"Long distribution chain should be shortened whether it is transferred to the producer or the final buyer," The Business Competition Supervisory Commission (KPPU) chairman Syarkawi Rauf, said here on Tuesday.
The lengthy distribution chain starts from upstream to downstream. The sequence can be described as follows: farmers-collectors-mills-wholesalers-retailer-final consumer.
The price difference in the middle of the distribution chain reaches Rp3.500. The average price for farmers is in the range of Rp7.000 and up to the final consumer is Rp10.500.
If the price difference can be cut, the price of rice will be around Rp9.500.
The police earlier raided a rice warehouse in Bekasi, West Java, owned by PT Indo Beras Unggul (IBU), confiscating more than 1 thousand tons of rice and alleging that the company had bought lower quality subsidized grain that was then labelled as premium rice when sold.
National Police Criminal Investigation Department (Bareskrim) economic crimes Chief Brigadier General Agung Setya stated that the company had bought unhusked paddy from farmers for Rp 4.9 thousand per kilogram.
The company reportedly sold it as medium and premium rice under the Maknyuss and Cap Ayam Jago brands at Rp13.7 thousand and Rp20.4 thousand per kilogram, respectively. Meanwhile, the retail price set by the government was Rp 9.5 thousand per kilogram.
PT Tiga Pilar Sejahtera, the parent company of PT IBU, has denied breaching rules.(*)
Editor: Heru Purwanto
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