Effects of High Food Prices on Non-Cash Food Subsidies (BPNT) in Indonesia Case Study in East Nusa Tenggara - Case Study in East Nusa Tenggara

Assyifa Szami Ilman
Policy analysis Center for Indonesian Policy Studies • February 2020 Indonesia

Abstract

Poor Indonesian households spend most of their monthly income on food (62.72%) (BPS, 2016). Their average food consumption is dominated by rice (62.14%) and lacks protein, legumes, fruits and vegetables, which are needed for a nutritional diet (BKP Kementan RI, 2018).

High food prices contribute to the inability to purchase more nutritious food in Indonesia. They also reduce the effectiveness of the Non-Cash Food Subsidy (BPNT) program, which aims to increase nutritious food intake through a grant to purchase rice and eggs. Vegetables, legumes and fruit were added to the program in 2020. In 2019, BPNT kiosks (e-warong) in Kupang, East Nusa Tenggara purchased their rice and eggs from wholesalers in Makassar and Surabaya, making the prices dependent on those charged in these cities.

An experimental simulation by CIPS conducted with women on Sumba Island found that: • price increases led to lower food purchases and a fall in monthly household consumption by 1.78 kilogram of rice and 3.73 eggs;

• the BPNT program increased average household rice and egg consumption by 21.4 kilogram and 33.79 eggs, respectively.

• when the BPNT program met with a price increase scenario, egg consumption fell by 1.2 eggs per person while rice consumption increased by another 1.46 kilogram compared to the consumption before the price change. Price spikes made households sacrifice protein intake.

Positive nutritional effects of the BPNT program are being reduced by high rice and egg prices in Indonesia. The government should complement the BPNT program with policy reforms that reduce food prices in the country. Price interventions have not kept prices within the set range for these food commodities. Instead, Bulog’s medium-quality rice import monopoly (Presidential Instruction No. 5/2015) and the policy of setting rice import quotas through inter-ministerial coordination meetings (MOT Regulation No. 1/2018) should be reevaluated. Maize imports should also increase, since maize is an important ingredient of chicken feed and affects the price of eggs.

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Center for Indonesian Policy Studies

The Center for Indonesian Policy Studies (CIPS) is an independent, non-profit and non-partisan th... see more