Indonesia has no plan to cancel rice imports

Indonesia has no plan to cancel rice imports

JAKARTA (JP): Minister of Trade and Industry Jusuf Kalla said
on Tuesday the government had no plans to cancel rice import
contracts despite the sharp drop in rice prices in the domestic
market.

"We still need to import rice because our local production is
still insufficient to meet the demand," he told reporters.

Kalla, also the chairman of the State Logistics Agency
(Bulog), was commenting on Minister of Agriculture M. Prakosa's
statement about the government's plan to temporarily halt rice
imports.

Indonesia's import of rice is estimated to reach 1.5 million
tons this year, far below last year's figure of 4.8 million tons.

The country imported 4.8 million tons of rice in the 1998/1999
fiscal year ending last March because of a series of harvest
failures largely attributed to bad weather.

The country's annual rice demand is estimated at 32 million
tons, including 27 million tons for consumption, three million
tons for industrial use and two million tons as a reserve for
Bulog. But domestic output is estimated at only around 30 million
tons.

Minister of Agriculture M. Prakoso said on Tuesday that the
government should temporarily halt rice imports to stablize the
rice market.

" Government intervention is still needed to protect the
farmers," he said.

Kalla said the government was aware that the influx of
imported rice had caused a sharp drop in rice prices in the
domestic market.

But he insisted that contracts that had been concluded could
not be cancelled, otherwise Indonesia's credibility in the market
would be damaged.

The price of rice has dropped sharply within the last two
months due to the influx of cheaper imported rice. The drop in
price has also caused a sharp decline in the price of unhusked
price, to below Rp 800 per kilogram, or less than the cost of
farming.

The government, through Bulog, has been committed to buying
unhusked rice at a price of Rp 1,400 per kilogram in an attempt
to push up the its price to a more realistic level, but the
program is not really working as most of the cooperatives
assigned to buy unhusked rice from farmers have received no
funding from Bulog.

The government also has decided to impose a 30 percent duty on
rice imports beginning in April to protect the farmers, but the
move is considered too late because the rice harvest will reach
its peak this month.

An analyst from the Econit Advisory Group, Arif Arryman,
blamed the government for its slow response in dealing with the
rice problem.

He said the delay in the procurement of unhusked rice by Bulog
had caused a steep fall in the rice price in some producing areas
to below Rp 500 per kilogram, or much lower than the farming
cost.

"The current government is too slow in responding to the
problem. It is not giving any attention to the problem and has no
clear policy. Even the Soeharto regime did better in this case
than the current government," he told a news conference.

According to Kalla, Bulog will spend about Rp 6 trillion this
year for procuring unhusked rice from local farmers for national
stockpiles.

Bulog has spent Rp 600 billion buying five million tons of
unhusked rice in the last two weeks alone but the procurement
seems unable to soak up the glut in the market due to the
bumper harvest in several provinces. (cst)