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)