ABSTRACT
This paper examines Indonesia’s food policy transformation under the National Medium-Term Development Plan (RPJMN) 2025–2029, focusing on the reconfiguration of state capacity in food system governance. It argues that recent policy instruments—particularly Presidential Instructions on rice and maize—reflect a shift toward a hybrid governance model that combines state-led market stabilization with demand-linked coordination. Moving beyond fragmented, production-oriented approaches, the government has introduced integrated mechanisms that link procurement, pricing, distribution, and downstream demand within a unified policy framework. In the rice sector, the establishment of a Government Procurement Price and expanded public stockholding strengthen price stabilization and farmer protection. In the maize sector, policy interventions emphasize alignment with industrial demand, particularly through integration with the feed market. Together, these approaches address structural inefficiencies in smallholder-based systems, including weak market absorption, price volatility, and fragmented supply chains. The findings suggest that Indonesia’s evolving policy framework represents a selective restoration of state capacity, in which the state acts not only as a regulator but as an active coordinator of market processes. While this model enhances system stability and farmer welfare, its effectiveness depends on institutional capacity, fiscal sustainability, and coordination across agencies. The Indonesian experience provides a relevant policy reference for developing economies seeking to strengthen food system governance under structural constraints.
Keywords: BULOG (Badan Urusan Logistik), food system governance; state capacity; agricultural policy; rice procurement; maize markets; price stabilization.
INTRODUCTION
In recent decades, global food systems have faced mounting pressures from climate change, geopolitical instability, supply chain disruptions, and market volatility. These dynamics have exposed structural weaknesses in food governance, particularly in developing economies where agricultural policies remain fragmented and overly reliant on market mechanisms (FAO, 2022; World Bank, 2020). While production growth has often been prioritized, broader systemic dimensions—such as distribution, access, price stability, and farmer welfare—have received comparatively limited attention.
Indonesia reflects many of these structural challenges. As one of the world’s largest agrarian economies, with more than 28 million agricultural households, the country plays a strategic role in regional food security (Badan Pusat Statistik, 2023). However, the agricultural sector continues to face persistent constraints, including fragmented land ownership, limited market access, and high exposure to price volatility (OECD & FAO, 2022). In this context, farmers remain among the most vulnerable actors within the food system.
Historically, Indonesian agricultural policy has been largely production-oriented, particularly for staple commodities such as rice. Although this approach has contributed to periodic increases in output, it has not adequately addressed systemic inefficiencies across the value chain. Disconnections between production, post-harvest handling, logistics, and market distribution have led to recurring price instability, post-harvest losses, and weak bargaining power for farmers (Timmer, 2002; Byerlee et al., 2009). These dynamics highlight a fundamental gap between agricultural policy and food system governance.
The RPJMN 2025–2029 marks a significant shift in Indonesia’s policy trajectory. Within this framework, agriculture is no longer treated solely as a production sector, but as part of a broader, coordinated food system. This transformation aligns with the long-term development vision under the RPJPN 2025–2045, which emphasizes inclusive growth, institutional strengthening, and resilience (Bappenas, 2023).
A key feature of this shift is the reassertion of the state as a central actor in food system governance. Rather than relying predominantly on market mechanisms, the government is adopting a more active role in coordinating production, stabilizing prices, managing food reserves, and protecting farmer welfare. This reflects a broader transition in which the state functions not only as a regulator but also as a coordinator of market processes.
This transformation is operationalized through recent policy instruments, particularly Presidential Instructions on rice and maize, which establish coordinated frameworks for procurement, stock management, and distribution. These policies reflect a whole-of-government approach, integrating multiple sectors into a unified governance structure.
This paper examines Indonesia’s transition toward a coordinated and farmer-centered food system under the RPJMN 2025–2029. It analyzes how policy instruments, institutional arrangements, and regulatory frameworks collectively reconfigure state capacity in food system governance. The paper contributes to the literature by demonstrating how integrated policy design can address structural inefficiencies in smallholder-based systems while strengthening market coordination and stability.
Rethinking food policy: from fragmentation to integration
The evolution of agricultural policy in developing economies has long been shaped by a production-centric paradigm. While increasing output remains important, contemporary research emphasizes that food security depends on the performance of the entire food system, encompassing production, processing, distribution, and consumption (FAO, 2018; Ericksen, 2008). In this broader perspective, the effectiveness of policy interventions is determined not only by production outcomes but by the degree of coordination across the value chain.
In practice, however, food policies in many developing countries remain fragmented across sectors and institutions. Production policies are often disconnected from trade, logistics, and social protection frameworks, resulting in coordination failures and inefficiencies (HLPE, 2017). These structural gaps reduce system performance and expose farmers to risks, particularly regarding price volatility and market access.
Market-based approaches, while essential, are often insufficient to address these challenges. Smallholder farmers typically operate under asymmetric market conditions, characterized by limited access to information, weak bargaining power, and high transaction costs (World Bank, 2020). As a result, they remain vulnerable to price fluctuations and are often unable to fully benefit from market opportunities.
In this context, the role of the state becomes critical. Rather than replacing markets, effective food system governance requires the state to coordinate market functions, provide public goods, and address structural inefficiencies. This involves not only regulatory oversight but also active engagement in areas such as price stabilization, procurement, and supply chain coordination.
Indonesia’s policy direction under the RPJMN 2025–2029 reflects this shift. The government is moving beyond fragmented, commodity-based interventions toward a coordinated food system framework that emphasizes integration, resilience, and inclusivity. Within this framework, farmers are repositioned as central actors, and policy design increasingly focuses on improving market access, stabilizing incomes, and strengthening participation across the value chain.
This transition represents a move from sectoral policy approaches toward system-based governance, in which production, distribution, and market mechanisms are managed within a coherent institutional framework. As such, it provides the analytical foundation for understanding Indonesia’s recent policy reforms in rice and maize, which are examined in the following sections.
POLICY FRAMEWORK UNDER INDONESIA NATIONAL MEDIUM-TERM DEVELOPMENT PLAN (RPJMN) 2025–2029
Indonesia’s transition toward a coordinated and farmer-centered food system is supported by a multi-layered policy framework that integrates long-term planning, statutory legislation, executive regulations, and sectoral instruments. Rather than functioning as isolated policy tools, these elements collectively form a governance architecture that aligns strategic objectives with operational implementation.
