Bulog to quit wheat business in October

Bulog to quit wheat business in October

JAKARTA (JP): The State Logistics Agency (Bulog) will stop
importing wheat and wheat flour in October after the government
ends subsidies to the commodities, the agency's chairman said.

Beddu Amang said that thereafter the private sector alone
would import wheat while the agency concentrated on importing
rice and sugar.

He said the agency would not lobby the government to prolong
the subsidy, which according to reforms agreed with the
International Monetary Funds (IMF) should come to an end in
October.

"In October we will leave the wheat business and private
companies will have to take over our job," he said.

Beddu said that private companies were already allowed to
import wheat and wheat flour directly but added they had so far
been reluctant to do so.

Private wheat flour producer PT Bogasari Flour Mills said that
it has no plans to import wheat directly, despite the removal of
import restrictions on the commodity.

Company director Franky Welirang argued that importing wheat
would be too expensive because of the sharp depreciation in the
value of the rupiah.

He said Bogasari would continue to operate exclusively as a
miller.

"Milling Bulog's wheat is still more profitable than becoming
a trader, even though the processing fee is very low," Franky
said.

Franky said that Bogasari meets 80 percent of the country's
monthly flour demand of 250,000 tons.

Beddu said that Bulog planned to buy 700,000 tons of wheat
next month.

"We will need to import around 4.25 million tons of wheat in
this fiscal year. We have already bought approximately 1 million
tons," Beddu said.

"In September we will tender a contract to buy 700,000 tons of
wheat to cover between two and three months consumption," he
said. He declined to reveal the current stock of wheat flour held
by the agency.

Beddu said the last wheat purchase tender was held on July 30,
when the agency bought 745,000 tons of wheat from the United
States, Canada and Australia to cover August, September and
October. Prices agreed were between $129.24 and $171.00 per ton
on a cost-and-freight basis.

The agency raised the price of flour by 46 percent on Monday,
from Rp 2,231 per kilogram to Rp 3,290 per kg, to adjust for the
increase in international wheat flour prices and the sharp
depreciation in the value of the rupiah against the U.S dollar.

Bulog lost its monopoly to import and distribute wheat, wheat
flour, soybeans, garlic and sugar on Feb. 1 under the economic
reform package agreed with the IMF.

But under June's supplementary memorandum, all subsidies were
extended in an attempt to lessen the impact of the worsening
economic conditions on the nation's poor. The agency's role in
importing and distributing the commodities was also reinstated.
(gis)