Govt raises floor prices of rice

Govt raises floor prices of rice

JAKARTA (JP): The government yesterday raised the floor price
of unhusked rice by Rp 50 or 12.5 percent to Rp 450 (19.9 U.S.
cents) following a two-year record high of the country's
inflation rate in January.

Minister of Information Harmoko said that the unprecedented
increase in the unhusked rice price was essential to improve
farmers's deteriorating economic position.

"The hike in the floor price of unhusked price will result in
a 5.33 percent increase in farmers' incomes," Harmoko told
assembled reporters at the briefing on the monthly cabinet
meeting on economy at the Bina Graha presidential office here.

The new floor price, effective immediately, raises the price
of unhusked rice to be paid by village cooperatives (KUDs) by
12.02 percent to Rp 466 per kilogram and by other buyers by 11.02
percent to Rp 460.

The price of husked rice also increased by 12.33 percent to Rp
738 per kilogram for KUDs and by 11.96 percent to Rp 730 for
other buyers.

Harmoko said the government has kept the price of fertilizer
stable so that the higher price of rice would encourage farmers
to boost rice production.

Indonesia, which became self-sufficient in rice in 1984, has
been importing rice in the last few years to meet its increasing
demand.

Inflation

The minister also told the press that President Soeharto
expressed deep concern over the two-year high of the inflation
rate in January.

"The President was concerned that this year's opening month
was marred with the unusually high inflation rate of 2.16
percent," the minister said.

January's inflation rate is the highest monthly level in two
years. The monthly inflation rate reached its record high level
of 2.92 percent in January 1993 following the rise in
transportation and electricity tariffs.

The minister said that the sharp increase in last month's
inflation rate resulted from the sharp increase in the prices of
foodstuffs, especially chili and other spices.

The sharp rise in the inflation rate in January raised the
combined inflation rate in the first nine months of this fiscal
year to 7.76 percent.

The inflation rate was recorded at 9.53 percent for 1990 and
1991, 9.77 percent in 1993, 9.24 percent in 1994 and 8.64 percent
in 1995.

The President instructed ministers at yesterday's meeting to
curb inflationary pressures in the coming months so that the
combined inflation rate in 1996 doesn't hit double digits,
Harmoko said.

The minister also reported that the narrowly-defined money
supply (M1) increased by 16 percent to Rp 52.67 trillion (US$22.7
billion) as of December from Rp 45.37 trillion as of the end
of 1994, while the quasi money grew by 31 percent to Rp 169.96
trillion from Rp 129.13 trillion.

The trade balance in the January-November period of last year
booked a surplus of $3.66 billion, with exports amounting to
$40.80 billion and imports $37.13 billion.

In November alone, exports reached $3.98 billion and imports
$3.35 billion, resulting in a trade surplus of $633.8 million.
(hen)

Farmers -- Page 8