Govt calculating annual rice price increase

Govt calculating annual rice price increase

JAKARTA (JP): The government is calculating this year's annual
increase in the producer (floor) price of rice and will announce
it later this month, Minister of Agriculture Sjarifudin Baharsjah
said yesterday.

"The formula for determining the price increase is similar to
that used last year," Sjarifudin told reporters.

Last year, the rice floor price was raised 12.5 percent which,
when adjusted for 8.65 percent inflation in 1995, amounted to a
real rise of 3.85 percent.

But the increase did not stop the erosion of rice farmers'
terms of trade because the price of granular urea rose 27 percent
and that of urea tablets rose 11 percent in February last year.

"The main objective of the rice price increase remains the
same: to further improve the real incomes of rice growers,"
Sjarifudin added.

He said the government had not yet decided whether to effect
an annual increase in the price of fertilizer.

"We are still mulling over the question as to whether the
government will still subsidize the price of fertilizer for rice
crops," he said.

The floor price of rice -- the price that village cooperatives
pay farmers -- now stands at Rp 450 (US$0.19) a kilogram for
unhusked rice.

Besides increases in the price of fertilizer, inflation is a
major variable in the formula to determine rice price rises.

The inflation rate fell to 6.5 percent last year from 8.64
percent in 1995.

"We certainly take into account likely inflationary pressures
when increasing the rice price," Sjarifudin said.

The agriculture ministry estimated that 51 million tons of
unhusked rice or the equivalent of around 33.15 million tons of
milled rice were produced domestically last year. This
represented a mere 2.6 percent increase on the 49.74 million tons
harvested in 1995.

The ministry estimates per capita rice consumption this year
at 130 kg, or 25.9 million tons for the population.

The country, which achieved rice self-sufficiency in 1984, has
been depending partly on imports since 1994 because of a slowdown
in the growth of rice production. (vin)