Australia may by-pass RI rice barriers

Australia may by-pass RI rice barriers

SYDNEY (Reuters): Indonesia's economic collapse and drought have combined to back Australian moves to by-pass longstanding blockages to Australian rice imports.

After widespread rice crop failure, Indonesia is this year seen importing up to five million tonnes of rice, believed by academics to be the greatest amount since independence in 1945. Imports from Thailand and Vietnam have already begun.

But Australia, which this year expects to produce 1.2 million tons of rice, remains effectively blocked from exporting to Indonesia by the government agency Bulog.

The agency, which holds the country's rice import monopoly, had denied Australia an import license in the past, leaving it exporting only "dribs and drabs", a well-placed Australian rice industry source said.

"We're hoping our friends in Canberra are helping us out on that one," he said when asked if Indonesia's crisis might result in blockages to Australian exports being removed.

Bulog is being allowed by the IMF to retain its monopoly on rice imports as the single exception to the rule that food import monopolies be dismantled from Feb. 1.

But possible Australian rice exports to Indonesia were now being positioned as food aid, a spokeswoman for the Department of Foreign Affairs and Trade told Reuters. This might initially occur through the re-export of Australian rice from Japan, another official said.

This adds a new twist to continued confusion in Indonesia's IMF-imposed food import reforms.

The IMF has insisted that import monopolies on imported food products be removed, except for rice, as a condition for its US$43 billion rescue package. Bulog technically lost its import monopoly, except for rice, on Feb 1.

The full extent of Indonesia's 1998 rice crisis was still unknown, according to Australian academic Jim Fox of the Australian National University's anthropology department.

Fox, who conducted an initial assessment of 1998 crop failure in Indonesia for the World Bank, told Reuters the United Nations' Food and Agriculture Organization (FAO) had now begun an intensive four-week Indonesia-wide assessment of food crops. The Asian Development Bank was also assessing crops.

Indonesia's unhusked rice output fell by 3.62 percent to 49.25 million tonnes in 1997 because of drought and is officially predicted to fall further, to 48 to 49 million tonnes, this year.

"The size of the crop is still an open question," Fox said.

The Australian rice industry expected Indonesia would import between three million and five million tonnes of rice this year, the Australian industry source said.

Fox believes imports of three million tonnes over about 14 months would be more realistic, he said.

Indonesia was reluctant to give precise figures in an effort to contain prices, he said.

Some 20 years ago, before Indonesia achieved self-sufficiency in rice, Australia was a regular exporter of rice to Indonesia.