State Palace Defends Decision to Increase Rice Imports, Says Needed to Stabilize Prices
Jakarta. The State Palace stands behind its decision to import up to 2 million metric tons of rice this year, as shrinking farmlands, drought and pests have amplified risks in domestic rice production and threaten price hikes.
"In reality, we still need [rice] imports," Presidential Chief of Staff Moeldoko said on Thursday (20/09). "The farmland have shrunk ... due to construction of toll roads and industrial estates and housing areas that are growing rapidly."
Bulog has imported 1.4 million tons of rice between January and August, and in accordance with the government's plan it will still import another 600,000 tons before the end of the year.
However, Budi Waseso, head of the Indonesia Procurement Agency (Bulog), said on Wednesday that the government needs to cut imports as all the agency's warehouses are now full.
He said Bulog would only need to meet the 1.8-million-ton import quota this year, with the remaining 400,000 tons having been secured and scheduled to arrive in October.
Budi said Bulog can increase its reserve to 3 million tons by the end of this year – three times the minimum recommended by the Food and Agriculture Organization (FAO) – from 2.4 million tons currently, with the additional imports due to arrive in October, and by buying rice from local farmers.
However, the State Palace doubted this assumption.
"Weather, pests, and so on also greatly affect productivity," said Moeldoko, who also heads the Indonesian Farmer Harmony Group (HKTI).
"Bulog's main function is to balance prices in the market. [Budi Waseso] could say that his warehouse was full. But maybe in the next week or two, the reserves would drop because of the need to intervene in the market," Moeldoko said.
Indonesia consumes about 32 million tons of rice per year. The FAO recommends that the country maintains a reserve of between 2.5 percent and 3.5 percent of its annual requirements, or 800,000-1.1 million tons at any given time, to ensure food security.
Bulog's stock slipped 38 percent below the required low-end benchmark in March. The national average rice price hovered above Rp 12,200 (82 US cents) a kilogram in the first three months of this year, or 12 percent above its four-year average, according to Central Statistics Agency (BPS) data.
Even after a major harvest in March and April, Bulog's stock only nudged up to 640,000 tons and the price was still above Rp 11,900 a kilogram, Coordinating Economic Affairs Minister Darmin Nasution said on Thursday.
"Who would believe [at the time] that this would be okay in the coming months?" Darmin said.
This prompted the government to decide in April to increase this year's rice import quota to 2 million tons – the highest since 2011 – from its initial 500,000 tons.
The average rice price is now above Rp 11,800 a kilogram, or 25 percent higher than it was when Jokowi became president in October 2014.
While a rising rice price is preferable to millions of Indonesian farmers, it is also a major source of dissatisfaction among low- and middle-income earners in urban areas.
Observers said the president will take this into consideration while seeking re-election next April.
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