At the strategic level, the RPJMN 2025–2029 repositions agriculture as a central pillar of economic transformation, rural development, and national resilience. Within this framework, agricultural policy is no longer confined to increasing production, but is increasingly oriented toward value chain integration, institutional strengthening, and system-wide coordination. This shift aligns with the long-term development vision outlined in the RPJPN 2025–2045, which emphasizes inclusive growth, sustainability, and structural transformation (Bappenas, 2023).
At the legislative level, Indonesia’s food governance is anchored in key legal frameworks that define the state’s responsibilities for ensuring food security and protecting farmers. Law No. 18 of 2012 on Food establishes the principles of food sovereignty, availability, and affordability, while Law No. 19 of 2013 on the Protection and Empowerment of Farmers provides a foundation for price stabilization, access to inputs, and institutional support. Together, these laws establish a normative framework in which the state is positioned as both a guarantor of food system stability and a protector of farmer welfare.
At the regulatory level, executive instruments play a critical role in translating strategic priorities into operational mechanisms. Presidential Regulation No. 131 of 2024 promotes the adoption of science- and technology-based agricultural development, supporting efficiency and modernization within the sector. More significantly, recent Presidential Instructions on rice and maize introduce coordinated frameworks for procurement, stock management, and distribution. These instruments move beyond general policy direction by specifying institutional roles, operational targets, and implementation mechanisms.
In particular, the rice procurement policy establishes a minimum domestic procurement target of 4 million tons and introduces a Government Procurement Price as a price floor to protect farmers from market volatility. Similarly, the maize policy framework integrates production with downstream demand, particularly through linkages with the feed industry. These instruments reflect a shift from passive regulation toward active coordination of market processes.
At the sectoral level, ministerial regulations further operationalize these policies through interventions in production systems, regional development, and institutional strengthening. Initiatives such as cooperative-based models aim to improve farmer participation, enhance bargaining power, and integrate upstream and downstream activities within a coordinated framework.
Taken together, this policy architecture reflects a transition from fragmented regulatory instruments toward a coherent governance framework that integrates planning, legal mandates, and operational mechanisms. More importantly, it signals a redefinition of the state’s role—from a passive regulator to an active system coordinator responsible for ensuring stability, inclusivity, and resilience in the national food system (Andoko & Adhi, 2025).
BUILDING NEW INTEGRATED FOOD SYSTEMS: STRATEGIC INDONESIA POLICY DIRECTION IN RICE AND CORN (2026–2029)
Since 2026, the Government of Indonesia has entered a new phase of food system governance through the implementation of integrated policy instruments targeting rice and corn as strategic commodities. Within the framework of the RPJMN 2025–2029, these policies are designed not only to increase production but also to build a nationally coordinated food system that ensures farmer protection, domestic supply stability, and the resilience of staple food chains.
This policy direction reflects a strategic shift from fragmented interventions toward end-to-end system management, covering production, procurement, storage, distribution, and consumption within a single coordinated framework.
Pre-reform conditions: structural imbalances in paddy markets (2019–2024)
Prior to the implementation of recent policy reforms, Indonesia’s paddy markets were characterized by significant structural imbalances. Farmgate pricing was neither standardized nor in inadequate protection, leading to high volatility and regional disparities. Data from the Indonesian Central Bureau of Statistics (BPS) indicate that in 2023, farmgate prices for harvested paddy generally ranged between IDR 5,000–5,800/kg (equivalent to USD 0.30–0.35/kg), with prices in surplus areas frequently declining to IDR 4,500–4,800/kg (USD 0.27–0.29/kg) due to weak absorption capacity and quality-related discounts (BPS, 2023; BPS, 2024).
In early 2024 (February–March), prices temporarily increased to IDR 7,200–7,500/kg (USD 0.43–0.45/kg) amid tighter supply conditions. However, during the main harvest period, prices declined again to IDR 5,842/kg (USD 0.35/kg) in May and IDR 6,171/kg (USD 0.37/kg) in June 2024 (BPS, 2024). This pattern reflects persistent structural instability, where prices fall during harvest and rise during shortages, with limited transmission of gains to farmers.
These dynamics highlight the absence of an effective price floor and the dominance of localized market conditions and intermediary bargaining power in determining farmgate prices.
Rice policy reform: price guarantees and state-led market stabilization
The reform of Indonesia’s rice policy since 2026 has been a central pillar of the transition toward a more coordinated, state-driven food system. At its core, the policy introduces a strengthened procurement and price stabilization framework designed to address long-standing structural weaknesses in paddy markets, particularly farmgate price volatility, weak market absorption, and fragmented supply chains.
A key instrument in this reform is the establishment of a Government Procurement Price, which serves as a binding price floor across different stages of the value chain. Unlike previous arrangements, where price support mechanisms were inconsistently enforced, the current framework provides clearer benchmarks and stronger institutional backing. Indicative procurement prices are set at approximately IDR 6,000–6,500/kg (equivalent to USD 0.36–0.39/kg) for harvested paddy and IDR 11,000–12,000/kg (USD 0.65–0.71/kg) for milled rice, based on an exchange rate of IDR 16,800/USD (April 2026 baseline).
This pricing structure is designed to reduce income uncertainty at the farm level while maintaining relative affordability for consumers. By establishing a credible price floor, the policy mitigates the recurrent pattern of harvest-period price collapse, which historically undermined farmer incentives and contributed to cyclical instability in production. In this sense, the procurement price serves not only as a protective mechanism but also as a signal for production decisions and investment behavior.
Beyond pricing, the reform is reinforced by a substantial expansion of public procurement. The government mandates a minimum domestic procurement target of 4 million tons annually, positioning Perum BULOG as a central off-taker responsible for absorbing domestic production and managing government rice reserves. Procurement is conducted through a combination of direct purchases from farmers and indirect channels involving cooperatives, millers, and aggregators, thereby extending the system's reach across diverse production regions.
