Floor price of unhusked rice to be increased to Rp 1,000

JAKARTA (JP): The government has decided to increase the floor price of unhusked rice this month by 43 percent to Rp 1,000 (10 U.S cents) a kilogram from Rp 700, Minister of Agriculture Soleh Solahuddin said yesterday.

"The increase will be formally announced Wednesday," he said, adding that the decision was taken in an economic, finance and industrial ministers coordinating meeting here yesterday.

Soleh said the increase, the third in the last five months, was expected to increase farmers' incomes and to further encourage farmers to boost rice production.

"The main objective of the rice price increase is to improve the real incomes of the farmers amid the soaring prices of essential needs and farming materials, including pesticides," he said.

The government announced a 17 percent increase in the producer floor price of unhusked rice to Rp 700 from Rp 600 in April in a bid to increase farmers' incomes.

The government also raised the price of unhusked rice procured by Bulog from village cooperatives 16.2 percent to Rp 716 per kilogram from Rp 616 per kilogram.

The price of unhusked rice procured by the State Logistics Agency (Bulog) from parties other than village cooperatives was increased 16.4 percent to Rp 710 per kilogram from Rp 610 per kilogram.

The price of polished rice procured by Bulog from village cooperatives increased 15.8 percent to Rp 1,125 per kilogram from Rp 971 per kilogram and from other sources 16 percent to Rp 1,115 per kilogram from Rp 961 per kilogram.

But many analysts said that the price increase failed to boost farmers' incomes because the move was followed by a rise in fertilizer prices.

Soleh said the subsidy for kalium chloride fertilizer (KCl), which has been abolished, would be reintroduced again to help boost rice production.

Reduction of KCl use in rice farming has resulted in a downward trend in the country's volume of production, Soleh said, attributing this to farmers no longer being able to afford the fertilizer.

"We are still discussing the amount of the subsidy," he said, adding that farmers needed 65kg to 70 kg of KCl fertilizer per hectare for rice farming.

Soleh said that to further help farmers, the government had ordered state fertilizer producer PT Pupuk Sriwijaya (Pusri) to distribute fertilizers from its plants to retailers and cooperatives.

"The move was taken to minimize the distribution line and to reduce the soaring prices of fertilizers," he said. (gis)