Indonesia is facing a significant reduction in its rice production during the critical harvest period from January to April 2024, with an estimated decrease of 17.52% compared to the previous year. This decline is primarily due to adverse weather conditions associated with the El Nino phenomenon, which led to a discouragement in planting activities during the October to December timeframe. As a result, the total rice production for 2023 was recorded at 31.1 million tonnes, while the projected output for the early months of 2024 is expected to fall to 10.7 million tonnes from the 13 million tonnes harvested in the corresponding period of the previous year. This reduction is further compounded by the anticipated shrinkage of rice-producing areas by about 16%, which is expected to negatively impact the harvest size in early 2024.
The implications of this downturn in production have already started to manifest in the domestic market, with retail prices for rice reaching an all-time high. The statistics bureau's retail rice price index, which encompasses all grades of the grain, peaked at 15,157 rupiah per kilogram in February 2024, marking the highest price point ever recorded. This spike in prices has contributed to an increase in the country's February headline inflation rate, surpassing initial forecasts.
In response to the escalating prices and in anticipation of heightened demand during the upcoming Muslim holy month of Ramadan, the Indonesian government has taken measures to augment its rice imports. An additional allocation of 1.6 million tonnes of rice imports has been approved for this year, supplementing the 2 million tonnes previously sanctioned. This strategic move aims to stabilize rice prices and ensure adequate supply for Indonesia's population of approximately 270 million people.
Moreover, the report also highlights a notable increase in the production of corn kernels with 14% water content, which is estimated to rise by 10.28% year-on-year to 5.34 million tonnes in the January-April period. However, it is important to note that the overall corn kernel output experienced a decline of 10.61%, totaling 14.77 million tonnes in 2023. These figures underline the challenges and adjustments the agricultural sector in Indonesia is currently facing, driven by climatic variations and the necessity to meet the domestic demand for staple foods.