Thursday, 24 January 2013


To support task of the National Logistics Agency (Bulog) as food stabilizer, it is necessary for the government to prepare a buffer stock mechanism for strategic food so it will be able to fully control food reserve. In the past, a food reserve mechanism has been formed, but since IMF’s interfered, everything was in a mess. Therefore, restoring the function of Bulog as stabilizer of strategic food commodity is not in violation with the law. this is the opinion of Chairman of Business Competition Supervisory Commission (KKPU). Tadjudin Noorsaid, economic Observer of CSIS, Pande Raja Silalahi, and rice entrepreneur, Nelly Soekidi, in response to government’s policy on assigning of Bulog as strategic food stabilizer.

Chairman of KKPU, Tadjudin Noorsaid, said that government’s attempt to designate Bulog as stabilizer of three food commodities (rice, soybean, and sugar) should receive appreciation. As food matters are related to the lives of many people. The state must intervene by controlling supply and prices of food.

Tadjudin explained that government’s intervention must be carried out. Bulog has had tens of years of experience in handling food matter. Bulog function as food stabilizer should be restored. If necessary, Bulogs status as an institution which reports directly to the President should be restored.

To restore Bulog function is not an easy job. The reason in that Bulog does not have authority in budget matter or in determining importation. From the aspect of fund, Bulog must find its sources of fund from banks in the form commercial loans. Commodities tackled by Bulog are only rice. In such a condition, it is impossible for Bulog to function as food stabilizer.

If Bulog function will be restored as buffer stock body and stabilizer of food prices, the government must provide fund sourced from APBN. Or, the government could provide a loan with low interest. If this is also impossible, the government could transfer part of fuel subsidies to food subsidies to food subsidies.

Currently, the function of Bulog is as operator, so in carrying out its tasks, it must ask for the approval of many institutions, such as the Ministries and the House of Representatives. This condition makes Bulog difficult to move. For example, in distribution of Raskin (rice for the poor), there must be a request from each regional government. And, to give aid to disaster victim, there must be an instruction from the Coordinating Minister for Social Welfare, while for import there must be an instruction from the Trade Ministry.

No Need to Hurry

CSIS Economic Observer, Pande Raja Silalahi, agreed if Bulog’s function as buffer stock body and stabilizer of prices of strategic food should be restored. But, it should not be done in a hurry and there has to be a more mature planning as it involves a quite significant amount of fund. But, the fund can be sourced from APBN or in the form of soft loan from Bank Indonesia.

Currently, what should be paid attention to by the government is to stabilize of prices of staple food or to protect prices from highly fluctuating. Therefore, the main thing that needs to be done is managing stock. This is related to buying from farmers at the right quantity and price. Therefore, Bulog’s availability of fund and liquidity are determining factors.

Nelly Soekidi said that the nations that the nations food affair must be tackled by the government. So, he agreed on the idea of restoring the function and role of Bulog as stabilizer of food prices.

The nations food affair must be handled by the government (Bulog). It should not be transferred to private sector as private sector prioritizes personal interest by seeking high profit. So far, Bulog has been proven successful in stabilizing price of rice.

Support Flows Continuously

Support to Bulog as stabilizer of strategic food is flowing continuously. But, to support the role of Bulog, the government must stipulate food policy which is in favor Bulog’s ? function and task. President Director of Perum Bulog, Sutarto Alimoeso, said that to make Bulog a food stabilizer, we must first agree on Indonesia’s? food politics, including deciding what the strategic food commodities are. If the government has decided strategic food commodities, these food commodities must receive full protection. Not only protection producers from fall of prices, but also protecting producers from fall of prices, but also protecting consumers from price fluctuation.

Designation of strategic food commodities must be provided in the draft of Food Act which is currently being deliberated by the House of Representatives and the government. Strategic food commodities, such as rice, corn, soybean, sugar and cooking oil must be protected by the government from fluctuation.

Also regarding sharp increase of soybean prices. If the government has designated soybean as one of strategic food, the government must protect soybean producers. So, when the concerned must be imported, it must make a more accurate calculation of demand. Import policy should not distort local farmers. This is the actual role of Bulog as food stabilizer.

But, it is admitted that there are several are parties who doubted the role of Bulog as food stabilizer. But, since the past few years, Bulog's management has made many changes to Bulog's performance. For example, conducting entrepreneurship training for Bulog's employees. It requires time to make big changes. Moreover, Bulog has had the experience of handling staple food.

Within the framework of management improvement, Bulog has opened three business units, namely service, logistics, and marketing. Then, Bulog Mart was developed whose orientation is marketing of strategic food. Actually, the strategy is in the framework of network opening as well as a stabilizer. When the government assigned Bulog to maintain stability of food prices, Bulog'smanagement will be ready.

Business News - October 5, 2012

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