Government must import rice to avert shortage

Government must import rice to avert shortage

Muninggar Sri Saraswati and Rendi A. Witular, The Jakarta Post, Jakarta

While the government has extended the ban on rice imports until
June due to adequate local rice supplies, state-owned logistics
company PT Bulog is planning to import some 300,000 tons of rice
soon in case there is an unanticipated shortage.

"I'm worried that rice producers will not be able to meet the
estimated rice stock of 2.25 million tons this year due to a
possible drought," said Bulog president director Widjanarko
Puspoyo after meeting Vice President Jusuf Kalla on Monday,
adding that the highest estimate for the rice stock would be only
two million tons.

His forecast contradicted a statement made by Minister of
Trade Mari E. Pangestu on Dec. 28. Mari had said that based on
information from the Ministry of Agriculture, the rice stock
would still be sufficient until June.

However, Widjanarko argued that a forecast severe dry season
from July to December would affect the rice stock.

He acknowledged that the rice import plan did not yet have
government approval.

Indonesia imports between 1.8 and 2 million tons of rice
annually. Last year, the rice stock was 1.9 million tons.

The government imposed a ban on rice imports early last year
as it was optimistic that the country would become self-
sufficient in rice for the first time since the 1980s.

Widjanarko has also voiced concerns that the low rice stock
would cause the price to increase uncontrollably -- putting
another burden on the people amid a fuel hike scheduled for
March.

It is also feared that higher rice prices would trigger a
higher inflation level, which is forecast to reach between 6.5
percent and 7 percent this year.

A higher inflation rate will lead to declining purchasing
power and eventually affect consumer spending. Higher consumer
spending is a prerequisite for the robust domestic consumption
that has helped boost economic growth since the 1997 economic
crisis.

Widjanarko said the government would conduct a series of
meetings to discuss rice imports, since Vietnam, Thailand and
Laos may reduce their rice production in order to save water
during the dry season.

"It will not be easy to import more rice because there is
limited stock in rice-producing countries," he said, adding that
the countries have ordered their farmers not to grow crops that
need a lot of water such as paddy, in a bid to save more water in
anticipation of a severe dry season.