Importantly, procurement is integrated with technical standards, particularly regarding moisture content. Harvested paddy typically enters the system at approximately 20–25% moisture, while dried paddy must meet a threshold of around 14% to qualify for standardized procurement and storage. These standards serve a dual function: ensuring storage durability and incentivizing improvements in post-harvest handling practices. As a result, the policy links price guarantees with quality upgrading, reinforcing both economic and technical dimensions of the supply chain.
From a governance perspective, the reform reflects a shift from passive market regulation toward active market coordination. The state no longer intervenes solely in response to price fluctuations; instead, it maintains a continuous presence through procurement, stock management, and distribution mechanisms. This integrated approach enhances the government’s ability to influence market outcomes, stabilize supply, and ensure the availability of staple food.
At the same time, the system maintains a hybrid structure in which private actors continue to play a role in aggregation, processing, and distribution. Rather than displacing market participation, the state acts as a stabilizing anchor, reducing uncertainty while enabling more predictable interactions across the value chain. This balance is critical in avoiding inefficiencies associated with excessive centralization while still addressing structural market failures.
Overall, the rice policy reform illustrates how price guarantees, when embedded within a broader institutional and operational framework, can function as a core instrument of food system governance. By integrating pricing, procurement, quality control, and distribution, the policy moves beyond fragmented interventions toward a more coherent and state-coordinated system that supports both farmer welfare and national food security.
Maize policy reform: price support and demand-linked market integration
In contrast to the rice sector, Indonesia’s maize policy reform since 2026 has adopted a distinct yet complementary approach, emphasizing demand-linked market integration rather than centralized stockholding. This reflects the structural characteristics of maize as a key input in the feed industry, where quality consistency, supply continuity, and industrial demand play a more decisive role than public reserve management.
Prior to the reform, maize markets were characterized by persistent price volatility and weak coordination between smallholder production and downstream industries. Data from the Indonesian Central Bureau of Statistics (BPS) indicate that in 2023, farmgate prices generally ranged between IDR 4,500–5,500/kg (equivalent to USD 0.27–0.33/kg), with prices in surplus-producing areas frequently declining below IDR 4,500/kg due to limited absorption capacity and reliance on intermediary-led transactions (BPS, 2023). Although prices increased temporarily in early 2024 amid tighter supply conditions, these fluctuations largely reflected short-term market dynamics rather than structural improvements.
A key constraint in the pre-reform system was the mismatch between smallholder production and industrial requirements, particularly in terms of moisture content, quality consistency, and delivery reliability. As a result, even when domestic production was sufficient in volume, the feed industry continued to rely on imports to meet quality standards (OECD & FAO, 2022). This disconnect highlights a fundamental inefficiency in the maize supply chain: production and demand are not effectively integrated.
The policy framework introduced in 2026 addresses these constraints through a combination of price support and demand coordination mechanisms. A reference price of approximately IDR 5,000–5,500/kg (equivalent to USD 0.30–0.33/kg) is established to provide a minimum level of income protection for farmers. While less centralized than the rice procurement system, this pricing mechanism reduces exposure to harvest-period price declines and improves predictability at the farm level.
More importantly, the reform emphasizes structured linkages between producers and downstream industries, particularly feed mills. Rather than relying on public stockholding, the system promotes coordinated offtake arrangements involving farmer groups, cooperatives, aggregators, and industrial buyers. This approach aligns production with demand, ensuring that output is not only produced but also effectively absorbed in the domestic market.
Quality standardization is a central component of this integration. Maize supplied into the system is generally required to meet moisture content levels of approximately 14–15%, consistent with feed industry specifications. These standards incentivize improvements in post-harvest handling and reduce losses associated with spoilage and quality degradation. As in the rice sector, pricing mechanisms are thus linked to technical upgrading, reinforcing the broader objective of supply chain modernization.
From a governance perspective, the maize policy reflects a shift toward demand-driven coordination, in which the state facilitates alignment between upstream production and downstream utilization. This differs from the state-led stabilization model observed in the rice sector but serves a complementary function within the broader food system. By ensuring that domestic production meets industrial requirements, the policy reduces reliance on imports while strengthening the resilience of the feed supply chain.
At the same time, the system maintains a significant role for private sector participation, particularly in aggregation, processing, and distribution. The state’s role is therefore not to replace market actors, but to reduce coordination failures and improve market efficiency through targeted interventions. This hybrid arrangement enables the policy to address structural constraints without imposing excessive centralization.
Overall, the maize policy reform illustrates how demand-linked integration can serve as an effective alternative to stock-based stabilization in commodities with strong industrial linkages. By combining price support with coordinated market access, the policy enhances farmer participation, improves supply chain efficiency, and contributes to a more resilient and integrated food system.
Toward an integrated and state-coordinated food system
Taken together, the rice and maize policies introduced since 2026 reflect a transition from fragmented commodity management to a more coordinated, state-driven food system. While rice policy adopts a state-led stabilization model based on procurement and price floors, maize policy emphasizes demand-linked integration with downstream industries.
This dual-track approach illustrates a differentiated policy design tailored to commodity-specific characteristics, while maintaining coherence within a broader food system framework. It also underscores the expanding role of the state—not only in stabilizing markets but in coordinating supply chain interactions. The institutional implications of this transformation are examined in the following section.
INSTITUTIONAL CAPACITY AND STATE PRESENCE IN FOOD SYSTEM GOVERNANCE
The effectiveness of Indonesia’s food system strategy under the RPJMN 2025–2029 depends on the capacity of state institutions and their operational presence across the supply chain. Recent reforms move beyond policy formulation toward coordinated implementation, encompassing procurement, market stabilization, and distribution. This shift reflects a reconfiguration of the state’s role from regulator to active market participant.
In this context, institutional capacity is central to improving coordination, reducing fragmentation, and rebalancing market power. The following sections examine how these functions are operationalized through procurement systems, the evolving role of BULOG, and their implications for market structure and governance.
Strengthening State Institutions in Food Procurement and Distribution
The implementation of Indonesia’s integrated food system strategy for 2026–2029 is closely linked to the strengthening of state institutions responsible for procurement, storage, and distribution. Central to this framework is BULOG's expanded mandate, which serves as the primary implementing agency for government rice procurement and reserve management.
