Indonesia’s rice prices have soared to record levels, with traders and millers warning that rising costs, regulatory pressures, and alleged adulteration cases are creating a fragile environment for the country’s staple grain industry.

According to the National Food Agency (Bapanas), premium rice now sells for IDR 15,622 per kilogram and medium rice for IDR 13,860, both above the government’s highest retail price (HET) caps of IDR 14,900 and IDR 12,500, respectively.

The Chairman of the Indonesian Rice Milling and Rice Entrepreneurs Association (PERPADI), Sutarto Alimoeso, said some mills have already shut down, citing the imbalance between production capacity and raw rice supply, combined with uncertainty over government oversight.

“Concerns over inspections for adulterated rice have also increased hesitation among business owners to operate, as it risks legal disputes in a situation where production costs are not balanced with selling prices,” Sutarto told SUAR on Wednesday (Aug 14).

Sutarto said that the shutdown of some rice mills in Indonesia is a complex issue and not caused by a single factor.

“One of the main factors is that the number of rice mills in Indonesia has now reached more than 169,000 units, while the availability of unhusked rice is far below the installed capacity,” he said.

He added that the available unhusked rice is only about 54 million tons of milled dry grain (GKG), far below the ideal capacity needed, which is more than 200 million tons.
According to him, this condition naturally triggers another factor—tight competition—causing some rice mills to be unable to operate optimally.

“With that situation, competition is inevitable. At some point, some will surely stop operating,” he said.

Sutarto also outlined another problem arising from pricing policies. He explained that the increase in the Government Purchase Price (HPP) of unhusked rice to IDR 6,500 per kilogram was not accompanied by an increase in the highest retail price (HET) of rice. This creates a dilemma for entrepreneurs, especially small-scale ones.

“But the highest retail price (HET) hasn’t been raised. This is a dilemma for business owners, especially the smaller ones—they definitely won’t be able to produce at a price above IDR 6,500,” he said.

Review the HET

Sutarto offered several solutions that could be taken by the government and business players.

First, the government needs to immediately review the Highest Retail Price (HET). Second, he urged the government not to put additional pressure on the market by purchasing unhusked rice or milled rice during low production periods, such as in June, July, and August.

From the business side, he reminded entrepreneurs not to commit fraud. According to him, a single act of fraud could have a negative impact on the entire rice milling ecosystem.

“If one (entrepreneur) commits fraud, it will affect other rice mills, and then problems will arise. So, the ones impacted are not only consumers but also other rice mills,” he stressed.

For long-term solutions, he emphasized the importance of collaboration and synergy. He proposed that rice mills establish partnerships with local farmers.

“It’s time for rice mills to create a solid plan, which is to collaborate with farmers. This way, unhusked rice can be sold directly from farmers to local rice mills without intermediaries, which will create efficiency,” he said.

Sutarto also emphasized the importance of cooperation between small rice mills and those with medium and large capacities. He stressed that small rice mills must not be shut down; instead, they should be aligned with the medium and large ones.

“During the major harvest season, small rice mills can produce brown rice or rice of slightly lower quality, and then supply it to medium and large rice mills,” he explained.

In this way, medium and large rice mills would take on the role of final processing and distribution between islands or regions. According to Sutarto, such cooperation creates a fair profit-sharing arrangement.

“So, our hope is that unhusked rice won’t need to be transported between regions. It will simply be dried, processed locally, sent to small rice mills first, and then passed on to large rice mills for distribution to other areas,” he explained.

With this initiative, he hopes unhusked rice will no longer need to move between regions, thereby creating a more stable and comfortable rice industry ecosystem for all stakeholders—from farmers, millers, and distributors to consumers.

Meanwhile, the Chairman of the Indonesian Seed Bank and Agricultural Technology Association (AB2TI), Dwi Andreas, also highlighted the pressure faced by rice milling entrepreneurs due to government intervention in rice prices.

According to him, the increase in the basic purchase price (HPP) is not in line with the Highest Retail Price (HET) set by the government.

“In fact, on the bigger issue, the price of unhusked rice was raised from IDR 6,000 to IDR 6,500. But without a corresponding increase in the HET, this is certainly a heavy burden for the mills. Because for unhusked rice at IDR 6,500, the production cost per kilogram of medium rice already reaches IDR 13,808,” he told Suar (August 14, 2025).

He proposed a concrete solution to this problem: increasing the rice HET. However, he suggested that the HET should only apply to medium rice consumed by the general public. As for premium rice, he recommended leaving the price to market mechanisms.

“If the government wants to protect consumers, setting the HET only for medium rice is enough, because premium rice consumers are a specific group and not too numerous. The market mechanism will then work on its own and even improve without intervention,” he said.

No Need to Worry

In response, the Head of the National Food Agency (Bapanas), Arief Prasetyo Adi, assured that the government has taken concrete measures to maintain stability, and rice mill and rice business owners need not worry as long as they comply with applicable regulations.

"There’s no need to worry about rice business activities as long as they (entrepreneurs) follow the rules. For premium rice, the broken grain content must not exceed 15 percent. In addition, the packaging weight must match what is stated," he told Suar (August 14, 2025).

The Bapanas chief also emphasized that the government will not tolerate fraudulent practices, such as deceiving consumers by selling medium rice in premium packaging. "If an entrepreneur commits fraud, then of course we must enforce the rules and set things straight," he said.

He urged traders not to withdraw rice from shelves but instead adjust prices according to the quality of the rice inside the package, as a way to protect consumers.

Previously, the government had planned to revise the rice quality and retail price ceiling (HET) policy. The revision would remove the two quality classifications—premium and medium—consolidating them into a single standard and a single retail price ceiling (HET).

However, Dwi Andreas opposed the proposal to eliminate the medium and premium classifications. He considered the policy a major mistake, as it disregards technological advancements in the rice industry.

"Because it ignores the technological developments we have today. If rice classification is removed, it will hinder producers’ efforts to improve rice quality and reduce loss or damage," he explained.

He pointed out that technologies such as color sorters play a key role in separating rice based on color and size, producing high-quality rice with a longer shelf life.

In conclusion, Dwi Andreas stressed that the government must choose whether to protect farmers by raising the price of unhusked rice or protect consumers by keeping rice prices low.