UNAIR NEWS – A sharp rise in rice prices over the past month has drawn serious concern. The price of medium-grade rice has reached Rp14,500 per kilogram, up about 15 percent. This surge is squeezing household purchasing power and raising the risk of food inflation spilling into other sectors. As a strategic commodity, rice is central to Indonesia’s social and economic stability.
Professor of Economics at Universitas Airlangga’s Faculty of Economics and Business, Prof. Dr. Rossanto Dwi Handoyo, S.E., M.Si., Ph.D., said the main issue lies in declining agricultural productivity. “In the past, one hectare of rice fields could produce four to six tons of grain. Now the yields are much lower,” he explained.
Climate change and production imbalance
Prof. Handoyo noted that climate change is a long-term challenge that has disrupted planting and harvesting cycles, making it harder for farmers to plan effectively. “In some areas, what used to be two planting seasons a year has been reduced to one,” he said. The problem has been compounded by farmland conversion, with many productive fields turned into non-agricultural zones.
He added that stagnant production coupled with rising consumption continues to push prices higher. While the government has promoted food estate programs, their long-term effectiveness is still uncertain. “Declaring self-sufficiency just because imports stop for a few months is not a real solution. True self-sufficiency must be sustained for at least three to five years,” he stressed.
Although the state logistics agency Bulog helps contain price spikes through market operations, the measures are temporary. Once the operations end, prices often rebound. The oligopolistic structure of the rice market also raises risks of cartel practices and manipulation, including the recent controversy over mixed rice.
Impact on poverty and small businesses
Rising rice prices affect more than consumer spending. Every 10 percent increase in rice prices could push the poverty rate up by around 1 percent, with poor households bearing the brunt.
Micro, small and medium-sized enterprises (MSMEs), particularly those in the food industry, also face mounting pressure as production costs climb. “They are forced to choose between raising prices or accepting thinner profit margins,” Prof. Handoyo said.
While the government distributes rice aid to low-income households, its reach is limited. For SMEs, long-term fixed-price contracts with Bulog could help stabilize raw material costs and reduce financial uncertainty.
Building new rice hubs
Looking ahead, Prof. Handoyo predicted that within the next 10–20 years, Java may no longer serve as the country’s main rice producer. He urged the government to establish new production centers outside the island through comprehensive planning, including irrigation development, transport infrastructure, workforce training, and farmer incentives.
“These efforts must be prepared from upstream to downstream to be effective,” he said. He believed that well-planned agricultural infrastructure is essential if new regions are to serve as sustainable food hubs.
Author: Rosali Elvira Nurdiansyarani
Editor: Khefti Al Mawalia
