I

ndonesia has no immediate plan to import rice this year, having record grain stocks at the end of 2012, state logistics agency Bulog has announced.

Bulog president director Sutarto Alimoeso said on Thursday that the agency had around 2.28 million tons of rice in storage at the end of December.

This amount can meet domestic needs for more than eight months.

“The year-end stock is at a record high,” said Sutarto.

The outlook for an increase in rice production is positive and this has given Bulog confidence that a greater amount of the staple food can be sourced from domestic farmers. Indonesia is the world’s third-largest rice consumer, after China and India.

Last year, annual production of unmilled rice rose 4.9 percent to 69 million tons, according to the Central Statistics Agency, paving the way for Bulog to purchase around 3.65 millions tons of
rice domestically, which is the agency’s record high for local rice absorption.

The Agriculture Ministry expects the unmilled rice supply to increase this year by 6 percent to 74 million tons on the back of more land being devoted to the crop and enhanced productivity.

In July last year, the government told Bulog to import up to a million tons of rice, but only 670,000 tons were actually imported — 600,000 tons from Vietnam and 70,000 tons from India.

The government has always endeavored to keep the price of rice stable. Rice is a key contributor to inflation and, historically, instability in the price of rice has led to political instability.

Last year’s stable prices are a major factor in the lowering of the inflation rate.

The consumer price index rose by just over half a percent in December, bringing annual inflation to a “quite low” level of 4.3 percent, according to the Central Statistics Agency. The figure was well below the government’s target of 5.3 percent.

The agency anticipates buying over 3.5 million tons of rice from local farmers this year, down by only 1.4 percent from last year. The number of poor households, the main target of Bulog’s distribution, has declined by 11.5 percent to 15.4 million.

“The figure will be enough to meet our domestic needs. We already have more than 2 million tons stockpiled, as required by the government,” Sutarto said.

In addition to this, the agency plans to buy another 700,000 tons from private millers, bringing the total of locally sourced rice to 4.25 million tons for the whole year.

The agency will manage about 435,000 tons of the government’s rice reserves this year, up 9.8 percent from the previous year.

Indonesia has sealed memorandums of understanding with two Southeast Asian peers on rice purchases to anticipate the possibility lower rice production.

In January last year, Indonesia signed a deal with Myanmar, which agreed to sell up to 200,000 tons of the commodity per year if necessary.

Later in September, the country extended its deal with Vietnam, which will provide up to 1.5 million tons of rice as needed until 2017.

Both countries have come up as alternatives sources of importation to Thailand where the price of rice has skyrocketed in the past few years.

Analysts have criticized the government’s efforts as relying too heavily on imports.

This policy could make the country more vulnerable to unmanageable and unpredictable external conditions, particularly those pertaining to climate irregularities.

In another development, the government announced last year that it would reinstate Bulog’s function as a buffer stock agency for several key commodities such as rice, sugar and soybeans.

To implement the plant, the agency is developing distribution centers, dubbed Bulogmarts.

The agency hopes to be operating at least 1,700 of these Bulogmarts in the next few years.

Around 100 Bulogmarts were set up last year in collaboration with local cooperatives.

Indonesia is the world’s third-largest rice consumer after China and India.