High rise in rice prices good for farmers: Analyst
High rise in rice prices good for farmers: Analyst
JAKARTA (JP): The 12.5 percent increase in the floor price of
unhusked rice will improve the terms of trade for farmers as long
as prices of other commodities do not follow suit, food
commodities analyst Chrisman Silitonga said here yesterday.
Silitonga was quoted by Antara as saying that the price
increase, which was announced yesterday, was "quite high" and
exceeds last year's inflation rate of 8.46 percent.
He said that the price hike should boost farmers' real incomes
by about 3 percent.
Minister of Information Harmoko announced that the government
increased the floor price of unhusked rice from Rp 400 (17 U.S.
cents) to Rp 450 per kilogram as of yesterday.
The Rp 50 hike is the highest since the government implemented
the floor price system for rice in 1969. The previous record was
set in 1994, when the price was raised by Rp 40 from Rp 360 to Rp
400 per kg.
According to Harmoko, who made the announcement after a
cabinet meeting yesterday, the new price will require village
cooperatives to buy unhusked rice from farmers at Rp 466 per kg
and non-cooperatives at Rp 460 per kg.
Village cooperatives will have to buy rice from farmers at Rp
738 per kg and from non-cooperatives at Rp 730 per kg.
The government usually announces changes in rice floor prices
in October, which then go into effect in January when the
planting season begins.
Yesterday's unhusked rice price of Rp 400 (17 U.S. cents) per
kilogram was based on the government's announcement in October
1994.
The government's decision to delay the announcement of the new
floor price was made to help farmers benefit from the new price
and to curb the inflation rate.
The prices of other goods generally start escalating shortly
after the government announces the increase in the rice floor
price.
Silitonga, an official from the National Logistics Agency
(Bulog), said yesterday it was too early to predict the impact of
the new floor price on Bulog's price-stabilization efforts.
Bulog is responsible for controlling the distribution of
several sensitive commodities including rice, soybean and flour.
Over the past few months, however, it has imported rice to
guarantee adequate stocks for market operations and routine
distributions for civil servants and members of the Armed Forces.
According to analysts, Bulog's low rice supply was caused by
farmers reluctant to sell their rice to the agency, which buys
for less than the market price.
Silitonga said he was convinced that Bulog's recent market
operations -- most of which involved low-quality, imported rice
-- would be able to keep prices stable until May. (pwn)