Govt allocates Rp 6t for unhusked rice

Govt allocates Rp 6t for unhusked rice

JAKARTA (JP): The government will spend about Rp 6 trillion
(US$810 million) this year on unhusked rice from local farmers.

Minister of Industry and Trade Yusuf Kalla said on Friday that
the State Logistics Agency (Bulog) would start the purchase of
unhusked rice next Monday, with a monthly budget of about Rp 400
billion.

"So Bulog's main responsibility now is to help stabilize the
price of unhusked rice," Kalla said, adding that the agency
previously bought milled rice in its price stabilization program.

He said the agency would purchase the unhusked rice from
village unit cooperatives through which farmers sell their
unhusked rice.

He said Bulog would absorb some eight percent of this year's
total output of an estimated 49.1 million metric tons of unhusked
rice or 31 million metric tons of rice.

"Protecting rice farmers is our first priority and what
directly affects the farmers is the price of unhusked rice they
sell to cooperatives," Kalla said.

The minister acknowledged that the price stabilization program
had become much more difficult after Bulog lost its monopoly
rights over rice imports.

"This is the reason why Bulog buys unhusked rice rather than
milled rice for its price stabilization program," he said.

Bulog lost all its monopoly privileges over several basic
commodities in a 1998 agreement signed between the International
Monetary Fund (IMF) and Indonesia to obtain IMF's financial
bailout. The agreement also allowed traders to import rice with
no duty.

The liberalization of the rice trade caused an influx of
cheaper rice from overseas. Many traders illegally sold the
imported rice to Bulog through cooperatives to benefit from the
government's subsidized prices.

The government in January introduced a 30 percent import
surcharge on rice following complaints by local rice farmers that
rice importers undercut the price of local rice.

Local rice is sold at about Rp 2,500 per kilogram, while
imported rice from neighboring countries like Vietnam and
Thailand is sold at about Rp 2,200 per kilogram.

Responding to complaints that the policy had no effect in the
market as imported rice was still much cheaper, Kalla said the
policy would start affecting the rice market in April or May as
it required a three-month transitional period.(03)