New Reference Prices for Seven Basic Commodities

In a bid to control fluctuations in the prices of basic commodities, the Ministry of Trade (“Ministry”) has finally issued Regulation No. 63/M-DAG/PER/9/2016 on the Stipulation of Reference Prices for the Purchase of Basic Commodities from Farmers and the Sale of Basic Commodities to Consumers (“Regulation 63/2016”).Through Regulation 63/2016, the government has also set reference prices for seven basic commodities. In addition, it has also now regulated mechanisms whereby the Logistics Affairs Board (Perusahaan Umum Badan Urusan Logistik –“BULOG”) and other State-Owned Enterprises (“SOEs”) can purchase basic commodities from farmers and then resell them to consumers.Prior to the issuance of Regulation 63/2013, the purchasing price for soybeans specifically was regulated under Ministry Regulation No. 80/M-DAG/PER/9/2015 on the Stipulation of Soybean Purchasing Prices by Farmers in Order to Safeguard Soybean Prices at the Farming Level (“Regulation 80/2015”).Reference PricesThe government differentiates between reference prices for basic commodities which are applicable to farmers and prices which are applicable to consumers. These two reference prices are determined based on an appraisal of production costs, distribution costs, revenue and/or other factors. [1] By implementing these reference prices, it is hoped that the price of basic commodities will not fluctuate, thus harming stakeholders.A list of reference prices covering seven basic commodities is detailed in the table below: [2]