Rice subsidies to end in 2002, says Gus Dur

JAKARTA (JP): President Abdurrahman Wahid said on Monday he had acquiesced to the International Monetary Fund (IMF) and agreed to end rice subsidies in 2002.

Abdurrahman, or Gus Dur, said rice prices would be fully determined by "market mechanisms" in 2002.

"I already agreed with Stanley Fischer to provide subsidies for rice until 2002," he said, referring to the IMF managing deputy director.

The State Logistics Agency (Bulog) regulates domestic rice prices by intervening in the market, particularly when prices plunge and farmers need protection.

The agency also sets import tariffs to protect farmers from cheaper rice imports. The tariff was set at 30 percent earlier this year.

In addition to the above measures, the government also has been providing subsidies to farmers through cheap fertilizer and credit.

Rice is a politically sensitive commodity in the world's fourth most populous nation, both because it is the main food staple of the more than 200 million population and the main crop of the farmers, particularly in Java.

The IMF, which is providing a multibillion dollar bailout for the country, has been against the subsidy policy.

Gus Dur said that although the farmers still had three years to enjoy government subsidies, they should start making preparations for the free import of rice beyond 2002.

Separately, the director general for food crops at the Ministry of Agriculture and Forestry, Syarifuddin Karama, said on Monday Indonesia had become self-sufficient in rice after years of falling production.

"Our unhusked rice production this year amounts to 50 million tons. So we have become self-sufficient again after declining rice production since 1990," Syarifuddin said.

Indonesia's annual rice consumption is around 30 million tons. The country first became self-sufficient in rice production in 1984.

Syarifuddin, however, said the government would continue to allow the import of high-quality rice to fill temporary gaps in production.

He said the imports were subject to an import tariff of 30 percent.

Meanwhile, Junior Minister of Forestry Nurmahmudi Ismail warned provincial and district authorities to balance the use of land for agriculture and industry.

"The ministry's data shows that in the 10 years from 1983 to 1993, the country lost some one million hectares of food-related land plots due to rapid industrialization," Nurmahmudi said at a ceremony marking the 20th World Food Day.

The warning was made ahead of the implementation of the regional autonomy law in January. There are fears that the more powerful local authorities will be even more aggressive in transforming agriculture land for industrial use.

Syarifuddin said that maintaining the agricultural plots was crucial to provide sufficient food supplies.

"Only 13 out of the nation's 26 provinces are self-sufficient in food supplies," he said. (rei/edt)