Rice Mafia of Indonesia Active Again? Suspicious Supply-Price Fluctuation
Indonesian Agriculture Minister Andi Amran Sulaiman has a strong suspicion that the "rice mafia" is behind the recent fluctuations in rice supply and prices in Indonesia. Suspicion emerged after new rice supplies suddenly 'flooded' Indonesian markets in February when prices of rice had already risen due to the scarcity of supplies. Sulaiman believes there is a cartel consisting of six big Indonesian rice distributors that deliberately hid rice output after last year's harvest and waited for prices to rise significantly before supplying rice to the markets in order to see higher profits.
The case is currently being investigated by the Business Competition Supervisory Commission (KPPU). However, Minister Sulaiman does not want the investigation to stop at this institution as he regards this act a criminal offense. Therefore, he also requests the Indonesian Police, prosecution and the Corruption Eradication Commission (KPK) to be involved. Rice is a key staple food product for the Indonesian population (consumed by all segments - from the poor to rich - on a daily basis). When the price of rice rises then there emerge serious pressures on the poorer segments of society. This can lead to an increase in the nation's poverty rate as a large portion of the Indonesian population lives just above the poverty line.
Suwandi, Head of Data and Information (Kapusdatin) at the Agriculture Ministry, said the KPPU and KPK are already involved in the monitoring and investigation of the (alleged) rice cartel after suspicion arose when - after a bad harvest season - rice supplies suddenly jumped at the nation's seven rice market centers in February 2016. In the first week of February the average price of rice was IDR 13,344 (approx. USD $1) per kilogram. However, due to ample rice supplies prices suddenly fell to the range of IDR 7,500 - IDR 10,000 per kilogram in the second week. In the first week of the month rice stocks at the Cipinang Rice Market stood at 29,458 tons. One week later reserves had nearly doubled to 52,383 tons. The same phenomenon occurred at the nation's other rice centers.
Indonesian Agriculture Minister Sulaiman declined to mention the names of the six big rice distributors that - according to him - formed a cartel that deliberately led prices rise before pouring rice supplies to the market. However, there are not many big players active in Indonesia's rice production and distribution sector. Big players in Indonesia's rice industry include Tiga Pilar Sejahtera Food, Buyung Poetra Sembada, Sumber Energi Pangan, and Lumbung Padi Indonesia. But whether these companies are involved in the cartel remains unclear.
Indonesia's Rice Balance:
| Year | Production | Demand | Import |
| 2011 | 36.97 | 33.04 | 1.90 |
| 2012 | 38.18 | 33.03 | 1.83 |
| 2013 | 39.60 | 34.55 | 0.72 |
| 2014 | 40.63 | 36.44 | 0.09 |
| 2015 | 41.99¹ | 33.36¹ | 0.02¹ |
in million tons of rice
¹ projection
Source: Kontan
In recent years there have been more allegations of unethical activity conducted by the 'rice mafia'. But cases are not only confined to the rice industry. Last year, Indonesia was also plagued by sharply rising beef prices. According to the Indonesian government this price surge was also the result of groups deliberately holding on to the beef supply in a bid to raise prices.