Indonesia scrambles for rice as supplies run low

Prima Wirayani, The Jakarta Post 12 Nov 15;

Against a backdrop of prolonged drought due to the El Niño weather phenomenon, Indonesia is running out of rice supplies, leaving it with no option but to hunt for more stocks after failing to secure some of its targeted imports from Thailand and Vietnam.

Trade Minister Thomas Trikasih Lembong said Wednesday that the government had secured only 1 million tons of rice from a year-end reserves target of 1.5 million tons.

“We got only a small amount of rice at soaring prices,” he told reporters, addressing a delay in making a decision on imports that cost the country not only in terms of stock availability but also price.

He said that Indonesia was overtaken by the Philippines, which entered the market early to rake in 1.5 million tons, higher than its normal purchase of around 500,000 to 700,000 tons annually.

Indonesia secured imports at over US$400 per ton, higher than the price of around $340 in the second quarter of this year when the government floated the import plan for the first time.

Initially, President Joko “Jokowi” Widodo insisted that stocks, though running low, remained adequate, Jokowi made it a priority for Indonesia to be self sufficient in key commodities such as rice, corn, soybeans and sugar. However, Vice President Jusuf Kalla said the government would import 1.5 million tons of rice and that it was purchasing stocks from Thailand and Vietnam.

Jokowi eventually agreed to the import plan late last month, saying the decision was made by his government to maintain sufficient stocks in anticipation of failed harvests due to prolonged drought.

Thomas said that the government was assessing the possibility of buying rice from Pakistan or even Brazil to fill the gap as the ASEAN region had also faced a rice scarcity.

“We have to get ready for next year too,” he said, adding that the prolonged dry season could delay harvests.

Citing Coordinating Economic Minister Darmin Nasution, Thomas said that for every one month of harvest delay, the government would need to provide a rice cap of 2.5 million tons.

The State Logistics Agency (Bulog) said previously that the amount of rice reserves reached between 1.3 and 1.4 million tons as of Oct. 25. It estimated that the amount would meet half a month of consumption as the country consumed an average 2.5 million tons of rice monthly.

To secure the stocks, the government was preparing a conversion of premium rice to public service obligation (PSO) or medium-grade rice, Thomas said. It was carrying out procedures to add subsidies to fill in the price gap between the premium and medium rice.

However, he refused to reveal if his ministry would hold any market operations to stabilize rice prices, despite acknowledging the increasing prices.

Institute for Development of Economics and Finance (Indef) executive director Enny Sri Hartati said the core of the rice fiasco was that there was no validated data available to calculate consumption and production, so the latter was often overestimated.

“The government always says the stocks are enough but prices keep soaring,” she said on Wednesday.

She said that valid and consolidated data among ministries and agencies was required given the sensitivity of the commodity, the price of which could rise sharply in the case of a shortage.

Decisions on imports would be simple if data could validly show the gap between consumption and production, she said.

Rice is a politically sensitive commodity in the world’s fourth most populous nation, both because it is the main food staple of the over 250 million people living across the archipelago, and because it is the main crop of farmers.

Enny said the government needed to make a firm and unified decision to secure stocks and prevent any social unrest.

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