He said that the cooperative will act as off-takers or buyers of farm produce, which will later be sold at affordable prices without middlemen who claim big margins.
"This cooperative has responsibilities such as buying and storing food products, and also pharmacies. This is a one-stop solution (for villagers)," he added in a press statement issued on Friday.
Currently, several food commodities, such as rice, chicken eggs, chicken meat, and beef, are enjoying good prices at the consumer level due to sufficient production to meet demand, he informed.
For example, the government's reserve rice stock managed by Bulog is currently pegged at more than one million tons, which is much higher than the average stock of 300 thousand to 400 thousand tons.
However, Karnavian said that the affordable prices should not fall too much since that could cause deflation, resulting in difficulties for farmers and fishermen to cover their production with low profit.
"We should be able to maintain this stock to be absorbed at a reasonable price. Do not let the price fall. One of the efforts is building the Red and White Cooperative in each village," he emphasized.
The minister said such cooperatives are needed in all villages to keep food prices in line with the highest retail price (HET) set by the government.
Farmers or producers would also benefit because agricultural products get absorbed at a reasonable price when supply is abundant, he added.
He informed that the formation of each Red and White Village Cooperative could cost up to Rp5 billion (USD297 thousand), requiring support in the form of initial capital assistance from the State-Owned Bank Association (Himbara).
The cooperatives are planned to be built in 70 thousand to 80 thousand villages throughout Indonesia. As an initial step, 64 thousand farmer groups have expressed their readiness to shift to such cooperatives.
Related news: Indonesia to form village cooperatives to absorb farm goods
Translator: Mentari Dwi G, Resinta Sulistiyandari
Editor: Rahmad Nasution
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