The policy framework establishes cross-sectoral coordination with clearly defined institutional roles. Bappenas aligns food policy with the RPJMN 2025–2029, while the Ministry of Agriculture oversees production, the Ministry of Trade regulates markets, and the Ministry of Finance supports fiscal instruments. Implementation is centralized through BULOG, with regional governments facilitating local execution. This arrangement reduces fragmentation and strengthens a coordinated, whole-of-government approach.
Under the current policy framework, BULOG’s role extends beyond traditional buffer stock management toward a more comprehensive function as a national off-taker and supply chain coordinator. This includes procurement of domestic rice, management of government reserves, and distribution through market operations and social assistance programs. This institutional consolidation reduces fragmentation and strengthens the state’s operational control over food supply chains.
This strengthening is consistent with the mandate of Law No. 18 of 2012 on Food, which assigns the state the responsibility for ensuring food availability, affordability, and stability, and with Law No. 19 of 2013 on the Protection and Empowerment of Farmers, which emphasizes price protection and market access.
Rebalancing market power and reducing intermediary dominance
A central institutional impact of the current policy framework is the rebalancing of market power within the agricultural supply chain. Prior to reform, farmgate pricing was largely influenced by intermediaries, particularly in regions with limited storage and market access. Farmers were often forced to sell during harvest periods under unfavorable conditions, reinforcing asymmetric bargaining positions.
The introduction of state-backed procurement mechanisms alters this dynamic. By establishing a guaranteed buyer and a binding price floor through government procurement, the state reduces dependence on intermediary networks. While private actors remain part of the supply chain, their influence over price formation is moderated by the presence of a credible state purchaser.
At the same time, integrating farmer groups and cooperatives into procurement channels strengthens collective bargaining and improves market access, in line with the objectives of Law No. 19 of 2013 on Farmer Protection and Empowerment.
Recalibrating institutional capacity: the evolving role of BULOG
The strengthening of BULOG’s role since 2026 also reflects a degree of historical continuity with its earlier function during the Suharto period. During that period, BULOG operated as a central instrument of state control in the food system, with authority over procurement, price stabilization, buffer stock management, and distribution of staple commodities (Booth, 1988; Timmer, 1996; World Bank, 2004).
However, following the post-1998 reform era, BULOG’s mandate was significantly reduced. Market liberalization policies shifted greater responsibility to private actors, and BULOG’s role became largely limited to buffer stock management and targeted distribution programs (World Bank, 2012; OECD, 2012). This transition reduced the state’s direct influence over farmgate prices and weakened coordination in domestic food markets.
The policy framework introduced since 2026 does not represent a full return to the past centralized system. Instead, it reflects a selective restoration of key state functions, particularly in procurement and price stabilization, within a more hybrid market environment. BULOG is reactivated as a strategic off-taker and coordinator, but without reestablishing full market control or monopoly powers.
This institutional recalibration allows the government to address structural weaknesses—such as price volatility and weak market absorption—while maintaining space for private sector participation. In this sense, the current model combines elements of historical institutional strength with contemporary governance arrangements.
Institutional constraints and implications for food system governance
Despite these advancements, the effectiveness of Indonesia’s institutional framework remains contingent on implementation capacity. Key constraints persist in logistics infrastructure, storage capacity, and post-harvest handling systems, while regional disparities continue to affect the consistency of policy execution. In addition, the expansion of state-led procurement introduces fiscal and operational pressures, requiring greater efficiency in procurement processes, reduced storage losses, and transparency in distribution to sustain institutional credibility.
A further challenge lies in maintaining an appropriate balance between state intervention and market participation. While state presence is essential for stabilizing prices and protecting farmers, excessive intervention may undermine private-sector incentives if not carefully calibrated.
Notwithstanding these constraints, the institutional reforms implemented since 2026 have significantly strengthened state capacity in food system governance. By consolidating procurement functions, enhancing coordination, and reducing intermediary dominance, the government establishes a more structured and predictable market environment. This transformation marks a shift from reactive intervention toward proactive system management, in which the state plays a continuous role in shaping market outcomes, ensuring stability, and protecting farmers. Within the existing legal framework, these developments demonstrate how statutory mandates on food security and farmer protection can be translated into operational and system-wide governance mechanisms.
CONCLUSION AND POLICY IMPLICATIONS
This paper examines Indonesia’s transition toward a coordinated, state-driven food system under the RPJMN 2025–2029, with a particular focus on rice and maize policy reforms implemented since 2026. The analysis demonstrates a clear shift from fragmented, production-oriented interventions toward a more integrated framework that links procurement, pricing, distribution, and downstream demand within a unified governance structure.
In the rice sector, the introduction of a Government Procurement Price and expanded public stockholding addresses a longstanding gap in farmgate price protection while strengthening supply stability. In the maize sector, integrating price support with downstream demand—particularly through feed industry linkages—improves market absorption and aligns production with industrial requirements. Together, these reforms establish a dual-track policy model: state-led stabilization for staple food security and demand-linked coordination for agro-industrial commodities.
This configuration reflects a broader redefinition of the state’s role in food system governance. Rather than functioning solely as a regulator, the state increasingly acts as a coordinator of market processes, shaping price formation, managing supply flows, and facilitating linkages across the value chain. This shift is particularly significant in smallholder-dominated systems, where market imperfections limit the effectiveness of purely market-based approaches.
From a policy perspective, three key implications emerge. First, food system transformation requires coordinated intervention across the entire value chain, rather than a narrow focus on production expansion. Second, state involvement—when institutionally grounded and operationally targeted—can effectively address structural inefficiencies such as price volatility, weak market absorption, and fragmented supply chains. Third, institutional capacity and inter-agency coordination are critical to translating policy design into effective implementation.
At the same time, the sustainability of this model depends on addressing key constraints, including fiscal pressures, infrastructure limitations, and uneven implementation across regions. Maintaining an appropriate balance between state coordination and market participation will be essential to avoid inefficiencies while preserving policy credibility.
Overall, Indonesia’s evolving policy framework represents a pragmatic and adaptive approach to food system governance. By combining strategic state intervention with market coordination, the government advances a model that enhances stability, supports farmer welfare, and strengthens national food resilience. More broadly, Indonesia’s experience suggests that effective food system transformation in developing economies requires not less state intervention, but more strategically coordinated state capacity.
