Jakarta. President Prabowo Subianto's goal of setting up tens of thousands of village-level cooperatives aims to stabilize food prices by cutting the middlemen out in its distribution, according to Agriculture Minister Andi Amran Sulaiman.

Work is underway to set up the so-called Merah Putih or Red and White Village Cooperatives. Prabowo plans to establish these cooperatives in up to 80,000 villages in Indonesia. Approximately 64,000 farmer groups are also expected to transform into these cooperatives. Andi Amran revealed that this program would become Indonesia's long-term solution to reduce reliance on middlemen in the food supply chain. Taking out these intermediaries can lead to more affordable food commodities in the market.

"Food distribution used to involve eight components within the supply chain. We will slash it to just three components, namely producers [farmers], cooperatives, and consumers," Andi Amran said in Jakarta over the weekend.

The minister claimed that middlemen could earn Rp 313 trillion ($19.2 billion) by acting as intermediaries in the distribution of main food commodities including rice, corn, soybeans, chilies, shallots, and coffees. Andi Amran said that these intermediaries not only caused food prices to soar among consumers but also lessened the farmers' profit. He revealed that the Merah Putih Village Cooperatives would slash the money circulating among these middlemen from Rp 313 trillion to Rp 50 trillion. This way, Rp 263 trillion would go to the farmers and consumers.

"So everyone can reap the benefits [of our food production]. This is a permanent solution for Indonesia's future," Andi Amran said, adding that the program could spur the village economy.

According to media reports, each cooperative will get between Rp 3 billion and Rp 5 billion in initial capital. They may use the money to purchase facilities to set up a warehouse and cold storage, among others. The initial funding will come from village funds, state and regional budgets, as well as loans from government-run banks.