Indonesia is Not Running Out of Rice

Indonesia is Not Running Out of Rice

Reuters reported on October 1, 2026, that Indonesian rice prices are expected to remain high until early 2027 due to distribution disruptions and the threat of El Nio. Retail prices reportedly reached Rp15,769 per kilogram in September, while 2026 production is estimated at around 34 million tons, higher than the national consumption of about 31 million tons. Reuters also cited a possible 10% decline in 2027 production due to a shorter rainy season and drought. This data is worth noting. But if we stop at price data and production risks, we lose half the story.

Indonesia is indeed facing rice price issues. However, Indonesia is also entering the El Nio period with significantly larger government rice reserves compared to previous years.

In mid-September 2026, the Government Rice Reserve (CBP) stock managed by Bulog stood at around 4.6 million tons. This figure comes after the government distributed more than 2 million tons throughout 2026 via various instruments, including Food Supply and Price Stabilization (SPHP), food assistance, and disaster relief. Compared to September 2025, the government's stock is still about 18% higher (Bapanas, 2026).

In June 2026, Bulog's stock even reached around 5.17 million tons. The vast majority of this procurement came from domestic production. The government then maintained reserves at a high level while distributing rice to protect people's purchasing power (Bapanas, 2026).

High prices certainly burden consumers. But prices that are too low can also harm farmers and weaken production incentives. BPS data from September 2026 showed the national Farmer's Terms of Trade (NTP) reached 131.11, an increase of 1.49% compared to the previous month. The price index received by farmers increased by 1.93%, higher than the price index paid by farmers, which increased by 0.44% (BPS, 2026).

If unhusked rice (gabah) prices are pushed too low to lower consumer prices, farmers may lose incentives. If unhusked rice prices are raised to protect farmer incomes, milling and distribution costs can increase. If the government then maintains retail prices at a certain level, the margins of downstream players can be squeezed.

In other words, the price of rice is an issue of value distribution along the food chain. Therefore, criticism of government policy should be directed more specifically at the design of the price transmission mechanism.

How can Bulog's reserves enter areas experiencing price pressure more quickly? How does the government ensure retailers still have economic incentives to provide rice at the set price? How are inter-island transportation costs accounted for? How does the government distinguish physical scarcity issues from issues of distribution and trade margins? These questions are far more important than merely debating whether the government has succeeded or failed in controlling prices.

The threat of El Nio also needs to be placed proportionally. The BMKG on October 2, 2026, did predict that El Nio would persist until early 2027. Up to 61.08% of seasonal zone areas are predicted to experience a delayed onset of the rainy season, while 51.90% of Indonesia's land area is expected to experience a shorter 2026/2027 rainy season than normal (BMKG, 2026).

The estimated production decline of up to 10% in 2027 must be understood as a scenario to anticipate, not as an amount of production that has already been lost. BPS data shows that paddy production from January to July 2026 reached around 24.36 million tons of dry milled grain (GKG), while the January-September rice production projection used by Bapanas reached around 28.68 million tons (BPS, 2026; Bapanas, 2026). Thus, the policy issue is not about convincing the public that El Nio is harmless. El Nio is dangerous.

The government is increasing the purchase price of unhusked rice, expanding the absorption of domestic production, building government reserves, broadening market interventions, and placing self-sufficiency as a strategic agenda. These policies certainly have consequences. Higher purchase prices increase protection for farmers but can increase costs in the milling and distribution chain.

There is another dimension that is also important. The risks to Indonesian rice do not stand apart from the global food market. Reuters itself reported in June 2026 that global milled rice supplies were at very high levels, around 196 million tons, meaning global supplies have the potential to dampen some of El Nio's impact on the world's food supply (Reuters, 2026).

This does not mean Indonesia must return to relying on imports. Self-sufficiency continues to provide strategic value by reducing dependence on global market volatility.

Food security means having the capacity to choose.

When domestic production is sufficient, the state has the room to not depend on imports. When production disruptions occur, strategic reserves buy the government time to respond. When international prices change, a country with strong production and reserves is in a better position to manage the shock.

Within this framework, building government rice reserves becomes more important than mere statistical numbers. Indonesia is entering a period of food pressure that is being responded to through responsive and active management.