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Reconfiguring Food System Governance: State Capacity and Policy Integration in Indonesia under National Medium-Term Development Plan (RPJMN) 2025–2029
ABSTRACT
This paper examines Indonesia’s food policy transformation under the National Medium-Term Development Plan (RPJMN) 2025–2029, focusing on the reconfiguration of state capacity in food system governance. It argues that recent policy instruments—particularly Presidential Instructions on rice and maize—reflect a shift toward a hybrid governance model that combines state-led market stabilization with demand-linked coordination. Moving beyond fragmented, production-oriented approaches, the government has introduced integrated mechanisms that link procurement, pricing, distribution, and downstream demand within a unified policy framework. In the rice sector, the establishment of a Government Procurement Price and expanded public stockholding strengthen price stabilization and farmer protection. In the maize sector, policy interventions emphasize alignment with industrial demand, particularly through integration with the feed market. Together, these approaches address structural inefficiencies in smallholder-based systems, including weak market absorption, price volatility, and fragmented supply chains. The findings suggest that Indonesia’s evolving policy framework represents a selective restoration of state capacity, in which the state acts not only as a regulator but as an active coordinator of market processes. While this model enhances system stability and farmer welfare, its effectiveness depends on institutional capacity, fiscal sustainability, and coordination across agencies. The Indonesian experience provides a relevant policy reference for developing economies seeking to strengthen food system governance under structural constraints.
Keywords: BULOG (Badan Urusan Logistik), food system governance; state capacity; agricultural policy; rice procurement; maize markets; price stabilization.
INTRODUCTION
In recent decades, global food systems have faced mounting pressures from climate change, geopolitical instability, supply chain disruptions, and market volatility. These dynamics have exposed structural weaknesses in food governance, particularly in developing economies where agricultural policies remain fragmented and overly reliant on market mechanisms (FAO, 2022; World Bank, 2020). While production growth has often been prioritized, broader systemic dimensions—such as distribution, access, price stability, and farmer welfare—have received comparatively limited attention.
Indonesia reflects many of these structural challenges. As one of the world’s largest agrarian economies, with more than 28 million agricultural households, the country plays a strategic role in regional food security (Badan Pusat Statistik, 2023). However, the agricultural sector continues to face persistent constraints, including fragmented land ownership, limited market access, and high exposure to price volatility (OECD & FAO, 2022). In this context, farmers remain among the most vulnerable actors within the food system.
Historically, Indonesian agricultural policy has been largely production-oriented, particularly for staple commodities such as rice. Although this approach has contributed to periodic increases in output, it has not adequately addressed systemic inefficiencies across the value chain. Disconnections between production, post-harvest handling, logistics, and market distribution have led to recurring price instability, post-harvest losses, and weak bargaining power for farmers (Timmer, 2002; Byerlee et al., 2009). These dynamics highlight a fundamental gap between agricultural policy and food system governance.
The RPJMN 2025–2029 marks a significant shift in Indonesia’s policy trajectory. Within this framework, agriculture is no longer treated solely as a production sector, but as part of a broader, coordinated food system. This transformation aligns with the long-term development vision under the RPJPN 2025–2045, which emphasizes inclusive growth, institutional strengthening, and resilience (Bappenas, 2023).
A key feature of this shift is the reassertion of the state as a central actor in food system governance. Rather than relying predominantly on market mechanisms, the government is adopting a more active role in coordinating production, stabilizing prices, managing food reserves, and protecting farmer welfare. This reflects a broader transition in which the state functions not only as a regulator but also as a coordinator of market processes.
This transformation is operationalized through recent policy instruments, particularly Presidential Instructions on rice and maize, which establish coordinated frameworks for procurement, stock management, and distribution. These policies reflect a whole-of-government approach, integrating multiple sectors into a unified governance structure.
This paper examines Indonesia’s transition toward a coordinated and farmer-centered food system under the RPJMN 2025–2029. It analyzes how policy instruments, institutional arrangements, and regulatory frameworks collectively reconfigure state capacity in food system governance. The paper contributes to the literature by demonstrating how integrated policy design can address structural inefficiencies in smallholder-based systems while strengthening market coordination and stability.
Rethinking food policy: from fragmentation to integration
The evolution of agricultural policy in developing economies has long been shaped by a production-centric paradigm. While increasing output remains important, contemporary research emphasizes that food security depends on the performance of the entire food system, encompassing production, processing, distribution, and consumption (FAO, 2018; Ericksen, 2008). In this broader perspective, the effectiveness of policy interventions is determined not only by production outcomes but by the degree of coordination across the value chain.
In practice, however, food policies in many developing countries remain fragmented across sectors and institutions. Production policies are often disconnected from trade, logistics, and social protection frameworks, resulting in coordination failures and inefficiencies (HLPE, 2017). These structural gaps reduce system performance and expose farmers to risks, particularly regarding price volatility and market access.
Market-based approaches, while essential, are often insufficient to address these challenges. Smallholder farmers typically operate under asymmetric market conditions, characterized by limited access to information, weak bargaining power, and high transaction costs (World Bank, 2020). As a result, they remain vulnerable to price fluctuations and are often unable to fully benefit from market opportunities.
In this context, the role of the state becomes critical. Rather than replacing markets, effective food system governance requires the state to coordinate market functions, provide public goods, and address structural inefficiencies. This involves not only regulatory oversight but also active engagement in areas such as price stabilization, procurement, and supply chain coordination.
Indonesia’s policy direction under the RPJMN 2025–2029 reflects this shift. The government is moving beyond fragmented, commodity-based interventions toward a coordinated food system framework that emphasizes integration, resilience, and inclusivity. Within this framework, farmers are repositioned as central actors, and policy design increasingly focuses on improving market access, stabilizing incomes, and strengthening participation across the value chain.
This transition represents a move from sectoral policy approaches toward system-based governance, in which production, distribution, and market mechanisms are managed within a coherent institutional framework. As such, it provides the analytical foundation for understanding Indonesia’s recent policy reforms in rice and maize, which are examined in the following sections.
POLICY FRAMEWORK UNDER INDONESIA NATIONAL MEDIUM-TERM DEVELOPMENT PLAN (RPJMN) 2025–2029
Indonesia’s transition toward a coordinated and farmer-centered food system is supported by a multi-layered policy framework that integrates long-term planning, statutory legislation, executive regulations, and sectoral instruments. Rather than functioning as isolated policy tools, these elements collectively form a governance architecture that aligns strategic objectives with operational implementation.
