The average quality rice price in Jakarta on February 24, 2024 is 14,860 Rp/kg; meanwhile, premium rice costs 18,000 rupiah (1.15 USD)/kg, which is 20% higher compared to the same period last year. High-quality rice prices can reach up to 21,000 Rp/kg in some places.
These prices have exceeded the government’s maximum price regulation (HET), which is 10,900 Rp/kg for average quality rice and 13,900 Rp/kg for high-quality rice in Zone 1, including Java, Lampung, South Sumatra, Bali, West Nusa Tenggara, and Sulawesi. Data from the Food and Agriculture Organization (FAO) shows that the overall rice price index in Indonesia in January 2024 reached 142.8, an increase of 1.7 points compared to December 2023, and the highest level since August 2008.
Mr. Zulkifli Rasyid, Chairman of the Cipinang Rice Wholesale Market Cooperative, said if there is no rice from the Price Stabilization and Food Supply (SPHP) program provided by Bulog, the price of premium rice in Jakarta could reach 20,000 Rp/kg, while medium quality rice would reach more than 15,000 Rp/kg.
Indonesia experienced a rice shortage in January and February 2024, leading to a price increase. The estimated rice shortage in January 2024 is 1.61 million tons and in February 2024 it is expected to be 1.22 million tons.
Indonesia has started the harvest season, but the harvest is sporadic due to unstable weather conditions this year. Additionally, the government has also distributed imported rice to the market, but it has not been able to significantly lower the selling price on a wide scale.
Mr. Zulkifli Rasyid predicts that rice prices will continue to rise until the end of March 2024 when localities enter the peak harvest season. “Rice prices are expected to return to normal when the harvest season begins. Therefore, high rice prices will continue until mid or late March,” said Mr. Rasyid on Saturday (February 24, 2024).
Drought causing a missed harvest
The sharp price increase in 2024 is due to delayed harvests and a decrease in supply. The amount of rice provided by farmers to the market does not meet the demand, resulting in a shortage of rice in warehouses, especially high-quality rice. In addition, last year’s limited production also caused imbalances in supply and demand.
Indonesia’s rice production in January and February 2024 is estimated to be 2.25 million tons, a 46.3% decrease compared to the same period last year due to El Nino’s impact on the harvest. The estimated rice production in January 2024 is about 930,000 tons, and in February 2024 it is about 1.32 million tons, compared to a monthly consumption of 2.54 million tons.
The dry season in Indonesia started earlier than usual, and the drought caused by El Nino has led to a decrease in the area and rice harvest production in the 2022/23 cropping season. Based on the implementation of the harvested area from January to November 2023 and the estimated harvested area in December 2023, Indonesia’s Central Bureau of Statistics (BPS) reported in early November 2023 that the harvested rice area in the 2022/23 fiscal year decreased by 2.58% to 10.19 million ha, compared to 10.46 million ha in the 2021/22 fiscal year.
Indonesia is expected to be the world’s largest rice importer this year
Import efforts continue to be one of the main “immediate measures” of the government to meet domestic rice demand. As of February 18, the amount of rice imported in 2024 reached 507,000 tons.
Indonesia is expected to import about 3 million tons of rice in 2024, becoming one of the world’s largest rice importers. This move could bring significant benefits to the Vietnamese rice industry.
Bulog started the new year by bidding to purchase 500,000 tons of rice to strengthen the national food reserve. The 500,000-ton contract is seen as a positive start for the Vietnamese rice industry, especially after the Lunar New Year.
In 2023, Indonesia was the second-largest rice import market of Vietnam, with over 1.17 million tons, equivalent to 640.25 million USD, a sharp increase of 878% in quantity and 992% in value compared to the previous year, accounting for over 14.3% of the total volume and 13.7% of the total value of rice exports. The average rice export price to Indonesia in 2023 was 549.2 USD/ton, an increase of 11.7% compared to 2022.
In January 2024, Indonesia ranked third in Vietnam’s rice import market, with 27,256 tons, equivalent to 18.08 million USD, at an average price of 663.3 USD/ton, a 35.8% decrease in quantity and a 29.3% decrease in value but a 10% increase in price compared to December 2023; a 68.3% decrease in quantity, a 55.8% decrease in value, and a 39.2% increase in price compared to January 2023, accounting for nearly 5% of the total volume and 3.2% of the total value of rice exports nationwide.
References: Jakartaglobe, Kompas
