Mega agrees to raise import tariff on rice

The Jakarta Post, Jakarta

President Megawati Soekarnoputri has personally agreed to raise the import tariff on rice in a bid to keep out less expensive foreign rice, so domestic rice producers can continue to sell at the current prices, according to chairman of the Indonesian Farmers Association (HKTI) Siswono Yudohusodo.

"The President has agreed," he was quoted by detik.com as saying following a meeting with Megawati at the presidential house.

But he said that other ministers were opposing the policy and were still divided on how much of a tariff increase would be needed.

He cited, as an example, that Minister of Agriculture Bungaran Saragih wanted the import tariff to be raised to Rp 520 per kilogram from the current Rp 430 per kilogram, while Minister of Trade and Industry Rini Soewandi opposed the protectionist measure.

Farmers have been demanding a much higher increase in the import tariff on rice amid the massive inflow of lower priced imported rice.

Siswono warned that if the government did not raise the import tariff, the farmers would hit the streets to hold massive demonstrations so that they could keep the prices, which the public must pay, artificially high.

He said that the higher import tariff was also needed as part of incentives to encourage farmers to keep planting rice, a politically strategic commodity in the country as it is the main staple food.

Many analysts have also said that the current Rp 430 per kg import tariff on rice (equal to 30 percent) was the lowest in the region.

Because rice is a strategic commodity, the government is determined to boost local rice outputs to ensure national food security.

Indonesia gained rice self-sufficiency status in 1984, but since then output has been on the decline for various reasons, including the loss of paddy fields in many of the rice production centers of Java.

But many international lending institutions are opposing the higher import tariff plan as it is deemed as a form of trade protectionism and would not really benefit the small farmers as they are also a net rice consumer.