At the strategic level, the RPJMN 2025–2029 repositions agriculture as a central pillar of economic transformation, rural development, and national resilience. Within this framework, agricultural policy is no longer confined to increasing production, but is increasingly oriented toward value chain integration, institutional strengthening, and system-wide coordination. This shift aligns with the long-term development vision outlined in the RPJPN 2025–2045, which emphasizes inclusive growth, sustainability, and structural transformation (Bappenas, 2023).
At the legislative level, Indonesia’s food governance is anchored in key legal frameworks that define the state’s responsibilities for ensuring food security and protecting farmers. Law No. 18 of 2012 on Food establishes the principles of food sovereignty, availability, and affordability, while Law No. 19 of 2013 on the Protection and Empowerment of Farmers provides a foundation for price stabilization, access to inputs, and institutional support. Together, these laws establish a normative framework in which the state is positioned as both a guarantor of food system stability and a protector of farmer welfare.
At the regulatory level, executive instruments play a critical role in translating strategic priorities into operational mechanisms. Presidential Regulation No. 131 of 2024 promotes the adoption of science- and technology-based agricultural development, supporting efficiency and modernization within the sector. More significantly, recent Presidential Instructions on rice and maize introduce coordinated frameworks for procurement, stock management, and distribution. These instruments move beyond general policy direction by specifying institutional roles, operational targets, and implementation mechanisms.
In particular, the rice procurement policy establishes a minimum domestic procurement target of 4 million tons and introduces a Government Procurement Price as a price floor to protect farmers from market volatility. Similarly, the maize policy framework integrates production with downstream demand, particularly through linkages with the feed industry. These instruments reflect a shift from passive regulation toward active coordination of market processes.
At the sectoral level, ministerial regulations further operationalize these policies through interventions in production systems, regional development, and institutional strengthening. Initiatives such as cooperative-based models aim to improve farmer participation, enhance bargaining power, and integrate upstream and downstream activities within a coordinated framework.
Taken together, this policy architecture reflects a transition from fragmented regulatory instruments toward a coherent governance framework that integrates planning, legal mandates, and operational mechanisms. More importantly, it signals a redefinition of the state’s role—from a passive regulator to an active system coordinator responsible for ensuring stability, inclusivity, and resilience in the national food system (Andoko & Adhi, 2025).
BUILDING NEW INTEGRATED FOOD SYSTEMS: STRATEGIC INDONESIA POLICY DIRECTION IN RICE AND CORN (2026–2029)
Since 2026, the Government of Indonesia has entered a new phase of food system governance through the implementation of integrated policy instruments targeting rice and corn as strategic commodities. Within the framework of the RPJMN 2025–2029, these policies are designed not only to increase production but also to build a nationally coordinated food system that ensures farmer protection, domestic supply stability, and the resilience of staple food chains.
This policy direction reflects a strategic shift from fragmented interventions toward end-to-end system management, covering production, procurement, storage, distribution, and consumption within a single coordinated framework.
Pre-reform conditions: structural imbalances in paddy markets (2019–2024)
Prior to the implementation of recent policy reforms, Indonesia’s paddy markets were characterized by significant structural imbalances. Farmgate pricing was neither standardized nor in inadequate protection, leading to high volatility and regional disparities. Data from the Indonesian Central Bureau of Statistics (BPS) indicate that in 2023, farmgate prices for harvested paddy generally ranged between IDR 5,000–5,800/kg (equivalent to USD 0.30–0.35/kg), with prices in surplus areas frequently declining to IDR 4,500–4,800/kg (USD 0.27–0.29/kg) due to weak absorption capacity and quality-related discounts (BPS, 2023; BPS, 2024).
In early 2024 (February–March), prices temporarily increased to IDR 7,200–7,500/kg (USD 0.43–0.45/kg) amid tighter supply conditions. However, during the main harvest period, prices declined again to IDR 5,842/kg (USD 0.35/kg) in May and IDR 6,171/kg (USD 0.37/kg) in June 2024 (BPS, 2024). This pattern reflects persistent structural instability, where prices fall during harvest and rise during shortages, with limited transmission of gains to farmers.
These dynamics highlight the absence of an effective price floor and the dominance of localized market conditions and intermediary bargaining power in determining farmgate prices.
Rice policy reform: price guarantees and state-led market stabilization
The reform of Indonesia’s rice policy since 2026 has been a central pillar of the transition toward a more coordinated, state-driven food system. At its core, the policy introduces a strengthened procurement and price stabilization framework designed to address long-standing structural weaknesses in paddy markets, particularly farmgate price volatility, weak market absorption, and fragmented supply chains.
A key instrument in this reform is the establishment of a Government Procurement Price, which serves as a binding price floor across different stages of the value chain. Unlike previous arrangements, where price support mechanisms were inconsistently enforced, the current framework provides clearer benchmarks and stronger institutional backing. Indicative procurement prices are set at approximately IDR 6,000–6,500/kg (equivalent to USD 0.36–0.39/kg) for harvested paddy and IDR 11,000–12,000/kg (USD 0.65–0.71/kg) for milled rice, based on an exchange rate of IDR 16,800/USD (April 2026 baseline).
This pricing structure is designed to reduce income uncertainty at the farm level while maintaining relative affordability for consumers. By establishing a credible price floor, the policy mitigates the recurrent pattern of harvest-period price collapse, which historically undermined farmer incentives and contributed to cyclical instability in production. In this sense, the procurement price serves not only as a protective mechanism but also as a signal for production decisions and investment behavior.
Beyond pricing, the reform is reinforced by a substantial expansion of public procurement. The government mandates a minimum domestic procurement target of 4 million tons annually, positioning Perum BULOG as a central off-taker responsible for absorbing domestic production and managing government rice reserves. Procurement is conducted through a combination of direct purchases from farmers and indirect channels involving cooperatives, millers, and aggregators, thereby extending the system's reach across diverse production regions.
