Bulog's rice procurements reach 1.1m tons

JAKARTA (JP): Domestic rice procurements by the National Logistics Agency (Bulog) reached 1.1 million tons during the first five months of the current fiscal year, indicating a 45.71 percent increase from the beginning of the year, in April.

"The rice procurements are the largest during the last two fiscal years, despite the fact that many problems hit our agricultural sector this year," Bulog Chairman Beddu Amang said at a hearing with the House of Representatives' Commission VII -- dealing with finance, trade, cooperatives and logistics -- here yesterday.

He said the problems included a shortage of fertilizers on the domestic market, the decrease of rice fields and floods and pest attacks in a number of rice-growing areas.

With the rice procurements of 1.1 million tons, Bulog's total stocks of rice, the main staple of the country, have now reached 2.7 million tons, adequate for food security until the upcoming general elections next year.

Beddu said, however, that during the current fiscal year, his agency will be able to procure only 1.4 million tons of rice, far lower than the target of two million tons.

He said the lower procurements of rice will be caused in part by the fact that the rice price on the market will be higher than the agency's buying price, causing farmers to prefer to sell their products at marketplaces.

Bulog, established by the government in 1967, is charged with maintaining the price stability of basic food commodities such as rice, sugar, flour and soybeans through buffer-stocking and market interventions.

During the first five months of the current fiscal year, procurements of sugar reached 1.04 million tons, flour, 1.4 million tons, soybeans, 376,556 tons and crude palm oil (CPO) 90,000 tons.

Beddu Amang noted that in an effort to arrest the rising price of cooking oil on the domestic market, Bulog will import 20,000 tons of cooking oil from Malaysia this month.

"The first shipment of the imported coking oil was made on Sept. 8," he told the press after the hearing.

He said that the imported cooking oil will be used by the agency for market intervention to press down the current price of Rp 1,500 (65 U.S. cents) per kilogram to at least Rp 1,400.

He said that the recent increase in the cooking oil price was caused by the shortage of crude palm oil supplies, a raw material for making cooking oil.

"CPO producers have been increasing their exports over the past few months on fears that the price of CPO on the domestic market will continue to decrease," said Beddu.

He said that the increase of CPO exports was also caused by the increase of CPO prices on the international market, from US$477 per ton in July to $530 per ton late last month, and the temporary abolishment of export tax for CPO during last month.

The government imposed an export tax on CPO products to protect the domestic cooking oil industry. The tax, however, is automatically abolished if prices on the world market fall to below $434 per ton for CPO and to $500 per ton for olein or cooking oil.

Bulog estimates that the shortage of CPO supplies on the domestic market will continue in the next few months, in conformity with the upward trend of exports.

The upward trend of exports is possible because most domestic CPO producers have already committed themselves to fulfilling their future contracts.

"Considering the CPO supply shortage, an export tax is still needed to guarantee the raw material for our industry," Beddu said in commenting on analysts' view that the export tax should be abolished.

Also to discourage the exports, Bulog suggested that the government apply export tax on CPO based on the bill of loading and not upon the export notification date, as currently applied. (13)