Bulog to auction wheat stocks to private firms

Bulog to auction wheat stocks to private firms

JAKARTA (JP): The State Logistics Agency (Bulog) will auction
about 900,000 metric tons of wheat flour from its stocks to
private companies following the removal of the government's
subsidy on the commodity.

Bulog's acting chairman Rahardi Ramelan said Friday the wheat
flour would be sold to the highest bidders.

"The wheat flour that Bulog owns will be put up for offer and
it will be sold to the most attractive bids," Rahardi, also the
minister of industry and trade, told reporters at his office.

The move would reduce the agency's financial burden and help
to create fairer prices, he added.

Before the subsidy on wheat flour, soybeans and sugar was
lifted last month, Bulog imported the wheat and appointed several
private milling companies owned by well-connected businessmen to
grind the wheat into flour.

The wheat flour was then distributed and sold to the market
through cooperatives and the agency's distribution arms at
subsidized prices.

The government removed subsidies on the three commodities to
meet its reform comittment agreed on with the International
Monetary Fund (IMF). The only subsidy retained is on the
politically-sensitive commodity of rice.

Before the subsidy removal, Bulog was the only institution
allowed to import the wheat.

The government estimated earlier that it needed to import 4.25
million tons of wheat this year, an amount equivalent to 3.15
million tons of wheat flour.

Monthly domestic demand of wheat flour reaches 260,000 tons or
about 3.12 million tons a year. In Jakarta alone, the demand is
32,000 tons a month. (das)