Tiga Pilar Denies Selling Subsidized Rice as Premium Produce

Tiga Pilar Sejahtera Food denies selling subsidized rice as premium produce. (Antara Photo/Irsan Mulyadi)

By : Sarah Yuniarni | on 10:56 PM July 25, 2017
Category : Business, Corporate News

Jakarta. Tiga Pilar Sejahtera Food, a publicly-listed producer of processed foods, denies the government's accusations that it has sold subsidized rice as premium produce, an executive said on Tuesday (25/07).

Last week, police raided the company's warehouse and confiscated 1.16 tons of rice packaged under Maknyuss and Cap Jago Ayam brands.

"We did not use subsidized rice for our production and didn't sell it at as our premium produce," Tiga Pilar Sejahtera Food president director Stefanus Joko Mogoginta said at the Indonesia Stock Exchange (IDX), adding that there are two kinds of state subsidies — input subsidies for farmers to buy fertilizers and seeds, and output subsidies for rice aid distributed by the State Logistics Agency (Bulog).

"We bought unhulled rice from farmers and processed it to keep the limit of 5 percent broken seeds," he said, referring to premium rice specifications which, according to the Indonesian National Standard (SNI), are based on the physical form of the seeds, not their variety or nutritiousness.

Tiga Pilar also denied accusations that it engaged in unfair market competition by buying rice for a higher than the government-set price.

Stefanus said what the company did was beneficial to farmers. Tiga Pilar bought unhulled rice for Rp 4,900 (US 36 cents) per kilogram, while the government-subsidized rice stands at Rp 3,700.

According to him, farmers have a right to sell their produce for more and the company merely provided incentives for them to meet its quality standards.

Tiga Pilar has reportedly sold Maknyuss rice for Rp 13,700 per kilogram and Cap Ayam Jago for Rp 20,400, while rice is normally sold for between Rp 6,000 and Rp 9,000 per kilogram on the domestic market.

The company expects to book Rp 7.24 trillion in revenue this year, up 8 percent from 2016, on the back of its newly launched products, which include snacks, premium rice and noodles. In the first semester, its rice-producing subsidiary, Dunia Pangan contributed 56.4 percent of its Rp 3.37 trillion gross sales.

Dunia Pangan factories have a production capacity of 480,000 tons of rice a year.

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