A worker unloading newly imported rice from Thailand at Tanjung Priok port in Jakarta.
The global food price index continues to decline. Similarly, prices of grains, including rice, in the international market are also beginning to decrease. So what about the price of rice in Indonesia?
On March 8, 2024, the Food and Agriculture Organization (FAO) announced the global food price index for February 2024 at 117.3. This number decreased by 0.7% compared to the previous month and decreased by 10.5% compared to the same period last year. This index is also much lower than the average food price index for 2022 – which is 144.7. This is the result of the decrease in grain prices, including wheat and rice, and the decrease in vegetable oil prices.
The grain price index for February 2024 is 113.8, a decrease of 5% compared to the previous month and a decrease of 22.4% compared to the same period last year (due to the decrease in wheat, corn, and rice prices). Among them, the global rice price index for February 2024 is 140.5, a decrease of 1.6% compared to the previous month. However, this number is still 12.3% higher than the rice price index for the same period last year.
FAO said: “The price of rice in February decreased compared to January due to low rice imports, not only from Indonesia but also from other rice-producing countries where the new harvest has just begun.”
The monthly decrease in rice prices is due to low rice imports and the start of new harvests in some rice-producing countries.
The food price index of the Food and Agriculture Organization (FAO).
On the global market, rice prices are also starting to decline.
In India, rice export prices this week fell from record highs as customers look for cheaper alternatives. The price of 5% broken rice this week is priced at 548-555 USD/ton, a decrease from the previous week’s range of 552-560 USD.
The domestic price of rice in India is currently lower than the price in other rice-producing countries in Asia because the government has implemented a rice subsidy program for the people to reduce the price of rice, especially before the upcoming election in May 2024.
India continues to restrict the export of Basmati rice and maintain a 20% tax on the export of Pratanak rice since August 2023.
In recent weeks, rice prices in Vietnam have been falling, with domestic prices reaching their lowest level since July 2023 as the harvest pushes up supply while rice exports to Indonesia slow down. This week, the price of Vietnamese rice increased slightly but is still much lower than the price at the beginning of 2024. This week, Vietnamese 5% broken rice is priced at 585 USD/ton, compared to 580 USD the previous week.
Rice prices in Thailand are also falling due to reduced demand for rice from other countries and depreciating currency. This week, Thai 5% broken rice is priced at 615 USD/ton, compared to 620 USD/ton the previous week.
Price trends of 5% broken rice export from India, Thailand, and Vietnam (Source: Reuters)
So how about the price of rice in Indonesia?
The Indonesian Central Statistics Agency (BPS) announced that the average price of rice nationwide in February 2024 reached 15,157 Rp/kg, an increase of 19.28% compared to the same period last year. The price of rice in Indonesia is much higher than the price of rice in other countries, especially Thailand and Vietnam.
Indonesia’s data shows that the price of rice imported from Thailand and Vietnam in February 2024 was 9,725 Rupiah/kg and 9,573 Rupiah/kg, respectively. The exchange rate of the Indonesian rupiah at the end of February 2024 was 15,585 Rp per US dollar.
As of March 10, 2023, the National Food Agency (Bapanas) reported that the average retail price of regular rice nationwide was 14,320 IDR/kg. Thus, the price of regular rice has decreased by 0.21% in just one week. Meanwhile, the average retail price of premium rice nationwide is 16,450 Rp/kg (a slight decrease of 0.06% in one week). At the end of February 2024, the price of premium rice in some markets in West Java and Jakarta reached a record high of 18,000 Rp.
Hery Sugihartono, the leader of the Demak District Farmers Association in Indonesia, said on Sunday (March 10, 2024) that although the price of rice has decreased, it is still relatively high due to seasonal demand during the Ramadan and Eid al-Fitr holidays. The price of rice sold by farmers will not decrease quickly, it will take about 3 weeks.
Rice has contributed to the high inflation for seven consecutive months in Indonesia, from August 2023 to February 2024. BPS noted that the monthly inflation rate for rice from August to December 2023 was 1.43%, 5.61%, 1.72%, 0.43%, and 0.48%, respectively. Then, in January and February 2024, the monthly inflation rate for rice was 0.64% and 5.32%.
Inflation for overall prices and rice prices in Indonesia
Indonesia becomes the second-largest rice import market for Vietnam
In 2023, Indonesia has emerged as the world’s second-largest rice importer, with 3.5 million tons, 5-7 times more than three years ago, according to data from the US Department of Agriculture. At the same rate, Indonesia’s rice imports from Vietnam have also increased significantly, making it the second-largest market for Vietnam’s rice exports in 2023 as well as the first two months of 2024 (from the 6th position in 2022).
Specifically, Vietnam’s rice exports to Indonesia in 2023 reached over 1.17 million tons, equivalent to 640.25 million USD, with an average price of 549.2 USD/ton, a sharp increase of 878% in volume and a 992% increase in export value; the price increased by 11.7% compared to 2022. With these results, rice exports to Indonesia accounted for over 14.3% of the total volume and 13.7% of the total export value of rice.
In the first two months of 2024, rice exports to Indonesia continued to rank second with a strong increase of 52.4% in volume, a 110.5% increase in export value, and a 38% increase in price compared to the first two months of 2023, reaching 219,165 tons, equivalent to 141.69 million USD, with a price of 646.5 USD/ton, accounting for 20.4% of the total volume and 19.3% of the total export value of rice in the country.
Price trends of 5% broken rice export from India, Thailand, and Vietnam (Source: Reuters)
Market outlook for Indonesia in 2024
As of now, the Indonesian government has issued a total rice import quota of 3.6 million tons in 2024 with the assessment that the drought situation related to the El Nino weather pattern is still affecting the domestic rice crop.
In its three most recent reports, USDA has continuously raised its forecast for Indonesia’s rice imports in 2024, from the forecast of 2.5 million tons in January 2024 to 2.9 million tons in February 2024 and to 3.5 million tons in the March 2024 forecast.
As rice prices in Indonesia are currently decreasing but at a slow rate, and the average rice price in this market is still about 18% higher than the same period last year, Vietnamese rice exporters still have many opportunities to export rice to this market in the coming months.
Reference: Kompas.id, Vietnam Customs General Department
