Import of cheap rice halted to assist farmers

JAKARTA (JP): The government has barred private importers from bringing in medium and low-grade rice, in a move to shore up market prices and protect local farmers.

A Sept. 2 decree by Minister of Industry and Trade Rahardi Ramelan grants the State Logistics Agency (Bulog) the exclusive right to import rice that is more than 5 percent broken.

The move is intended to keep a balance between supply and demand in the domestic market and stabilize market prices, according to the decree announced on Friday.

The decree became effective immediately, but imports for which letters of credit were issued before or on Sept. 2 would be exempt, provided the shipments reached Indonesian ports not later than 30 days after the policy was issued.

Director-General of Foreign Trade Djoko Moejono told Antara that the policy was intended to reduce rice imports.

"We have to think about the farmers. We hope this policy will help local producers and sustain their income," he said.

He said the market had been flooded by cheap imports, which undercut local rice by as much as 40 percent.

He gave the example of locally grown rice that is 10 percent broken selling for Rp 2,600 (35 US cents) per kilogram last week compared to Rp 2,100 for similar quality imported rice.

Djoko said he was confident that the policy would not cause a significant increase in local prices since Bulog had accumulated enough stocks from imports and local suppliers.

Local rice production has been rising this year thanks to a favorable climate, he said.

Bulog has bought up to 2.3 million tons of rice from local farmers and imported 1.78 million tons between January and August, he said, noting that usually Bulog only bought 1.4 million to 1.9 million tons from local farmers every year.

There have been rumors that some importers had mixed imported with local rice and then sold it to Bulog as local rice, in order to boost their profits. (02)