Table 1 Harvested area, production, and yield of rice in Indonesia in 2000-2012
Year Harvested Area
Ha Production
Ton Yield
TonHa 2000
11.793.475 51.898.852
4,40 2001
11.499.997 50.460.782
4,39 2002
11.521.166 51.489.694
4,47 2003
11.488.034 52.137.604
4,54 2004
11.922.974 54.088.468
4,54 2005
11.839.060 54.151.097
4,57 2006
11.786.430 54.454.937
4,62 2007
12.147.637 57.157.435
4,71 2008
12.327.425 60.325.925
4,89 2009
12.883.576 64.398.890
4,99 2010
13.253.450 66.469.394
5,02 2011
13.203.643 65.756.904
4,98 2012
13.440.940 68.594.067
5,10
Source: BPS 2012
The rice self-sufficiency of Indonesia always above 90, it means the domestic consumption needs almost can be met by domestic rice production.
More than half of the national rice production is contributed by Java Island as the most fertile land and the biggest farm labor forces. Java produces about 2,5 MT
per year or about 52 of the national rice production. The other islands like Sumatera, Sulawesi, Kalimantan, and Bali with Nusa Tenggara contribute 24,
11, 7, and 5 of the national rice production, respectively. The major rice producing areas are West Java, East Java, Central Java, South Sulawesi, and
North Sumatera. In other hand for the other islands such as Kalimantan, Papua, Maluku, and small islands are not suitable to be planted by paddy. They only
contribute by 1 of national production BPS 2012.
Table 2 Harvested area, production, and yield of paddy per province in 2011
Province Harvested area Ha
Production MT Yield
TonHa North Sumatera
757.194 3.611.244
4,77 South Sumatera
772.803 3.332.799
4,31 Subtotal Sumatera
3.418.891 15.654.258
4,58 West Java
1.959.686 11.467.516
5,85 Central Java
1.748.611 9.429.506
5,39 East Java
1.945.712 10.533.607
5,41 Subtotal Java
6.192.549 34.148.340
5,51 West Nusa Tenggara
416.079 2.056.879
4,94 Subtotal Bali Nusa
Tenggara 757.866
3.473.210 4,58
West Kalimantan 441.920
1.379.411 3,12
South Kalimantan 490.528
2.001.274 4,08
Subtotal Kalimantan 1.289.917
4.557.268 3,53
Central Sulawesi 216.174
1.023.720 4,74
South Sulawesi 907.555
4.514.849 4,97
Subtotal Sulawesi 1.491.480
7.267.672 4,87
Other provincesislands 73.676
284.435 3,86
Total Indonesia 13.224.379
65.385.183 4,94
Source: BPS 2012
In Indonesia with sun shines all year around, farmers can grow paddy three times a year. First crop season lasting from October to March, second crop from
April to August and third crop from August to December. The first crop produces the main harvest. It produces about 60-65 of total national rice production in a
year. The second crop produces about 25-30 and the third crop produces about 5-15 of total national rice production Ellis 1993 in Sari 2010. Farmers manage
their paddy cropping pattern adjusted with the availability of water. Paddy which is planted in Indonesia is wet type; it needs a lot of water for growing. Therefore
mostly all farmers growing their paddy in rainy season October-March. Whereas in the dry season not all farmers growing paddy, some of them growing
vegetables, corn, sweet potatoes, and legumes which do not need a lot of water for growing.
First crop
Second crop
Third crop
Month 10
11 12
1 2
3 4
5 6
7 8
9
Planting Mid-season
Harvest Figure 4 Seasonal Paddy Crop Calendar
Source: Ministry of Agriculture, Indonesia 2012 in FAS USDA 2012 The seasonal cropping pattern implies that the rice supply is not constant
along the year. The excess supply occurs in the peak of harvest time at the first crop in February and March. While in the second and third crop, the rice supply
cannot meet the rice demand in the market completely. In addition, the rice demand of Indonesian market is inelastic or constant along the year. The
consequences of these conditions are the low price in the peak of harvest time and the high price in the time of lack supply. These conditions are not good either for
consumer and producer. The low price in the peak of harvest time will hit farmers and the high price in the lack of supply will burden consumers. The mentioned
conditions trigger high inflation and influence the macroeconomic condition. Since new technology has not been found to address this condition, government of
Indonesia has been setting many policies to address these problems.
