Sharing the Wealth: How Villages Decide to Distribute OPK Rice

Policy Research

In response to the financial crisis which struck Indonesia in mid-1997, the government of Indonesia, in cooperation with the World Bank, instituted a food support program called Operasi Pasar Khusus, or OPK. The OPK program was designed to provide first 10kg, and later 20kg, of rice per month to every poor family in Indonesia.

The rice was to be sold at a price of Rp1,000/kg, which represented a substantial subsidy from the market price of over Rp2,000/kg. For a typical poor household receiving the full 20kg of rice at the subsidized price, the subsidy would be equivalent to approximately 10% of annual monthly household expenditure. The rice was distributed through village governments. Each month, rice wasdelivered to the villages, either directly by the government logistics depots, DOLOGs, or by the village staff, who retrieved the rice from the kecamatan (subdistrict) office. Though the list of rice recipients was supposed to follow the national BKKBN social welfare guidelines, in fact, village officials had almost complete authority to determine how the rice would be distributed within their villages. As a result, as has been documented by earlier SMERU reports, the implementation of the OPK program varied dramatically from village to village, even within the same kecamatan. In some areas, the rice was well-targeted to poor families; in others, the rice was simply divided equally among recipients. In yet other areas, it was simply announced that cheap rice was available for sale, and whoever could afford to buy it was allowed to do so. Virtually all aspects of the rice distribution, from the generation of eligibility lists to the amount of rice each household was allowed to buy to the price of the rice, varied dramatically from village to village.

The purpose of this study is to try to begin to understand what lay behind the decisions made by village heads as to how to distribute the rice. Which villages distributed the rice evenly, and which were more successful at targeting it to the poor? What aspects of the village made targeting easier or more difficult? What aspects of the villages’ underlying economic, social, and political landscape led to the dramatic differences in who received the subsidy, and how much subsidy they received?

This study consists of field visits to five villages-three villages in Kabupaten Pandeglang, Banten, and two villages in Kabupaten Semarang, Central Java. The three villages in Pandeglang were three of the villages included in BPS’s Survei Seratus Desa (SSD), a panel dataset conducted from 1997 to 1999 in 100 villages, spread across 10 kabupaten (districts) in 9 provinces. The analysis from those villages is therefore supplemented with data from the SSD. Additional background information about the villages comes from BPS’s 1999/2000 Potensi Desa dataset.

Research Area 
West Java
Central Java
Research Topic 
financial crisis
operasi pasar khusus
social protection
food support
Publication Type 
Working Paper
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