Mega agrees to raise import tariff on rice

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.