Government Food Reserve Policy With Dynamic Stock Mechanism, Can It Be Successful? This is Dr Sam Herodian's Opinion

In the midst of various crises that hit the world, the availability and stability of food stocks is becoming an increasingly complex issue.  Coupled with global trade flows, food stability does not only depend on the role of the private sector.  The role of the state through stabilizing institutions is inevitably required to be more proactive, productive and flexible in providing food for the community.

As is known, the government plans to establish a Government Food Reserve (CPP) for 11 food commodities which will be managed by the State Logistics Agency (Bulog) and State-Owned Enterprises (BUMN). This policy will be used for mitigation measures and stabilization of domestic food prices.  The decision will be stated in a Presidential Regulation (Perpres) which will be issued soon.

Alluding to this, Dr Sam Herodian, IPB University Lecturer from the Faculty of Agricultural Technology said that CPP is a supply of staple food stored by the government.  These reserves can be mobilized quickly for consumption purposes as well as to deal with emergencies and to anticipate price fluctuations.

Compared to rice food reserves in the community, he continued, the amount of stock in Bulog is still smaller, so there is no need to panic.  On the other hand, to relieve Bulog, because if the stock in the community is increased, the rice stock will not be as large or stable as it is now.

 "If this is used as data, if someone thinks (the rice stock) is less than one million tons, then imports and so on will become a soft issue for importers," he explained in the 75th Public Discussion Forum Webinar of the Center for Food Agricultural Studies and Advocacy "Management of  CPP with Dynamic Stock Mechanism,” (30/08).

 However, he said, the calculation of the Government's Rice Reserve (CBP) managed by Bulog also needs to look at the monthly harvest area and the CBP expenditure by Bulog.  Bulog's CBP expenditure should be taken into consideration.  In addition, there are many problems faced when the CPP is implemented, namely quality assurance and market assurance.

 According to him, the management of CPP with a static stock mechanism has several critical points.  These include high logistics and administrative costs.  Storage of certain commodities, often damaged by pests and causing losses that become waste.  The second critical point is that there is no comprehensive policy framework for the stock disposal mechanism.

 "Disposal stock is estimated to increase because of the unintegrated management of government food reserves with the social safety net," he added.

 Meanwhile, the benefits of partially dynamic stock strategy will provide flexibility for Bulog.  Perum Bulog can issue a certain amount of rice in order to minimize shrinkage.  The budget for reserves also decreases and depreciation decreases.  Commodity quality is also guaranteed because the stock is constantly updated over a certain period of time.

 "This flexibility scheme can be applied by Bulog if it is driven by future trading, optimizing the warehouse receipt system and close loop by building collaboration between various parties from upstream to downstream," he continued.

 According to him, there are four conditions for the success of dynamic stock.  First, from the procurement side, there must be certainty when it is needed or adjust the harvest time.  On both sides of the storage, the best technology is used with the ability to last according to the scenario.  Third, on the distribution side, reserves are stored according to the needs of each region based on routine needs and special conditions.  Fourth, on the distribution side, there must be market certainty that absorbs reserves that are kept aside for special purposes.  (MW/Zul) (IAAS/STR)

Published Date : 02-Sep-2022

Resource Person : Dr Sam Herodian

Keyword : Lecturer of IPB University, Government Food Reserves, Rice, Food, Agriculture, Economy