Rice procurement may hit 20-year low

JAKARTA (JP): The State Logistics Agency (Bulog) estimated yesterday that its domestic rice procurement may fall to 250,000 metric tons this year, the lowest level in 20 years, due to a decline in rice production.

Bulog chairman Beddu Amang, however, said that the agency would be able to meet the domestic demand with imports estimated to reach three million tons this year.

He said Bulog would import 3.1 million tons of rice if its procurement reached only 250,000 tons. "But if the agency could purchase 500,000 tons from local farmers, imports would be cut to around 2.85 million tons," he told reporters after a hearing with the House of Representatives' Commission III for agriculture, forestry and plantations, transmigration and food affairs.

Bulog said its rice procurement in the January-to-May period plunged 94 percent to 96,512 tons from 1.55 million tons in the same period last year.

"This year's procurement will likely reach only 250,000 tons. It is the lowest level in 20 years," Beddu said, adding that domestic procurement reached 1.95 million tons last year and 1.43 million tons in 1996.

He said Bulog initially planned to buy about one million tons locally this year but the decline in production caused by the drought made it impossible to meet the procurement target.

Bulog's rice stocks on May 28 stood at 2.5 million tons, sugar at 592,686 tons, wheat flour at 325,000 tons and soybeans at 102,596 tons.

He said the rice stocks were sufficient for three months while those for sugar and other commodities could last up to 28 months.

Beddu, however, ruled out a possible rice shortage in the coming months.

"Don't worry, our stocks will increase because our rice imports continue to flow in from Thailand, China and Vietnam and we are still receiving rice aid from other countries."

He added that Japan has pledged to supply 500,000 tons of rice in soft loans with a 30-year maturity and 100,000 tons as a grant, Taiwan would sell 200,000 tons, China 250,000 tons and Vietnam 10,000 tons and Thailand would give 5,000 tons in a grant.

The government is still negotiating for another 400,000-ton rice grant from Japan and 100,000 tons from Taiwan, Beddu said.

Recent reports have said Thai rice and sugar exporters have stopped accepting Indonesia's letters of credit (L/Cs) for rice and sugar orders due to the uncertain conditions here.

But Beddu said that Thai exporters had agreed to take Indonesia's L/Cs if they were opened by state banks and endorsed by foreign banks in Singapore.

Beddu also said yesterday that Bulog planned to invite local and international tenders to buy commodities for the agency.

"We will no longer go to the international market quietly. We will invite foreign suppliers through international tenders if necessary. This will apply to any commodities," Beddu said.

Beddu added that the subsidies on basic commodities would remain until the economic situation improved to help remedy the pains of the common people.

"The International Monetary Fund has agreed on the subsidies which will amount to Rp 5.3 trillion (US$460 million) to import basic commodities. The IMF has asked us to gradually remove the subsidies but this depends on the economic conditions," he said.

The government's agreement with the IMF stipulates that subsidies on all commodities, except rice, must be abolished by Oct. 1.

"But if we are not able to scrap the subsidies, then we don't have to. We understand that the subsidies will burden our state budget, but on the other hand we have to help our people," Beddu said. (gis)