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)