Importantly, procurement is integrated with technical standards, particularly regarding moisture content. Harvested paddy typically enters the system at approximately 20–25% moisture, while dried paddy must meet a threshold of around 14% to qualify for standardized procurement and storage. These standards serve a dual function: ensuring storage durability and incentivizing improvements in post-harvest handling practices. As a result, the policy links price guarantees with quality upgrading, reinforcing both economic and technical dimensions of the supply chain.
From a governance perspective, the reform reflects a shift from passive market regulation toward active market coordination. The state no longer intervenes solely in response to price fluctuations; instead, it maintains a continuous presence through procurement, stock management, and distribution mechanisms. This integrated approach enhances the government’s ability to influence market outcomes, stabilize supply, and ensure the availability of staple food.
At the same time, the system maintains a hybrid structure in which private actors continue to play a role in aggregation, processing, and distribution. Rather than displacing market participation, the state acts as a stabilizing anchor, reducing uncertainty while enabling more predictable interactions across the value chain. This balance is critical in avoiding inefficiencies associated with excessive centralization while still addressing structural market failures.
Overall, the rice policy reform illustrates how price guarantees, when embedded within a broader institutional and operational framework, can function as a core instrument of food system governance. By integrating pricing, procurement, quality control, and distribution, the policy moves beyond fragmented interventions toward a more coherent and state-coordinated system that supports both farmer welfare and national food security.
Maize policy reform: price support and demand-linked market integration
In contrast to the rice sector, Indonesia’s maize policy reform since 2026 has adopted a distinct yet complementary approach, emphasizing demand-linked market integration rather than centralized stockholding. This reflects the structural characteristics of maize as a key input in the feed industry, where quality consistency, supply continuity, and industrial demand play a more decisive role than public reserve management.
Prior to the reform, maize markets were characterized by persistent price volatility and weak coordination between smallholder production and downstream industries. Data from the Indonesian Central Bureau of Statistics (BPS) indicate that in 2023, farmgate prices generally ranged between IDR 4,500–5,500/kg (equivalent to USD 0.27–0.33/kg), with prices in surplus-producing areas frequently declining below IDR 4,500/kg due to limited absorption capacity and reliance on intermediary-led transactions (BPS, 2023). Although prices increased temporarily in early 2024 amid tighter supply conditions, these fluctuations largely reflected short-term market dynamics rather than structural improvements.
A key constraint in the pre-reform system was the mismatch between smallholder production and industrial requirements, particularly in terms of moisture content, quality consistency, and delivery reliability. As a result, even when domestic production was sufficient in volume, the feed industry continued to rely on imports to meet quality standards (OECD & FAO, 2022). This disconnect highlights a fundamental inefficiency in the maize supply chain: production and demand are not effectively integrated.
The policy framework introduced in 2026 addresses these constraints through a combination of price support and demand coordination mechanisms. A reference price of approximately IDR 5,000–5,500/kg (equivalent to USD 0.30–0.33/kg) is established to provide a minimum level of income protection for farmers. While less centralized than the rice procurement system, this pricing mechanism reduces exposure to harvest-period price declines and improves predictability at the farm level.
More importantly, the reform emphasizes structured linkages between producers and downstream industries, particularly feed mills. Rather than relying on public stockholding, the system promotes coordinated offtake arrangements involving farmer groups, cooperatives, aggregators, and industrial buyers. This approach aligns production with demand, ensuring that output is not only produced but also effectively absorbed in the domestic market.
Quality standardization is a central component of this integration. Maize supplied into the system is generally required to meet moisture content levels of approximately 14–15%, consistent with feed industry specifications. These standards incentivize improvements in post-harvest handling and reduce losses associated with spoilage and quality degradation. As in the rice sector, pricing mechanisms are thus linked to technical upgrading, reinforcing the broader objective of supply chain modernization.
From a governance perspective, the maize policy reflects a shift toward demand-driven coordination, in which the state facilitates alignment between upstream production and downstream utilization. This differs from the state-led stabilization model observed in the rice sector but serves a complementary function within the broader food system. By ensuring that domestic production meets industrial requirements, the policy reduces reliance on imports while strengthening the resilience of the feed supply chain.
At the same time, the system maintains a significant role for private sector participation, particularly in aggregation, processing, and distribution. The state’s role is therefore not to replace market actors, but to reduce coordination failures and improve market efficiency through targeted interventions. This hybrid arrangement enables the policy to address structural constraints without imposing excessive centralization.
Overall, the maize policy reform illustrates how demand-linked integration can serve as an effective alternative to stock-based stabilization in commodities with strong industrial linkages. By combining price support with coordinated market access, the policy enhances farmer participation, improves supply chain efficiency, and contributes to a more resilient and integrated food system.
Toward an integrated and state-coordinated food system
Taken together, the rice and maize policies introduced since 2026 reflect a transition from fragmented commodity management to a more coordinated, state-driven food system. While rice policy adopts a state-led stabilization model based on procurement and price floors, maize policy emphasizes demand-linked integration with downstream industries.
This dual-track approach illustrates a differentiated policy design tailored to commodity-specific characteristics, while maintaining coherence within a broader food system framework. It also underscores the expanding role of the state—not only in stabilizing markets but in coordinating supply chain interactions. The institutional implications of this transformation are examined in the following section.
INSTITUTIONAL CAPACITY AND STATE PRESENCE IN FOOD SYSTEM GOVERNANCE
The effectiveness of Indonesia’s food system strategy under the RPJMN 2025–2029 depends on the capacity of state institutions and their operational presence across the supply chain. Recent reforms move beyond policy formulation toward coordinated implementation, encompassing procurement, market stabilization, and distribution. This shift reflects a reconfiguration of the state’s role from regulator to active market participant.
In this context, institutional capacity is central to improving coordination, reducing fragmentation, and rebalancing market power. The following sections examine how these functions are operationalized through procurement systems, the evolving role of BULOG, and their implications for market structure and governance.
Strengthening State Institutions in Food Procurement and Distribution
The implementation of Indonesia’s integrated food system strategy for 2026–2029 is closely linked to the strengthening of state institutions responsible for procurement, storage, and distribution. Central to this framework is BULOG's expanded mandate, which serves as the primary implementing agency for government rice procurement and reserve management.
