Rice is a crucial commodity, particularly for Asia where most of the population is dependent on rice as the basic staple food that is consumed on a daily basis (and usually multiple times per day). It is estimated that more than 90 percent of rice is produced and consumed in Asia. Hence, rice consumption and production in the West is rather insignificant (although rice does have a centuries-long history in the West and thus there also developed specific European rice culinary specialties such as the risotto in Italy or the paella in Spain). Thus, rice-producing Asia is a net exporter of rice to the rest of the world.

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Indonesian Agriculture Minister Andi Amran Sulaiman has a strong suspicion that the "rice mafia" is behind the recent fluctuations in rice supply and prices in Indonesia. Suspicion emerged after new rice supplies suddenly 'flooded' Indonesian markets in February when prices of rice had already risen due to the scarcity of supplies. Sulaiman believes there is a cartel consisting of six big Indonesian rice distributors that deliberately hid rice output after last year's harvest and waited for prices to rise significantly before supplying rice to the markets in order to see higher profits.

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In order to avert a spike in inflation and social unrest, Indonesian President Joko Widodo may feel forced to allow around 1.5 million metric tons of rice imports in 2015 as domestic prices of rice have been rising on sluggish local harvests. Moreover, an intensifying El Nino is expected to cause dry weather in the months ahead hence further jeopardizing rice productivity. These already tough conditions will be exacerbated by seasonal Islamic celebrations (Ramadan and Idul Fitri) that always trigger increased consumption of food products.

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Indonesian inflation is expected to have eased further in February 2015 on lower food prices. One notable exception, however, is rice. Rice prices have soared approximately 30 percent year-on-year (y/y) up to IDR 12,000 per kilogram in February. Higher rice prices have been caused by distribution obstacles for Raskin (‘rice for the poor’) operations in combination with this year’s late harvest season (between March and June). Fluctuation in prices of rice, the staple food of 250 million Indonesians, has a significant impact on inflation in Indonesia.

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The price of rice in several Indonesian regions has risen by between 17 to 23 percent to IDR 8,500-9,000 per kilogram as rice production at the start of the year has not been able to meet rice demand. In January 2015, Indonesian rice production stood at 2 million tons, whereas demand reached 2.5 million tons. Inflation of rice is a sensitive issue in Indonesia because it jeopardizes declining poverty rates as poorer segments of Indonesian society spend over half of their total disposable income on food items, primarily rice.

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The central bank of Indonesia (Bank Indonesia) expects to see a trade surplus in May 2014. Governor of Bank Indonesia Agus Martowardojo stated that he is optimistic that Indonesia’s trade balance will show positive growth after recording a shocking deficit of USD $1.96 billion in April 2014. This deficit was mainly the result of weak global demand for crude palm oil and coal, both of which are Indonesia’s most important foreign exchange earners in the non-oil & gas sector. However, this global demand is expected to have remained weak in May.

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