Government Purchase Price (HPP) is not the Remedy for National Rice Politic

The Federation of Indonesian Peasants Union (FSPI) as peasant’s organization would like to point out some critical points facing the increase on Government purchase price price and the national rice politics these days: First, the peasants are appreciating the government good will to revise Inpres (Presidential decree) 13/2005 into Inpres 3/2007. Neverthless in our opinion the new price set up in the Inpres 3/2007 is still not sufficient enough to increase the peasants wellfare, with the input cost and basic needs that rocketing after the increase in fuel price of 126 percent (October 2005). Based on FSPI calculation in several areas using the welfare and poverty model according National Beareau of Statistic (BPS) the appropriate government purchase price is Rp 3.320 per kg. We consider the increasing on government purchase price is one of government effort to stimulate agricultural sector (especially in rice sector). The peasants also see that maximum price mechanism (ceiling price) set in the lattest Inpres is not so suitable. It can be concluded from the Bulog mechanism and the domestic market in these past two years. Government couldn’t protect the domestic market and buying the un-husked rice directly from the peaasants because the decree only allows them to buy under or at the same price as government policy price. It will be rational and fair if the government set the floor price that will cover the production cost plus peasant’s incentive, and the ceiling price that can be used as government control to the market. Last note, price is not the only factor that can suddenly increse rice peasants welfare in Indonesia. There is still another key factor, like rice production infrasturcture and post production mechanism-which will define the consumers’ rice price. Secondly, the role of Bulog. Bulog’s role is clearly limited since 1998 with the Letter of Intent (LoI) signed by the Government and International Monetary Fund (IMF). Considering this condition, the fact of Bulog two side functions as profit seeker and Public Service Obligation (PSO) has to be evaluated immadietly. Bulog should give more focuss on its PSO function to serve the peasants, and regulating people’s food logistic better. This stratetic function has to fully realize because a great country is a country that can actualize food soverignty to its people. For that reason, it is important to create an institution that is capable of fully controlling Indonesian food stock and logistic issue. Considering the pricipal issues above, Bulog has to move fast for the people-especially peasants. At this moment, harvest season is starting in several areas (mostly West Java, Central Java, East Java, and North Sumatera), and Bulog must buy the un-husked rice DIRECLY from the peasants. Many reports from FSPI’s peasants that show Bulog never buy the un-husked rice directly from the peasants. Even in District Karawang- the nearest rice production centre from Jakarta- Bulog can only but less than 30 percent! According to the statement from a few FSPI’s peasants the profit that peasants receive is nothing compare to the profit receive by the milling or the trader. They receive margin almost half of the rice price, and more that 65 percent profit in the rice trading process. That is way Bulog must buy un-husked rice directly from the peasants and not from the milling, midle man or trader. If Bulog can do that in our opinion there will be no problem in the stock supply and the peasants will feel secure and close to the Bulog/government. The 6.46 trilliun rupiah that Bulog spent in 2007 to buy 1.615 million tons will be better if tjey convert it to buy un-husked rice. Almost 90 percent of Indonesian peasants sold un-husked rice not the rice. So, if Bulog buy rice they not benefit the peasants-but the traders. This is very risky to sepulate, lenghtening rice trade chain, increase price and making the stock become difficult to count which exactly the issue of rice problem last year. From FSPI calculation, this year Bulog fund can help them to provide 3,23 million tons of un-husked rice. Third, the pre and post production issue: the main issue. The biggest problem that Indonesian peasants facing is that they do not have the control for the main productive resources which is land, water and production infrastructure. Approximately 13,7 million farm household is small peasants (own less than 0,5 ha of land), damage irigation, and expencive production infrastructure, due to the expencive green revolution farm input that are linger untill today. We can see that the side that always gets the big profit is the corporate that work in agrochemistry, hybrid seed producers, fertilizers and pesticide. We need to be careful so this momentum on the increasing price of un-husked rice can not be uses by corporate, profit seekers midle man and traders to increase the price of paddy production input-that will lead the rice politics back to ground zero, and will not be significant anymore for the peasants’ welfare. Government is often forget about the post production aspects, whish is to shorten up the rice trading chain which has been benetif to the traders and midle man all this time. One important thing to be noted is the consumers’ problem that not supposed to be cheap price oriented. Government along with the people should activale involve in consumers education to solve the problems in rice post production sector To achieve a better condition, FSPI’s peasants are struggle for a genuine agrarian reform. This genuine agrarian reform is expected to be able to solve the problem of inequity on the ownership of peasants’ main productive resources, namely land, water and other inputs. Hence, we underline that the price policy is not the only great remedy for the national rice politics. Government still have many homeworks to be done, such as the issue of productive resources that are supposed to be own by the peasants, improvement in rice trading system and the consumers