Bulog getting out of wheat flour trading

JAKARTA (JP): The State Logistics Agency (Bulog) will relinquish its wheat flour activities to deal solely with rice once its remaining stock is sold, Minister of Industry and Trade Rahardi Ramelan said on Friday.

Rahardi, who is also the agency's chairman, denied the wheat flour stocks would be sold gradually to prevent disruption of market prices.

"Once they are sold, we will concentrate on dealing with the distribution and procurement of rice," he said after the installation of the ministry's new inspector general.

Rahardi was quoted by Antara news agency as saying the government imported 3.2 million tons of wheat in 1998.

He said the agency's wheat flour stock was 542,042 metric tons at the end of February.

He said that early this year the agency offered up to a 15 percent discount for wheat flour in a move to increase sales which slowed after the Christmas, New Year and Idul Fitri festivities.

Rahardi denied a report Bulog set up a consortium of wheat flour distributors to replace the now defunct Federation of Association of Sugar and Wheat Flour Distributors (Gapegti).

Bisnis Indonesia daily reported on Thursday that the consortium was established to buy Bulog's wheat flour produced by private PT Bogasari Flour Mills, the country's biggest wheat flour miller, and PT Berdikari.

Gapegti, a cartel-like association, was dissolved last year following allegations it was involved in hoarding basic commodities.

Traders fear the consortium could lead to emergence of a new cartel in the distribution of the product.

"Bulog never set up a consortium. The consortium was established by small traders, distributors and cooperatives so they could buy Bulog's wheat flour at discounted prices," Rahardi said.

He argued that small distributors and cooperatives could buy wheat flour in greater amounts as part of a consortium, and it would be cheaper than buying in small groups.

The consortium is expected to buy 150,000 tons of the agency's stock at much lower prices.

Rahardi acknowledged the consortium would buy the agency's wheat flour at even lower prices than its 15 percent discounted prices.

However, he assured the consortium would not become a new cartel because distribution lines would be unhindered.

Bulog lost its monopoly to import and distribute wheat, wheat flour, soybeans, garlic and sugar in February last year under the economic reform package agreed upon with the International Monetary Fund. (gis)