Bulog to continue to stabilize sugar, wheat flour prices

JAKARTA (JP): The State Logistics Agency (Bulog) will continue its sugar and wheat flour market intervention to help stabilize prices despite the abolishment of its import and distribution monopolies on the two commodities.

Ishadi, chairman of the Federation of the Associations of Sugar Wheat Flour Distributors, said yesterday the federation's members would continue to help Bulog in its market operation which involves selling its stocks at the old prices.

He said the operation would probably continue until May when all Bulog's sugar and wheat flour stocks were sold out.

"We will continue our duty to stabilize sugar and wheat flour prices until our old stocks sell out, at least until May. Sugar is being sold at Rp 1,600 per kilogram and wheat flour at Rp 1,000 per kg in our market operation," Ishadi said.

He said the market operation was expected to push sugar consumer prices below Rp 1,750 per kilogram. In some areas in Jakarta sugar is currently being sold at Rp 2,000 per kilogram.

He said Bulog's chief Beddu Amang had promised the agency would not increase its sugar prices until May.

Bulog lost its monopolies over the import and distribution of some commodities on Feb. 1, under an agreement signed last month by the International Monetary Fund (IMF) and President Soeharto.

The agreement only allows Bulog to keep its monopoly over rice imports. Under the agreement, Bulog will no longer operate as a buffer stock agency to stabilize other important products such as sugar, wheat flour, soybeans, and cooking oil.

The 50-point agreement, including the elimination of Bulog's monopolies, was part of the requirements for Indonesia to receive a US$43 billion loan package from the IMF and other international sources.

Ishadi said the federation, Bulog's main distribution arm, would sell sugar and wheat flour directly to retailers, cooperatives, institutions and community groups to prevent the unscrupulous from stockpiling commodities for future profit.

He said direct selling of these commodities would make it easier to ensure they reached the end consumers at non-inflated prices.

Many wholesalers are reported to have stockpiled sugar and wheat flour and resold it to retailers at a very high margin.

This, according to reports has caused a sharp increase in the prices of the two commodities at retail level.

"We will open wide our storehouses to sell our stocks directly, for cash, to the public, retailers, and institutions who want to buy the commodities in bulk. We will sell sugar at Rp 1,400 per kilogram and wheat flour at Rp 21,500 per 25 kg bag," he said.

"That approach is important to prevent parties profiting from the situation," he added.

Ishadi said it would discourage people from speculative trading because sugar and wheat flour could not be stored for months.

He said Bulog had allocated about 300,000 tons of sugar for this market operation throughout Indonesia this month. This will increase 20 percent in the coming months. The agency has allocated about 8,000 tons per month for Jakarta alone.

He declined to give details about the size of Bulog's stocks of sugar and wheat flour but said the stocks would be enough to supply people until May.

"So don't worry. Don't believe the rumors. The fact is we have a lot of sugar and wheat flour," he said.

Last month, the Jakarta branch of Bulog (Dolog Jaya) claimed to have 48,000 tons of sugar and 330,000 tons of wheat flour in stock. (gis)