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)