Indonesia’s antimonopoly agency says it has found indications of cartel practices in the country’s largest rice wholesale market, which cause prices of the staple to rise during certain months of the year.
President Joko Widodo last year called on the Business Competition Supervisory Commission (KPPU) to investigate domestic rice trading after the government had to import rice despite official data showing that the harvest actually exceeded local demand.
The agency suspects that certain large traders at the Cipinang Wholesale Rice Market – the nation’s main rice exchange – often block supplies from other provinces in favor of imported rice, KPPU chairman Syarkawi Rauf said on Monday (08/03).
“They often drive the prices up high enough to vindicate demand for rice imports […] because there is more profit in selling imported rice,” Syarkawi said.
The traders can make 10 percent profit on imported rice, compared to just 3 percent on local rice. They also buy the rice from state procurement agency Bulog’s nearby warehouses, resulting in significant savings on transport costs compared to having to source the commodity from other regions, the KPPU chairman added.
The agency says a group of five to seven companies control 70 percent of local market trade, compared to Bulog, which only has the capacity to supply 20 percent of the country’s rice demand.
“We are having trouble to find evidence, because their operations are quite sophisticated,” Syarkawi said.
However, he said the KPPU was expected to gather enough evidence for a hearing on the case in April.
Meanwhile, Nellys Sukidi, chairman of the Jakarta chapter of the Indonesian Rice Millers and Entrepreneurs Association (Perpadi), dismissed any notion of cartel practices in the local market.
“In Cipinang alone we have 600 traders with 3,000 tons of rice changing hands every day […] There is also real-time, transparent pricing information available,” Nellys said. “What is there to be manipulated?”