, and broken rice. Additionally, it also stipulates provisions for special types of rice.

Second, the Bapanas Regulation Number 5 of 2024 concerning Amendments to Bapanas Regulation Number 7 of 2023 regarding the HET of Rice. This regulation governs the HET of medium and premium rice for various regions in Indonesia. The HET for medium rice is set in the range of Rp 12,500-Rp 13,500 per kilogram (kg), while the HET for premium rice is Rp 14,900-Rp 15,800 per kg.

The government should prioritize the reform of quality and regulations for rice over the standardization of quality and the Highest Retail Price (HET) of rice. One way to achieve this is by strengthening the national quality system for consumption rice and implementing transparent labeling so that the quality of rice can be traced.

Meanwhile, the Institute for Development of Economics and Finance (Indef) assesses that the standardization of quality classes and the Highest Retail Price (HET) of rice will have a negative impact on the national rice sector. Instead of eliminating rice classification, the government should strengthen the national rice quality system.

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 the government's policy plan could lead to several negative impacts.

First, the policy serves as a disincentive for improving the quality of rice. By eliminating the premium price, producers have no incentive to maintain or enhance the quality of rice.

Secondly, the policy will become a burden for small rice mill operators as 95 percent of rice milling in Indonesia consists of small to medium units. The risk is that they will be unable to meet the new quality standards without significant investment, ultimately leading to business closures and market consolidation by larger players.

"Third, low-income consumers are vulnerable to the impacts. If the government-regulated price of rice is equated with the current premium price, the group of consumers who usually purchase medium rice will be affected, thereby increasing the risk of poverty," said Abra.

Therefore, according to Abra, the government should prioritize the reform of quality and regulations for rice over the standardization of quality and the Highest Retail Price (HET) of rice. One way to achieve this is by strengthening the national quality system for consumption rice and implementing transparent labeling so that the quality of rice can be traced.

The government should also maintain a flexible pricing scheme for various types of rice based on zoning, taking into account inter-regional distribution costs. Implementing a price ceiling risks lowering quality and encouraging a black market without cost adjustments.

"Even if the new policy is ultimately enforced, it should be balanced with a transition policy that includes periodic evaluations based on socio-economic impacts," he said.