Rice procurement may hit 20-year low

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)