Rice and Corn Prices Fall, Red and White Kopdes Prepared as Buyers

JAKARTA - The government is preparing the Red and White Village/Neighborhood Cooperative to buy rice and corn when prices in the market fall below government regulations. This decision places the cooperative as a price buffer for farmers.

Coordinating Minister for Food Zulkifli Hasan said the function had been decided in a limited meeting at the Presidential Palace Complex, Jakarta, Wednesday, July 15.

"If the price of rice, corn, and others is below the price determined by the government, cooperatives can become buyers of agricultural products," said Zulkifli Hasan.

He then emphasized that the commodities that have been decided at this time are rice and corn.

"What has been decided is rice and corn. If it is still below that, the Kopdes can take over," he said.

In this scheme, the Red and White Kopdes acts as an offtaker or buyer of the harvest. Cooperatives enter when the market price does not reach the limit set by the government.

However, Zulkifli Hasan or Zulhas has not explained the source of the purchase capital, warehouse capacity, procedures for determining volume, nor the parties who will bear the risk if the harvest is not immediately absorbed by the market.

The readiness of funds is an important part because cooperatives must have cash when the price of grain or corn falls. Without sufficient capital and storage space, the price buffer function is difficult to run.

Minister of Finance Purbaya Yudhi Sadewa at the same location but in a different place said farmers were still free to sell their results to the party offering the best price. He also said cooperatives could obtain financing from banks.

In addition to being a buyer of rice and corn, Kopdes Merah Putih will be used to distribute social assistance and subsidized goods.

The government has not announced when the function of purchasing the harvest will begin to run in full.