The policy framework establishes cross-sectoral coordination with clearly defined institutional roles. Bappenas aligns food policy with the RPJMN 2025–2029, while the Ministry of Agriculture oversees production, the Ministry of Trade regulates markets, and the Ministry of Finance supports fiscal instruments. Implementation is centralized through BULOG, with regional governments facilitating local execution. This arrangement reduces fragmentation and strengthens a coordinated, whole-of-government approach.
Under the current policy framework, BULOG’s role extends beyond traditional buffer stock management toward a more comprehensive function as a national off-taker and supply chain coordinator. This includes procurement of domestic rice, management of government reserves, and distribution through market operations and social assistance programs. This institutional consolidation reduces fragmentation and strengthens the state’s operational control over food supply chains.
This strengthening is consistent with the mandate of Law No. 18 of 2012 on Food, which assigns the state the responsibility for ensuring food availability, affordability, and stability, and with Law No. 19 of 2013 on the Protection and Empowerment of Farmers, which emphasizes price protection and market access.
Rebalancing market power and reducing intermediary dominance
A central institutional impact of the current policy framework is the rebalancing of market power within the agricultural supply chain. Prior to reform, farmgate pricing was largely influenced by intermediaries, particularly in regions with limited storage and market access. Farmers were often forced to sell during harvest periods under unfavorable conditions, reinforcing asymmetric bargaining positions.
The introduction of state-backed procurement mechanisms alters this dynamic. By establishing a guaranteed buyer and a binding price floor through government procurement, the state reduces dependence on intermediary networks. While private actors remain part of the supply chain, their influence over price formation is moderated by the presence of a credible state purchaser.
At the same time, integrating farmer groups and cooperatives into procurement channels strengthens collective bargaining and improves market access, in line with the objectives of Law No. 19 of 2013 on Farmer Protection and Empowerment.
Recalibrating institutional capacity: the evolving role of BULOG
The strengthening of BULOG’s role since 2026 also reflects a degree of historical continuity with its earlier function during the Suharto period. During that period, BULOG operated as a central instrument of state control in the food system, with authority over procurement, price stabilization, buffer stock management, and distribution of staple commodities (Booth, 1988; Timmer, 1996; World Bank, 2004).
However, following the post-1998 reform era, BULOG’s mandate was significantly reduced. Market liberalization policies shifted greater responsibility to private actors, and BULOG’s role became largely limited to buffer stock management and targeted distribution programs (World Bank, 2012; OECD, 2012). This transition reduced the state’s direct influence over farmgate prices and weakened coordination in domestic food markets.
The policy framework introduced since 2026 does not represent a full return to the past centralized system. Instead, it reflects a selective restoration of key state functions, particularly in procurement and price stabilization, within a more hybrid market environment. BULOG is reactivated as a strategic off-taker and coordinator, but without reestablishing full market control or monopoly powers.
This institutional recalibration allows the government to address structural weaknesses—such as price volatility and weak market absorption—while maintaining space for private sector participation. In this sense, the current model combines elements of historical institutional strength with contemporary governance arrangements.
Institutional constraints and implications for food system governance
Despite these advancements, the effectiveness of Indonesia’s institutional framework remains contingent on implementation capacity. Key constraints persist in logistics infrastructure, storage capacity, and post-harvest handling systems, while regional disparities continue to affect the consistency of policy execution. In addition, the expansion of state-led procurement introduces fiscal and operational pressures, requiring greater efficiency in procurement processes, reduced storage losses, and transparency in distribution to sustain institutional credibility.
A further challenge lies in maintaining an appropriate balance between state intervention and market participation. While state presence is essential for stabilizing prices and protecting farmers, excessive intervention may undermine private-sector incentives if not carefully calibrated.
Notwithstanding these constraints, the institutional reforms implemented since 2026 have significantly strengthened state capacity in food system governance. By consolidating procurement functions, enhancing coordination, and reducing intermediary dominance, the government establishes a more structured and predictable market environment. This transformation marks a shift from reactive intervention toward proactive system management, in which the state plays a continuous role in shaping market outcomes, ensuring stability, and protecting farmers. Within the existing legal framework, these developments demonstrate how statutory mandates on food security and farmer protection can be translated into operational and system-wide governance mechanisms.
CONCLUSION AND POLICY IMPLICATIONS
This paper examines Indonesia’s transition toward a coordinated, state-driven food system under the RPJMN 2025–2029, with a particular focus on rice and maize policy reforms implemented since 2026. The analysis demonstrates a clear shift from fragmented, production-oriented interventions toward a more integrated framework that links procurement, pricing, distribution, and downstream demand within a unified governance structure.
In the rice sector, the introduction of a Government Procurement Price and expanded public stockholding addresses a longstanding gap in farmgate price protection while strengthening supply stability. In the maize sector, integrating price support with downstream demand—particularly through feed industry linkages—improves market absorption and aligns production with industrial requirements. Together, these reforms establish a dual-track policy model: state-led stabilization for staple food security and demand-linked coordination for agro-industrial commodities.
This configuration reflects a broader redefinition of the state’s role in food system governance. Rather than functioning solely as a regulator, the state increasingly acts as a coordinator of market processes, shaping price formation, managing supply flows, and facilitating linkages across the value chain. This shift is particularly significant in smallholder-dominated systems, where market imperfections limit the effectiveness of purely market-based approaches.
From a policy perspective, three key implications emerge. First, food system transformation requires coordinated intervention across the entire value chain, rather than a narrow focus on production expansion. Second, state involvement—when institutionally grounded and operationally targeted—can effectively address structural inefficiencies such as price volatility, weak market absorption, and fragmented supply chains. Third, institutional capacity and inter-agency coordination are critical to translating policy design into effective implementation.
At the same time, the sustainability of this model depends on addressing key constraints, including fiscal pressures, infrastructure limitations, and uneven implementation across regions. Maintaining an appropriate balance between state coordination and market participation will be essential to avoid inefficiencies while preserving policy credibility.
Overall, Indonesia’s evolving policy framework represents a pragmatic and adaptive approach to food system governance. By combining strategic state intervention with market coordination, the government advances a model that enhances stability, supports farmer welfare, and strengthens national food resilience. More broadly, Indonesia’s experience suggests that effective food system transformation in developing economies requires not less state intervention, but more strategically coordinated state capacity.
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