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)