'Unnecessary to raise floor prices of rice'

'Unnecessary to raise floor prices of rice'

JAKARTA (JP): The market prices of rice, which recently soared
above the floor prices, are favorable to farmers which makes it
unnecessary for the government to increase the commodity's floor
prices at present, an official of the Ministry of Agriculture
says.

Syamsuddin Abbas, Secretary of the Operation Board of the
Ministry's Extension Service Agency, said yesterday that the
floor prices could be raised if market prices fall below the
floor prices.

"We are always on the farmers' side and therefore we will put
all efforts to help increase their income and terms of trade,"
Syamsuddin told The Jakarta Post.

He said that the government, in controlling rice production
and prices, always takes into account the level of actual income
farmers receive for their harvest.

"On the other hand, however, the government must also manage
the inflation at a low level, cut back government subsidies to
farmers and ensure rice rations at relatively low prices for
civil servants and Armed Forces members," he said.

Syamsuddin, who assumed his position almost two weeks ago,
said there was still four months before the next harvesting
season -- which starts around February next year -- in which to
decide whether or not the floor prices should be increased.

Minister of Agriculture Sjarifudin Baharsjah said last week
that the government had decided not to raise the prices of
fertilizer and the floor prices of rice, at least until the end
of the current planting season.

He acknowledged that the government usually raised the floor
prices in the beginning of October, when the harvesting season
began, to protect farmers from exceptionally low prices.

Urea fertilizer will remain at Rp 260 (11 U.S. cents) per
kilogram, tablet urea at Rp 295 per kg, Superphosphate 36 at Rp
420 per kg and triple superphosphate at Rp 480 per kg.

Analyst

Chrisman Silitonga, an analyst of food commodities argued,
however, that the government's reluctance to increase the floor
price of rice would discourage the farmers to cultivate that
crop.

He was quoted by the Kompas daily as saying that the low floor
price of rice would also encourage farmers to sell their harvest
only to the market, but not the National Logistics Agency
(Bulog).

Bulog is charged with maintaining stability in the prices of
several basic food commodities through its marketing monopoly
over foods such as rice, sugar and wheat flour.

According to earlier reports, Bulog's rice stock currently
totaled 1.1 million tons, sufficient for seven months of
allocations to civil servants and Armed Forcers members.

Bulog, however, has been forced to import rice to replenish
its stocks for market operations to maintain price stability.

Last month, Bulog reported that rice stocks from domestic
procurement had reached 830,000 tons, or slightly less than the
target of 900,000 tons, while those from imports amounted to
600,000 tons.

Syamsuddin said yesterday that self-sufficiency in rice which
Indonesia achieved for the first time in 1984 and had maintained
until 1993, is now facing major challenges due to the steady
decrease in irrigated land, increasing demand, unfavorable
climate and plant disease.

The Central Bureau of Statistics reported earlier this year
that unhusked rice production in 1993 reached 48.2 million tons,
but dropped by 3.2 percent last year to 46.6 million tons.

Estimates for this year are 48.5 million tons, or a 3.89
percent increase from last year. (pwn)