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