Rice production may decline, says Minister of Food

Rice production may decline, says Minister of Food

JAKARTA (JP): The Minister of Food/Chairman of the Logistics
Board (Bulog) Ibrahim Hasan indicated that Indonesian rice
production this year might be down because up to this month the
national rice procurement was significantly less than the same
period last year.

"In June last year the procurement from domestic production
reached 2.2 million tons while this year it was only 850,000
tons," said Ibrahim at a hearing with House Commission VII on
finance, trade, cooperatives and logistics.

He hastily added, however, that Bulog had no plan to import
rice to replenish its stocks, but would instead collect rice
loans it gave to other countries such as the Philippines.

"We will collect a total of 650,000 tons of rice borrowed by
other countries. The Philippines has already agreed to send
200,000 tons of rice by the end of December," said Beddu Amang,
deputy chairman of Bulog, to the press after the hearing.

He explained that the Philippines borrowed rice from Indonesia
four or five years ago.

Meanwhile, a senior government official said in Manila
yesterday that the Philippines may be forced to buy rice on the
world market to repay up to 200,000 tons it owes to Indonesia.

Indonesia has helped the Philippines cover crop shortfalls by
lending it rice since 1989, but this year it has told Manila it
must be repaid because of a possible fall in its own crop.
Manila must repay at least 190,000 tons by the year-end.

"We are discussing with them the details," said Gregoria Tan,
deputy administrator for the National Food Authority (NFA). "If
it cannot be sourced locally we may have to pay it out in other
ways."

Tan said the Philippines would have to wait until September
before it knows whether it will have sufficient rice to repay
Indonesia in local supplies.

"In terms of the supply situation it might be a better
solution (to buy) since foreign rice is cheaper than domestic
rice," he said.

Even if the Philippines ends the year with a small surplus it
has to be careful not to leave itself in a position where it will
have to import its main staple next year.

Third quarter supplies are likely to be tight, with stocks on
July 1 of about 81 days compared with a target of 90 days.

But agriculture officials said last month they expected output
to reach 10.5 million tons of unmilled rice, compared with last
year's typhoon-damaged crop of 9.43 million tons.

Indonesia was originally due to be repaid last year but gave
the Philippines a one-year extension on the loan.

Tan said Jakarta had told the Philippines it would prefer the
rice to be repaid ahead of the Dec.31 due date.

Wheat, soybean

Bulog, Ibrahim added, has also decided not to import wheat
only from one country, such as the United States, to avoid the
possibility of an embargo. "We also import wheat from China,
Saudi Arabia, Canada and Australia," Ibrahim said.

Indonesia depends entirely on imported wheat to meet its bread
and noodle needs.

Beddu explained that Bulog will remain the sole importer for
soybeans even when the new global trading system under the World
Trade Organization comes on stream next year.

Indonesia which consumes around 2.3 million tons of soybean a
year imports about 500,000 tons to cover the domestic deficit.

He conceded, however, that Indonesia may have to import a
larger volume of soybean if the differences between domestic and
international prices remain as high as 70 percent as they are at
present.

"The new multilateral trade arrangements will tolerate a price
difference of 30 percent at the most," Beddu said.

Indonesia therefore should increase the productivity of its
soybean crops in order to reduce its price, other "we have to
import more in line with the new trade rulings to be enforced by
the World Trade Organization", he said.(yns/vin)