Who Enjoys Expensive Rice? Farmers Struggle Despite Price Hikes

The soaring price of rice in Indonesia creates a stark divide in perception between the nation's wealthy elite and its economically struggling citizens. While those who can afford luxury vehicles like the Alphard are unfazed by the current maximum retail price, ordinary citizens, such as elementary school teachers, find it a significant burden.

President Prabowo's recent remarks, suggesting that those unhappy with high rice prices should grow their own, have sparked varied interpretations. Rice is widely acknowledged as a politically sensitive and strategic commodity. However, the critical question remains whether farmers are truly benefiting from these elevated prices. The reality is more complex, depending on the farmer, harvest timing, and buyer.

Government initiatives aim to ensure farmers do not incur losses. The government has set a purchase price for unhulled paddy at Rp 6,500 per kilogram for January 2025, with the national average reaching Rp 6,925 by May 2026. The National Food Agency reported an increase in the price index received by paddy farmers, suggesting improved welfare. Official figures indicate a surplus of 3.8 million tons in 2025, with state logistics agency Bulog holding 3.7-4 million tons. Yet, on the ground, many farmers report selling their paddy to middlemen for as low as Rp 5,100 per kilogram, well below the government's minimum price.

Compounding the issue, farmers' costs are rising faster than their selling prices. In March 2026, despite a general increase in rice prices, the farmers' terms of trade actually declined by 0.08 percent. This is because the prices of essential goods for farmers, including gasoline, cooking oil, and rice itself, increased by 0.41 percent. Thus, even with higher paddy prices, the increased costs of fertilizer, fuel, and other necessities negate potential gains.

Furthermore, not all farmers sell to Bulog, which primarily buys during harvest seasons for its buffer stock. Outside these periods or Bulog's procurement areas, farmers often resort to selling to traders at prices below the government's minimum. This situation underscores the need for government policies that genuinely support farmers. The paradox of high prices despite surplus production, as noted by the Ombudsman, stems from slow distribution, quality issues, and supply chain bottlenecks, leading to a retail price of Rp 15,758 per kilogram for premium rice in May 2026.