2.2 Rice Policies in Indonesia
Rice policies in Indonesia are comprehensive since it has been the most important commodity for Indonesia economically, socially, and politically. The
Indonesian rice policies are divided into two types, anticipation policy and market intervention policy. Other than that the Indonesian rice policies can be divided
into three phases based on the regime period of market policies. Sari 2010 explained the characteristics of each period as follow:
First phase is in 1967-1996 period, when the rice price was fully controlled by government through market interventions in purpose to enhance and maintain
price stability. The full control power was given to Bulog as the only organization who organize the rice trade in Indonesia. The Bulog rights including monopoly
right to control over international trade of rice, unlimited access to credit facilities from Bank of Indonesia, right to impose floor price and ceiling price as guarantee
price for producer and consumer, right to procure the excess supply of rice from farmer as much as necessary to lift the rice price in harvest time until the
determined floor price, the facilities of extensive logistical warehouses for rice stocks, and right to sell the stocks by mean of ceiling price. In this condition, price
stabilization policy had succeed to dampen price volatility, stimulated the enhancement of rice production, and achieved rice self sufficiency in 1984. But
the implementation of these policies paid high cost. The second phase is in 1997-2000 period, when rice market of Indonesia
was fully liberalized. In this period, all Bulog’s rights were omitted, import tariff was eliminated into 0 and all forms of the farm subsidies were repealed. These
are the implication of the Letter of Intent LOI between the government of Indonesia, World Bank and International Monetary Fund IMF as the offered
solution to overcome the financial crisis in 1998. With zero import tariffs, the Indonesian rice market was dominated by imported rice almost 6 MT from
Thailand, Vietnam, and USA. Therefore the food self sufficiency was dropped in this period. There was no incentive for farmer to growing paddy. This condition
was exacerbated by El Nino effect. In this period the rice prices in farmer market and consumer market were not stable. Inflation in this period was about 77,63, it
brings on -13,13 of economic growth for Indonesia. After severe crisis in 1998, Indonesian economy moved on gradually. Since
2001 until now 2012, the government of Indonesia has been controlling the domestic rice market again with modified rules. The Indonesian rice market
system is not tough enough for free trade, especially for the small farmers who have weak bargaining power and high dependency to rice production. The new
national rice policies consists of five elements, they are rice production
enhancement, food diversification, price policies, import policies, and rice distribution for the poor www.bulog.co.id.
Bulog transformed to be a state enterprise with public company status. Bulog has mandates to maintain price stabilization in the rice market through
www.bulog.co.id: 1
Domestic Procurement.
Bulog has right to procure the excess supply of rice in the harvest time from domestic market with determined Government Purchasing Prices Harga
Pembelian PemerintahHPP and determined characteristics. The previous policy of floor price as the guarantee price for producer in the New Order is
replaced by the Government Purchasing Price as a reference price for producer price. Bulog is given budget to procure about 7-8 of the total
production Natawidjaja 2011. Bulog purchases the excess supply by create a new demand in the market. Bulog only purchases the products which meet
the requirement of HPP, so Bulog does not absorb the whole excess supply and does not guarantee the rice price for producers.
2
Manage Government Rice Reserve Stock.
Bulog manage Government Rice Reserve as an anticipation way for food shortage problems, emergency in the case of disaster or food insecurity, and
as a tool for rice price stabilization. Bulog gets the stock from domestic procurement and release it by the Market Operation and the Rice for the
Poor Program. Every year Bulog has to provide stocks depends on the previous stock and the forecasting supply and demand. Ideally, Bulog has to
have 0,75-1,25 MT in stock each year. These policies succeed to maintain stable rice supply in the domestic rice market when the world rice crisis
occurred in 20072008. 3
Rice Distribution through Market Operation Operasi PasarOP and Rice for the Poor
RASKIN.
Bulog distributes its rice stocks to cover the shortage of rice supply and dampen the high price of rice in the market. Market Operation will be held
if rice price rises in one week about 10 or more of the normal price compared to the normal price in three months before Regulation of the
