Controversy over rice imports<\/p>\n
Importing rice, like raising fuel prices, is always
\npolitically controversial. However, the heightened political
\nemotions set off by the importation earlier this month of 70,000
\nmetric tons of rice from Vietnam seems to be inordinate.<\/p>\n
Those analysts who sharply criticized the imports as being
\ninimical to the interests of rice growers and the leaders of the
\nIndonesian Farmers Association who encouraged protest
\ndemonstrations are not so ignorant as not to know that the amount
\nof the imports is too small to cause any disruption in the
\ndomestic rice market.<\/p>\n
The imported rice will only amount to about 0.002 percent of
\nnational consumption, which is estimated at 32.85 million tons
\nthis year, against national production of 33 million tons. The
\ngovernment also had explained as early as August, when the debate
\nover the rice import plan started to rage, that imported rice
\nwould not be released onto the market unless local prices rose
\nfar in excess of the set ceiling, and would be used only to
\nreplenish the National Logistics Agency (Bulog)'s buffer stock.<\/p>\n
Minister of Agriculture Anton Apriyantono said in September
\nthat importation would only be resorted to if Bulog's stocks fell
\nbelow one million tons and retail prices rose above Rp 3,500 (US$
\n0.30) per kilogram. But Bulog's stocks always change as it
\nhas to sell at least 150,000 tons of rice monthly under the rice-
\nfor-the-poor program. Latest estimates by the trade ministry,
\nwhich oversees Bulog, show that as of early this month the
\nagency's stocks had dwindled to around 800,000 tons -- below the
\nthreshold set by the ministry.<\/p>\n
The basic issue here is that the government should always have
\na buffer stock of at least one million tons of rice to meet
\nurgent need in emergencies, such as natural disasters or crop
\nfailures. As the fourth most populous country in the world with
\nmore than 220 million people to feed, the government must also
\nsee to it that the country has reliable suppliers in times of
\nurgent need.<\/p>\n
Experience has shown that food security is vital to political
\nstability, and the challenge in Indonesia is particularly
\nformidable as food security essentially means the availability of
\nrice, the main staple, at affordable prices, while there are only
\ntwo major rice exporters in Asia (Thailand and Vietnam).<\/p>\n
Hence, the importation of 70,000 tons earlier this month was a
\ncontingency measure to preempt any shortages that might be caused
\nby unexpected factors like crop failures or natural disasters --
\nparticularly important given that the next harvest will only
\nstart in February and that it will take a few weeks before the
\nimported rice actually arrives in Indonesian ports.<\/p>\n
To start thinking about importing rice only after a major
\nshortage has arisen would be calamitous -- what starts as an
\nisolated shortage could soon escalate into a crisis given the
\ntime lag between the decision to import and the actual arrival of
\nshipments. Moreover, a shortage, or even just a perceived
\nshortage, could very quickly prompt speculators to join the fray,
\nthereby resulting in spiraling inflation as rice weighs heavily
\nin the basket of goods used for calculating the consumer price
\nindex.<\/p>\n
It is also worth remembering that most rural farm households
\nare net consumers of rice, and steep rises in rice prices could
\ntrigger a social and political crisis as food usually accounts
\nfor the bulk of the spending of poor families.<\/p>\n
The government certainly does not want to repeat the mistakes
\nmade during the rice crisis of 1998 when imports came very late
\namid an acute rice shortage arising from a national crop failure
\ncaused by the El Nino phenomenon.<\/p>\n
Some analysts have suggested that the government buy the rice
\nit needs on the domestic market in order to improve the incomes
\nof farmers. The problem with this argument is that most farmers
\nnormally sell their surplus output within days of the harvest so
\nthat most stocks are now already in the hands of wholesalers or
\nretailers. Hence, buying such a large quantity of rice in one
\ntransaction could disrupt the market and trigger excessive price
\nrises.<\/p>\n
In fact, past experience has shown that farm-gate rice prices
\nalways remain stagnant even when retail prices are rising
\nsharply, meaning that the farmers rarely benefit from rice price
\nincreases, except those mandated by the government.<\/p>\n
We therefore believe that the fundamental issue that the government
\nmust immediately address is the public's lack of trust in the
\ngovernment's rice policy and the perceived lack of transparency
\nin the process of making decisions on resuming rice imports,
\nwhich were totally banned in 2004.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/controversy-over-rice-imports-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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