Mon, 10 Oct 1994

Govt raises rice price, maintains urea subsidy

JAKARTA (JP): The government decided on Saturday to raise the floor price of rice, while maintaining its subsidy for the domestic sale of urea fertilizer in a bid to increase farmers' income.

"However, the government decided to abolish the subsidy for the sales of ZA and TSP fertilizers, whose utilization is very limited, by increasing their prices as of today," Minister of Information Harmoko said after a cabinet meeting at the Bina Graha presidential office on Saturday.

The meeting, chaired by President Soeharto, was attended by Vice President Try Sutrisno, economic ministers and first echelon officials.

Harmoko said the floor price of unhusked rice paid by the National Logistics Agency (Bulog) to village cooperatives will be raised by 11.11 percent to Rp 400 (18.32 U.S. cents) per kilogram, and husked rice by 11 percent to Rp 657 beginning Jan. 1, 1995.

The price of ZA fertilizer was raised by 13.46 percent to Rp 295 per kilogram and TSP fertilizer by 41.18 percent to Rp 480 as of Saturday, while the urea price is being maintained at Rp 260, he said.

He said increasing the rice price, coupled with maintaining the urea price, will help increase the income of farmers by 7.77 percent and raise the index of their real income to 104.67 from 99.3 at present. "This is expected to encourage farmers to increase the country's rice production by three percent next year," he said.

However, he noted, the rice and fertilizer price hikes will likely raise inflation by 0.65 percent.

Harmoko said the government has also introduced four new varieties of rice whose plants will be more resistant towards droughts and adaptable to red soil.

The new varieties, called Gajah Mungkur, Kalimutu, Jatiluhur and Way Raren, are produced from combinations of seeds from Indonesia and other countries, including Kenya and Nigeria.


Harmoko said the cabinet meeting also discussed the country's exports, which reached $3.5 billion in July, consisting of $821 million in oil and gas exports and $2.68 billion in non-oil exports.

Because the country's July imports reached $2.62 billion, it enjoyed a trade surplus of $884.6 million in that month, he said.

He said Indonesia's cumulative exports during the first seven months of this year were recorded at 21.91 billion and its imports at $17.37 billion, thereby resulting in a trade surplus of $4.54 billion.

The January-July exports consisted of $5.36 billion in oil and gas exports and $16.55 in non-oil exports, he said.

The minister said the extension of banking credits as of the end of July reached Rp 167.7 trillion ($76.8 billion), 12.8 percent higher than the Rp 148.56 trillion as of the end of last year.

He said the money supply increased by 12.3 percent to Rp 41.59 trillion as of the end of August from Rp 37.03 trillion as of the end of last year.

Harmoko said the cabinet meeting also discussed the 17.4 percent increase in tourist arrivals to 2.16 million -- generating $2.53 billion in foreign exchange revenues for the country -- during the first eight months of this year over the same period last year. (riz)

Editorial -- Page 4