Govt raises rice and fertilizer prices

JAKARTA (JP): The government yesterday increased the producer price (floor price) of unhusked rice by 16.6 percent and fertilizers by an average of 21 percent to increase farmers' income and cut back on fertilizer subsidies.

After meeting with President Soeharto at Merdeka Palace yesterday, Minister of Agriculture Sjarifudin Baharsjah said the floor price of unhusked rice would be propped up from Rp 450 (19.5 U.S. cents) to Rp 525 per kilogram.

Sjarifudin, accompanied by State Minister of Food Ibrahim Hasan and head of the National Logistics Agency (Bulog) Beddu Amang, said the price of unhusked rice procured by Bulog from village cooperatives was also increased 16 percent from Rp 466 to Rp 541 per kg.

Unhusked rice procured by Bulog from parties other than village cooperatives was increased 16.3 percent from Rp 460 to Rp 535 per kg.

Meanwhile, rice procured by Bulog from village cooperatives increased 16 percent from Rp 738 to Rp 856 per kg and from non- village cooperatives by 16 percent from Rp 730 to Rp 848 per kg.

Bulog was set up by the government in 1967 to control distribution and importation of several basic foodstuffs -- including rice, sugar, wheat, corn and soybean -- to ensure national food security and reasonable incomes for farmers.

Sjarifudin said urea fertilizer prices were increased by 21 percent from Rp 330 to Rp 400 per kg, ZA fertilizer by 27 percent from Rp 355 to Rp 450 per kg and superphosphate-36 (SP-36) fertilizer by 14 percent from Rp 525 to Rp 600 per kg.

Sjarifudin said the price increases of unhusked rice, rice and fertilizers were expected to contribute 1.09 percent to the annual inflation rate.

The inflation rate dropped to 6.47 percent last year from 8.64 percent in 1995.

He said in real terms the increase in urea prices could give farmers a 16 percent increase in their income.

Last year, the rice floor price was raised 12.5 percent, when adjusted for 8.65 percent inflation in 1995 gave a real rise of only 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.

Sjarifudin said earlier this week the main objective of the rice price increase was to further improve the real incomes of rice growers.

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.

Indonesia, formerly the biggest rice importer in the world, became self sufficient in 1984. In 1994 however, unfavorable climates and plant diseases forced the country to revert to imports.

According to the Central Bureau of Statistics, production in Indonesia fell by 3.2 percent to 46.6 million tons of unhusked rice in 1994 -- the lowest level in 15 years -- from 48.2 million tons in 1993.

Rice is currently the staple diet of nearly 90 percent of Indonesia's 190 million people. (pwn)