Bulog supports futures commodity trading plan

Bulog supports futures commodity trading plan

JAKARTA (JP): The National Logistics Agency (Bulog) is to take
part in the planned futures commodity exchange, which is expected
to help it in its role to secure adequate foodstuffs for the
domestic market, its chief Beddu Amang said yesterday.

He said that Bulog had no objections to the establishment of a
futures commodity market in Indonesia as it would help Bulog's
job of buffer-stocking foodstuffs.

Beddu said, however, it was up to the Ministry of Industry and
Trade to decide whether or not a futures commodity exchange
should be established in Indonesia.

"But if they decide to go ahead with it, that will be fine
with us. We'll just go along and give it our full support," he
told reporters.

But he admitted that officials at Bulog had not yet studied
the impact of domestic commodities futures trading on Bulog's
operations.

Bulog was established in 1967 to stabilize the prices of
several important foodstuffs, including rice, sugar, wheat, corn
and soybeans, through market operations and buffer-stocking
schemes.

Plans

The government's plans to establish a futures commodity
exchange has been supported since 1990 by the Federation of
Edible Oil and Fats Association (FAMNI) and the Association of
Indonesian Coffee Exporters (AICE).

FAMNI Vice Chairman Tarmidzi Rangkuti said earlier this year
that a futures exchange would benefit farmers because they would
be able to rely on a certain price during a certain period of
time and adjust their planting and harvesting schedules based on
this information.

Executives of both FAMNI and AICE have claimed they are ready
to operate a futures exchange, but have to wait for the necessary
government regulations.

The commodities that will be traded on the futures market are
coffee and crude palm oil (CPO), while rubber is still being
debated.

Many observers have also considered that the marketing of CPO
on a futures market would not be beneficial as long as the
government still had excessive control over the commodity. They
were particularly referring to its policy of imposing an export
tax on CPO.

The observers pointed out that activities on the planned
futures exchange needed free market mechanisms. (pwn)