Saturday, October 20, 2012

Indonesia imports rice despite sufficient supply

The Indonesian government has said that the national rice stock is enough to cover the nation’s needs for the next seven months.

“As of now, our national rice stock stands at 2.1 million tonnes and this is enough for 7.7 months. This is quite an adequate stock rate,” Coordinating Economic Minister Hatta Rajasa told reporters after a meeting with the State Logistics Agency (Bulog) at his office in Jakarta yesterday.

Regardless of the adequate national rice stock, Agriculture Minister Suswono said that the government would still import a maximum volume of 1 million tonnes of rice this year.

Suswono said the import was needed to fill the target of 2 million tonnes held in the Bulog’s rice reserve by the end of the year.

“Bulog’s rice reserve stock is estimated to stand at around 1 million tonnes by the end of this year...This means the government will need to make up the deficit with imports,” Suswono said.

Suswono said that the permission to import 1 million tonnes of rice had been issued by the Trade Ministry. However, it was likely that the government would only import 700,000 tonnes to cover rice reserve requirements.

Hatta stressed that Bulog needed to maximise its rice procurement from local farmers before the government moved on import plans.

“The main issue is not whether we have enough stock but rather how to strengthen our reserves. We want a strong reserve to prevent speculation and price fixing,” Hatta said.

The government had predicted that Indonesia’s total rice production might stand at 38 million tonnes this year, while consumption would reach 34 million tonnes. This means that the country would be able to book 4 million tonnes in rice surplus.

Deputy Agriculture Minister Rusman Heriawan said that in order to achieve food security, Indonesia would need 10 million tonnes of rice surplus annually.

Indonesia was self-sufficient in 2008 and 2009, however, it started to import rice to maintain its reserves in 2010 after a failure in harvest expectations.

Shrinking farmland areas and lower productivity have been regarded as the main factors that determine the country’s dependence on imports.

Hatta said that in order to alleviate a potential food crisis, the government had also allocated 2 trillion rupiah (US$104 million) to emergency food funds.

“[A total of] 1.4 trillion rupiah has been allocated for the agriculture ministry and 600 billion rupiah for food security credit programmes [KKP],” Hatta said.

Hatta added that the utilisation of emergency funds would be determined by the finance ministry with the coordinating ministry for the economy determining the criteria of a food emergency crisis.

Indonesia has signed agreements with Thailand, Vietnam and Cambodia to import rice should the country need it.

Rice imports have been a thorny issue between the government and some law makers at the House of Representatives.

The House has passed, on Thursday, a revision to the 1996 Food Law, which was aimed at strengthening food production in the country and moves food import to a last resort measure.

The law authorises the establishment of a new agency whose main mission would be to ensure food security.

A number of lawmakers recommended that this new agency should be at ministerial level.-Asia News Network (October 20, 2012)

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