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No imports despite rice price rise

With rice prices already rising by more than 30 percent so far this year, the government plans to boost the local rice supply without imports, as officials vowed to crack down on the so-called “rice mafia” allegedly playing a role in the abnormal price movement

Satria Sambijantoro and Linda Yulisman (The Jakarta Post)
Jakarta
Tue, February 24, 2015

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No imports despite rice price rise

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ith rice prices already rising by more than 30 percent so far this year, the government plans to boost the local rice supply without imports, as officials vowed to crack down on the so-called '€œrice mafia'€ allegedly playing a role in the abnormal price movement.

The recent spike in the price of rice, the main staple food of Indonesia'€™s 250 million citizens, was caused by a supply shortage, Vice President Jusuf Kalla said Monday after a meeting with top economic ministers discussing the issue.

The Vice President noted that the government'€™s '€œrice for the poor'€ (Raskin) program had distributed only 140,000 tons of its initial target of 500,000 tons because of '€œtechnical problems'€.

'€œImports will only happen when necessary, but now is not the time,'€ said Kalla. '€œThis is just a distribution problem,'€ he said.

Even without imports, the domestic rice supply would be sufficient to meet demand in the coming months as the country would usher in the harvest season from March through April, Coordinating Economic Minister Sofyan Djalil explained to reporters after his meeting with Kalla.

Trade Minister Rachmat Gobel said that the government'€™s effort to rely less on imports through food sovereignty had faced challenges from certain parties.

'€œThere are still parties that try to '€˜play'€™, looking to push for [more] imports. We have to pay careful attention to such actions,'€ he said Monday during the discussion at the Trade Ministry, which was held prior to his meeting with the Vice President.

The government would be steadfast its decision not to import rice and would instead prioritize strengthening domestic supply, Rachmat said.

He added that the Trade Ministry would step up the fight against the so-called '€œmafia'€ in the rice trade that had eroded the competitive edge of domestic business players.

The government has stated that it will soon cooperate with independent auditing firm PT Sucofindo to audit at least 14,000 warehouses across the country amid suspicions of illegal stockpiling and reselling.

It will start taking legal action against perpetrators. Warehouse owners found guilty of illegal stockpiling could face up to five years'€™ imprisonment and fines of Rp 50 billion (US$3.85 million), on top of having their licenses revoked.

Officials from the Trade Ministry have discovered some warehouses mix the low-quality Raskin rice with other brands at their disposal. In addition, some rice from the State Logistics Agency (Bulog) rice had reportedly been found in markets that were not within the agency'€™s distribution remit.

President Joko '€œJokowi'€ Widodo has built his economic development plan on the concept of food sovereignty, as he seeks to make Indonesia less dependent on imports, with the country expected to have no rice imports from 2017.

Jokowi has vowed to improve the country'€™s farming infrastructure to boost productivity, including an ambitious plan to build 49 new dams within five years to improve irrigation for local farmers.

At the moment, the country still imports rice annually to sustain the rice stockpile at Bulog, which is tasked with distributing rice and other food commodities throughout Indonesia to manage prices. The agency imported at least 425,000 tons of rice from Thailand and Vietnam last year.

The government has always endeavored to keep the price of rice stable. Rice is a key contributor to inflation and price fluctuations could lead to public protests and political instability.

Bank Indonesia Governor Agus Martowardojo said Monday that he was optimistic that the rising rice price would not lead to a sharp increase in inflation. Indonesia would likely post month-to-month deflation for the second consecutive month in February, he noted.

In January, the monthly Consumer Price Index (CPI) stood at a negative 0.24 percent, taking year-on-year inflation during the month to 6.96 percent, a drastic fall compared to 8.36 percent in December.

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