Experts urge govt to raise import tariff on rice

Adianto P. Simamora and Nana Rukmana, The Jakarta Post, Jakarta

Agriculture experts said the government must immediately raise the import tariff on rice to protect farmers against cheaper imported rice as the harvest season begins.

Pantjar Simatupang of the Center for Social and Economic Research said on Sunday the massive inflow of cheaper imported rice was the main reason for the current drop in the price farmers' are receiving for unhusked rice.

"The government must quickly raise the import tariff to at least Rp 720 per kilogram," he told The Jakarta Post.

He said that although the government raised the floor price for unhusked rice to Rp 1,230 per kilogram last year, farmers were not benefiting from the policy because traders could easily turn to cheaper imports.

The floor price is the price used by the State Logistics Agency (Bulog) to purchase unhusked rice from farmers (the floor price for unhusked rice of a quality ready for grinding is set higher price at Rp 1,725 per kilo). But Bulog only buys 5 percent of the total rice output for reserve purposes.

The government currently imposes an import tariff on rice of Rp 430 per kilo, which is about a 30 percent tariff.

Pantjar said that with such a low tariff importers could sell imported rice here for about Rp 2,500 per kilo, compared to the government's set price for local rice of Rp 2,790 per kilo.

He said this was contributing to the pressure on the price of unhusked rice at the farm level.

Kompas daily reported over the weekend that as the harvest season began, farmers were only able to command the low price of about Rp 800 for every kilo of unhusked rice.

But Asyikin Kusnadi, a senior official at the agriculture office in Cirebon, West Java, told the Post the low prices being received by farmers were mainly due to the low quality of the unhusked rice.

In Cirebon, the price of unhusked rice is about Rp 1,000 per kilo.

The chairman of the Indonesian Farmers Association, Siswono Yudohusodo, however, blamed the low import tariff for the falling price of unhusked rice.

He said the import tariff must be raised to Rp 850 per kilo in order for the government floor price to become effective.

He said other countries had higher import tariffs on rice, including China with 150 percent, Pakistan 120 percent and Thailand 90 percent.

But Bayu Krisnamurti, a director at the Center for Development Studies at the Bogor Institute of Agriculture, warned that raising the import tariff was only a short-term solution.

He said fundamental changes were needed to allow local rice to compete with imports, including increasing the efficiency of the country's farmers.

He added that increasing the import tariff could also create another problem, namely smuggling.

The World Bank earlier warned the government against raising the import tariff on rice as this would increase the price of the commodity in the country. It added that the protectionist measure would hurt farmers as they are net rice consumers.

Rice is the main staple food of the country's more than 200 million population, which makes it a strategic commodity here.