Prices of rice increasing across the country

JAKARTA (JP): Rice, the staple food of the majority of Indonesia's population of over 192 million, has lately become a public concern as a scarcity of the grain was reported countrywide over the last couple of months.

The National Logistics Agency (Bulog) -- established to regulate the country's primary food commodities and keep prices from fluctuating at unreasonable levels through market operations and buffer-stocking -- has been struggling to keep down prices but seems helpless in the situation.

President Soeharto earlier this month ordered the agency and its offices throughout the country to conduct market operations at the slightest sign of price increments.

"If there are any indications of sudden price hikes, Bulog must immediately sell its stock on the market, so the public can see that we are prepared to add to the market's supply," Soeharto said.

Indonesia, formerly the biggest rice importer in the world, became self-sufficient in rice in 1984. However, a substantial decline in domestic production as a result of the prolonged dry season forced the country to import rice again last year.

So far, Soeharto's orders -- and the agency's operations -- seem unable to stop rice prices from soaring.

According to various press reports, prices of rice in North Sulawesi, parts of Sumatra and even West Java, known as the country's main rice producer, recently increased by 10 percent and 30 percent, despite market operations by the logistic agency's local offices.

Local logistics offices have also started to open up to imports in a bid to increase their rice stocks and support their market operations.

The imports have reportedly been entering through various ports across the country.

The logistic agency's Jakarta office, for example, recently imported 120 tons of rice from India and Myanmar to stabilize prices, according to press reports.

In East Java, more than 293,000 tons of rice from Pakistan, Thailand, Myanmar, Vietnam, India and Taiwan had entered Surabaya's Tanjung Perak harbor as of August, while South Sulawesi will soon receive 22,000 tons of imported rice from Thailand.

Increase

The logistics agency had actually predicted price increments. However, the increase of 10 percent to 30 percent was far above the agency's prediction of only nine percent.

Bulog's chairman, Beddu Amang, said last week that prices of rice would increase by 1.2 percent to 1.8 percent per month until February, due to the end of the harvesting season.

He further calculated that the estimated 1.2 percent to 1.8 percent price increments each month, which will cause a cumulative rise of nine percent between this month and next February, would still result in a "safe", less-than-double-digit inflation rate expected for this year.

This year's inflation rate, according to the Central Bureau of Statistics, reached 6.41 percent as of August, of which 0.54 percentage points were contributed by rice.

For the corresponding period of last year, inflation stood at 6.85 percent, with 1.04 percentage points contributed by rice.

Although floods, plant diseases and unpredictable droughts were reported to play a role in the slowdown of the growth of this year's rice production, some analysts consider the soaring prices are a "psychological effect" caused by the coming of the rainy season.

Others say speculators are in the market, holding back rice supplies and watching prices go up before gradually releasing their stocks.

All of this, however, has not prevented the government from drawing a bright picture for the country's future rice production.

Although rice production dropped by 3.2 percent to 46.6 million tons (unhusked) last year, officials of the Ministry of Agriculture in a technical meeting Saturday in Palu, Central Sulawesi, set up a rice-production target of 51.16 million tons for next year, up by 9.33 percent from this year's target of 47.67 million tons.

The meeting proposed to conduct a rice-planting intensification program on some 7,000 hectares of rice fields across the country and plant high-quality Memberamo and Cibodas- type crops on 44,000 hectares of rice estates in 14 major rice- producing provinces.

Amrin Kahar, the director general of food crops and horticulture, said last month that this year's favorable weather would allow rice production to surpass 48 million tons. (pwn)