Indonesian rice prices are expected to remain close to all-time highs into early 2027 as distribution bottlenecks and delayed rains threaten supplies, industry officials and analysts said.
Retail rice prices in Indonesia, the world's fourth-largest producer of the grain that is the staple for its 290 million people, climbed to a record of 15,769 rupiah ($0.88) per kilogram in September, data from statistics agency BPS showed, fuelling public dissatisfaction over persistent food inflation.
Rice output is expected to fall 2.8% on-year in the January to November period, BPS data showed.
The National Food Agency expects rice production of about 34 million metric tons this year, exceeding consumption of over 31 million tons. However, output in 2027 is likely to take a hit as a shorter-than-usual rainy season from November could delay planting and shorten the growing period, while El Niño-induced dry weather is already reducing planting in some areas, analysts said.
"A prolonged period of elevated rice prices should be anticipated, with prices likely to continue rising through March 2027 as El Niño-related weather disruptions delay the main harvest cycle," said Dwi Andreas Santosa, a food analyst at IPB University.
He said meaningful relief is not expected before April as supplies from a delayed harvest will only be available in the second quarter of 2027.
Rice output could drop 10% next year, with around 30% of Indonesia's paddy fields lacking irrigation infrastructure and vulnerable to drought, said Zulharman Djusman, deputy secretary general at the rice farmers group KTNA.
Some farmers in water-scarce areas, particularly in southern Java, have switched to secondary crops or left fields fallow, said Sutarto Alimoeso, chairman of the Association of Indonesian Rice Millers and Entrepreneurs.
DISTRIBUTION BOTTLENECKS
A gap between the cost of buying from farmers and the government's retail price ceiling is squeezing Indonesia's rice supply chain, Roy Mandey, chairman of Affiliation Global Retail Association, told Reuters.
This is forcing retailers to buy from distributors at prices above the cap and sell at a loss, making them reluctant to secure supplies, he said.
In supermarkets, premium 5 kg rice sacks that are popular among the middle class have become increasingly scarce in recent months, according to media reports.
Industry representatives have called for more targeted intervention. Mandey proposed replacing the single retail price ceiling with a framework that includes a floor price for farmers and a retail price that triggers the release of government stocks.
Indonesia's national food agency did not immediately comment.
State procurement agency Bulog, which manages the national rice reserves, held about 4.6 million tons as of mid-September.
Reserves are not automatically available through ordinary commercial channels. Part of the stock is held as a strategic buffer against El Niño-related risks, while releases are channelled through government food aid and subsidised market-stabilisation programmes.
Soon after President Prabowo Subianto took office in late 2024, the government introduced measures aimed at increasing production, supporting farmers and strengthening reserves as part of a self-sufficiency push. The country has not imported rice since then.
In January 2025, the government raised the purchase price for harvested dry unhusked rice to 6,500 rupiah per kilogram from 6,000 rupiah, which helped farmers but raised costs for millers, contributing to the mismatch between production costs and the ceiling imposed on packaged rice sold to consumers.
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