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.