Bulog budgets Rp 6.6 trillion to buy rice from farmers

JAKARTA (JP): The National Logistic Agency (Bulog) has budgeted Rp 6.6 trillion ($694.7 million) to buy up to 2.5 million tons of unhusked rice from farmers this year with the target of propping up prices at Rp 1,500 per kilogram, Antara reported on Monday.

The news agency said the budget is 38 percent higher than what Bulog spent in 2000 when it bought 2.2 million tons from farmers.

It quoted Bulog deputy chairman Sjafei Atmodiwiryo as saying that the money would come from loans from Bank BRI, Bank Bukopin, and Bank Mandiri.

Bulog has the dual task of maintaining rice prices at levels affordable to consumers and at the same time ensuring adequate return to farmers.

Rice procured by the agency is resold to civil servants and members of the Indonesian Military and National Police as part of their salary, and is also used for its open market operations to stabilize prices.

Sjafei admitted that Bulog faced a daunting task in propping up prices of unhusked rice at Rp 1,500 a kg, the targeted floor price set by the government for 2001, noting that prices in the market currently hovered between Rp 800 and Rp 900.

The floor price was set at Rp 1,020 in 2000.

He blamed the flood of imports for the current low prices, in spite of a 30 percent import duty imposed since January 2000.

He noted that imported rice, even after the tariff, is sold at around Rp 1,800 kg in the markets, undercutting locally grown rice which is quoted at around Rp 2,200.

He suggested that the government hike the import tariff to at least 61 percent.

Until 1998, Bulog was involved in procuring and selling many basic commodities such as rice, sugar, flour and soybean. The agency lost its monopoly over all these commodities as part of the massive economic reforms mandated by the International Monetary Fund.

Bulog has since been designated only to procure and sell rice, and in direct competition with private traders. (05)