Indonesia's rice sector continues to face significant structural challenges. Although rice is a strategic commodity essential to the livelihoods of the general public, market control remains heavily concentrated among a few large corporations. This phenomenon has raised concerns regarding potential oligopolies in distribution as well as price setting at the consumer level.
Data presented by Perum BULOG indicates that the share of government-controlled rice reserves remains relatively small compared to total national production. Despite government efforts to increase stock capacity, limited room for maneuver in market intervention leaves BULOG tending to act as a price follower, rather than an effective price setter capable of curbing inflation.
Disparities are also clearly evident in the rice milling industry. While the vast majority of rice milling units in Indonesia operate on a small scale, they process only a minority share of total rice production. Conversely, a handful of large-scale mills control more than half of processing capacity, logistics networks, and access to premium markets.
Economic observers assess that this situation places the bargaining power of farmers and small millers in a vulnerable position. Frequently, national food subsidy practices are perceived as lacking target accuracy, with a portion of the benefits enjoyed by large business groups that hold complete control over the supply chain from upstream to downstream.
In response to this situation, the government, through relevant authorities, is continually urged to reform food trade governance. A strategic proposal from the Business Competition Supervisory Commission (KPPU) is to strengthen BULOG's market share to at least 20 percent so state intervention in price stability can function more optimally and transparently.
President Prabowo Subianto also highlighted the need for strict supervision of business actors using capital power to dominate the market. The focus moving forward is now on strengthening logistics infrastructure for small millers and modernizing the distribution system to minimize price dependency on a few market players in order to safeguard sustainable food security.
