HKTI backs 25% hike in rice price

HKTI backs 25% hike in rice price

YOGYAKARTA (JP): The Association of Indonesian Farmers (HKTI)
urged the government on Monday to increase the price of rice by
at least 25 percent from about Rp 2,400 per kilogram.

HKTI chairman Siswono Yudhohusodo said the price hike was
needed to offset farmers' higher spending on fertilizer.

The increase in the price of the fertilizer, particularly
since the government lifted the subsidy on fertilizer sales late
last year, made the current rice price unrealistically low, he
said.

"With a higher price of rice, farmers will be able to earn a
better margin and get a better living, too," he said on the
sidelines of a seminar on traditional farming held by Gajah Mada
University.

The rice price is determined by the market but the government
sets the floor price for the State Logistics Agency (Bulog) to
purchase unhusked rice from farmers.

Siswono, the owner of a real estate developer and former
minister of transmigration in the Soeharto administration, said
the current rice price of Rp 2,400 (about 35 U.S. cents) per
kilogram was so low that farmers could not get a sufficient
margin.

Based on an assumption of the country's total rice production
of 30 million tons, the 25 percent hike, or about Rp 600 per
kilogram, would enable local farmers to increase their total
income to up to Rp 18 trillion, Siswono said.

HKTI also sent a letter to the government asking for the
application of a 50 percent import duty on rice.

Siswono said the import duty was needed to narrow the price
gap between local and imported rice.

He said imported rice, about 100,000 tons of which are shipped
in from Vietnam and Thailand each month, sold for cheaper prices
and consequently hurt local farmers' income.

"I believe President Abdurrahman Wahid can understand the
problems encountered by local farmers, some of whom are actually
members of the President's organization Nahdlatul Ulama," he
said.

Newly appointed Minister of Industry and Trade Yusuf Kalla
said last week the government was considering imposing a 30
percent to 35 percent import duty on rice as part of its next
letter of intent to the International Monetary Fund (IMF).

The tax is one of several options being considered to cut the
price gap between local and imported rice.

The government liberalized rice imports in September last year
to counter surging rice prices in the local market as part of its
agreement with the IMF.

However, the recent strengthening of the rupiah made imported
rice cheaper than local products.

Under the regulation, private companies are permitted to
import rice without having to pay import duties.

The country's imports of rice are estimated to reach 1.5
million tons this year, far below last year's figure of 4.8
million tons.

It imported 4.8 million tons of rice in the 1998/1999 fiscal
year ending March 31 because of a series of harvest failures
which were largely attributed to bad weather.

The country's annual rice demand was estimated to be 32
million tons, including 27 million tons for consumption, three
million tons for industrial use and two million tons as a reserve
for Bulog.(44/cst)