U.S. criticized over wheat donations to RI

U.S. criticized over wheat donations to RI

BRUSSELS (Reuters): The European Union and Australian farm groups yesterday said a United States government plan to purchase hundreds of millions of dollars worth of surplus U.S. wheat and donate it to needy countries including Indonesia amounted to a disguised subsidy.

Gerry Kiely, spokesman for EU Farm Commissioner Franz Fischler, said the provision of food aid should not be linked to the domestic market situation.

"In the EU there is no direct link between food aid and our market situation," Kiely told Reuters.

Meanwhile, Bob Illfa, grains division president for the Western Australia Farmers Federation said: "What the Americans are doing is really going to affect the price of grains in Australia."

Australia's wheat growers have been hard hit by a downturn in demand for agricultural commodities from economically strapped Asian countries, in a year forecast to yield a near-bumper Australian crop of some 20 million tons.

President Bill Clinton last week said the U.S. would begin buying more than 80 million bushels of wheat (2.5 million tons) within days. The action could boost depressed wheat prices in the United States by about 13 cents a bushel, or five percent, Clinton said.

Under the humanitarian aid plan, the wheat would be given to Indonesia, Ethiopia, Sudan, Eritrea and North Korea.

The Australian Wheat Board (AWB) was particularly smarting over the United States plan to ship wheat to Indonesia, which annually purchases up to 10 percent of Australia's total exports, Ryan said.

Ethiopia and Sudan were also key destinations for Australian wheat.

In Jakarta, Indonesia welcomed the U.S. government's donation plan to donate wheat to needy countries, and said further international donations would be welcome.

"Indonesia still needs wheat, so if the rich countries could contribute to us, we will not reject it," Food Minister A.M. Saefuddin told reporters.

Saefuddin said Indonesia was considering scrapping its subsidy on wheat as early as October and diverting the funds to subsidize other essential commodities.

The International Monetary Fund had originally demanded Indonesia phase out all subsidies on October 1 but its most recent accord with Indonesia, signed in June, accepted the need for continued food subsidies to ease the burden of the country's economic crisis on the poor.

Indonesia has been hit by food shortages and spiraling prices of basic commodities due to the collapse in the rupiah, a severe drought and a breakdown of the distribution system in the wake of widespread unrest in May.