Business Times 22 Jan 10;
(SINGAPORE) Rice-production growth in Indonesia, the world's third-largest grower, may slow this year as an El Nino weather phenomenon parches crops, according to Bulog, the state-owned food company that manages the nation's supplies.
Output of milled rice may expand 3 per cent in 2010 after rising 5 per cent to 40 million tonnes in 2009, according to Mohammad Ismet, an expert who helps set Bulog's policies. That forecast assumes that the government has some success in neutralising El Nino's impact, he said in an interview on Wednesday.
El Nino curbs or delays rains across Asia and can parch crops, potentially crimping harvests of rice, sugar and palm oil while boosting prices. Thailand and the Philippines, the world's top rice shipper and importer respectively, warned earlier this month that the weather pattern may cut their harvests.
Without government intervention, including use of drought-resistant seeds, production growth 'may not be as much as 3 per cent', Mr Ismet said in Singapore, where he was attending a conference. Still, the South-east Asian nation will have enough supply of the staple to meet domestic needs, he said.
Thai rice-export prices, used as an Asian benchmark, were set at US$609 a tonne on Jan 13 compared with US$607 the week before and last year's low of US$525, according to data from the Thai Rice Exporters Association. Futures in Chicago traded at US$13.98 per 100 pounds on Wednesday, down by 6.1 per cent this year.
An El Nino - caused by a warming of the equatorial Pacific Ocean - was forecast to cause drier-than- average conditions in Indonesia in the January-to- March period, the US Climate Prediction Center said on Jan 7. The pattern, forecast to last till June, 'is expected to exert significant influence on the global weather and climate in the coming months', it said.
The last time that Indonesia had a moderate El Nino similar to conditions that the country is now experiencing was in 2006, when rice output grew 0.5 per cent, Mr Ismet said. That compares with growth of about 5 per cent a year from 2007 to 2009, he said.
The price of rice in the domestic market has risen 6 per cent this month compared with October as supply tightened after El Nino delayed planting from November to December, he said.
'Price is the best indicator for the market, whether the supply is enough or not for the consumption,' he said.
Bulog is forecast to buy 3.5 million tonnes of rice from farmers to sell to the poor at subsidised rates, helping to cool prices, Mr Ismet said. The nation of about 232 million people has per capita consumption of 139.42 kg, he said. - Bloomberg
