Budi Arie Explains The Origin Of Each Village Cooperative Can Profit Rp1 Billion

Minister of Cooperatives Budi Arie Setiadi explained how each red and white village cooperative has the potential to generate profits of up to IDR 1 billion per year or IDR 80 trillion for 80 thousand cooperatives.

In a working meeting with Commission VI of the House of Representatives (DPR) in charge of trade, trade area, and business competition supervision Budi Arie said the figure came from cutting the role of an intermediary that was detrimental and efficiency in subsidized distribution.

He revealed that data, including from the Ministry of Agriculture, shows that "middlemans", moneylenders, and middlemen can pocket up to Rp300 trillion from the village.

According to Budi Arie, this happens, one of which is because the price difference is very unequal between the price at the farmer/producer level and the selling price in urban areas. For example, carrots purchased by Rp500 from farmers can be sold for Rp5,000 in the city.

"The value of the middle person is too big. So it is unfair for the village community, it is also unfair for the people of the city," said Budi Arie as quoted by ANTARA, Monday, May 26.

With the efficiency of distribution routes through village cooperatives, Budi Arie estimates that Ro90 trillion or around 30 percent of the total Rp300 trillion can be saved and channeled back to the village. This figure, according to him, is one of the origins of calculating the potential profit of Rp1 billion per cooperative unit.

In addition, Budi Arie highlighted the issue of efficiency in subsidy distribution. He gave an example of a fertilizer subsidy of Rp43 trillion. The price of fertilizer from the factory is around Rp2,300 per kg and with a transportation cost of Rp300' Rp400, the price is priced at Rp2,600. However, in the market the price of subsidized fertilizer can increase to Rp4,800 per kg.

"Delta is too big, and it is very detrimental to the community, people, or farmers who should enjoy subsidies," he explained.

Other sources of profit come from LPG, where farmers and the public often buy at non-subsidized prices, even though the state has disbursed large funds for subsidies.

Budi Arie explained that the idea of this red and white village cooperative was the president's initiative to ensure that the state's subsidized goods actually reached the community effectively and efficiently. The goal is that large subsidy funds are not in vain and really enjoyed by the people.

Regarding monopolistic concerns, Budi Arie said that Law Number 5 of 1999 concerning the Prohibition of Monopoly Practices and Business Competition allowed two institutions to carry out these practices: SOEs and cooperatives. According to him, cooperatives are justified to monopolize because they belong to many people, not just one or two individuals.