Fri, 05 Aug 1994

Bulog cuts official price of rice to curb inflationary pressure

JAKARTA (JP): The National Logistics Agency (Bulog), the state run semi-buffer agency, cut the price of its rice yesterday by Rp 10 to Rp 675 (31 U.S. cents) per kilogram in Jakarta and to Rp 665 in other provinces in Java to curb growing inflationary pressure.

Beddu Amang, Bulog's deputy chairman, also instructed the logistics offices in those provinces to immediately intervene in the market in order to curb another rise in rice prices, which hit a high of over Rp 725 per kilogram last month.

Monthly inflation reached 1.37 percent last month as compared to 0.12 percent in June, bringing the inflation rate to 5.96 percent in the first seven months of this year. The inflation rate in the January to July period has already surpassed the annual target of five percent set by the government during the 1994-99 development plan.

Last month's sharp increase in inflation rate was caused by a rise in food and housing costs.

The logistic offices in most of the country's 27 provinces have intervened intensively in the market to push rice prices down.

According to Bulog, around 27,000 tons of its rice was sold in the market last moth, bringing the total amount of rice released from its stockpiles to over 330,000 tons since January.


Members of the House of Representatives hailed Bulog's decision to cut its price index as an affective move to stabilize the rice market.

House members, however, did not give any comment on the possible impact of the cut on farmers.

Farmers, who account for more than 80 percent of the country's population, often complain that rice prices are still too low as compared to farming costs.

"The House thanks Bulog for its response to stabilize rice prices," Imam Churmain, deputy chairman of the House's Commission IV, which is in charge of agriculture, forestry and transmigration.

Imam said that Bulog should introduce another cut in its official price if yesterday's move failed to stabilize rice trading.

Bulog, which only controls between five and eight percent of the country's total rice supply of 30.4 million tons, as of June, should be prepared for another price hike.

The government blamed the rise in the rice price on speculative trading by traders following the media's intensive reporting of the drought affecting the country's rice producing areas such as West and Central Java. (hen)