Indonesian Govt Sets Conditions For Rice Imports

Indonesian Govt Sets Conditions For Rice Imports

Dow Jones, Jakarta

Indonesia appears to be having second thoughts about a plan to import rice starting next month, setting two conditions that have to be met before state logistics agency Bulog can make any purchases.

Minister of Agriculture Anton Apriyantono said on Friday that there will be no rice imports unless national stocks drop below 1 million metric tons and local prices rise above Rp 3,500 a kilogram as a result.

National stocks at Bulog now total 1.6 million tons and prices of medium rice are below Rp 3,500/kg, said Anton.

"As long as the (two) conditions for imports aren't met, we won't import rice," he said.

Anton added that his office and the Ministry of Trade have agreed on the conditions.

The government recently said it would lift a ban on rice imports and allow Bulog to import 250,000 tons of rice starting in October to maintain its year-end stocks at 1.6 million tons at least. The authorities have yet to issue any import permits.

Indonesian farmers have criticized the plan, fearing imported rice may pressure local prices lower and erode their earnings.

Rice imports have been banned since January 2004 to counter rampant smuggling of the commodity into the country that had disrupted domestic prices.

In a statement on Friday, the Ministry of Trade said the government has raised the possibility of rice imports to preempt any jump in local prices.

It is a precautionary step, the ministry said.

"Imports can't be executed in a short time. They need preparation and a survey of suppliers," according to the statement.

Until 2004, Indonesia had been a major rice buyer in Asia with domestic output lagging consumption. It imported 1.45 million tons of rice in 2003.

A scrapping of the rice import plan will likely disappoint Vietnam and Thailand - Indonesia's key rice suppliers.

The ministry reiterated that the 250,000 tons of rice imports, if they should come about, will only be used to secure domestic stocks related to Bulog's task of implementing the government's rice-for-poor program and stabilizing local rice prices.

"The rice won't be sold commercially to local markets," the ministry said.

"The distribution of Bulog's rice stocks is based on orders from the Ministry of Trade upon recommendations from related agencies."

The ministry added that the government plans to raise prices for government rice purchases to Rp 1,500/kg from Rp 1,330/kg to help boost farmers' incomes.

The Central Statistic Bureau, or BPS, has forecast that 2005 rice output may fall 2 percent to 53.01 million tons of unhusked rice, sufficient to produce 32.25 million tons of husked rice, while consumption is estimated at 30.6 million tons.

Rice is a staple for around 240 million people in Indonesia.