Asia Times: Jakarta stuck in neutral as rice imports soar


	March 14, 2002	atimes.com

Southeast Asia

Jakarta stuck in neutral as rice imports soar
By Prangtip Daorueng

JAKARTA - Natural disasters, people's changing patterns of food consumption, and the reduction in rice-growing areas have driven Indonesia into high dependence on imported rice, adding to the hardships of an already ailing economy. This year continues to have a gloomy picture on rice, despite efforts by several governments to increase the domestic rice output of a country that not too long ago declared self-sufficiency in it.

In her speech at the National Rice Week in West Java this month, President Megawati Sukarnoputri said it was important to go back to traditional food consumption in order to reduce Indonesia's high dependence on rice imports. "Let them grow their own staple food such as cassava and sago," she told authorities. "There is no need to alter local consumption habits."

But just one day after her speech, Widjanarko Puspoyo, chairman of the State Logistic Agency (Bulog), said that the country is likely to import 3 million tonnes of rice this year - or twice the amount imported last year.

Experts had earlier warned that the upcoming El Nino phenomenon would cause long droughts in different parts of the world and bring heavy rain in others. Indonesia is situated in the zone with a high possibility of droughts. The Central Bureau of Statistics estimates a setback in domestic production by 5-10 percent, due to El Nino and the recent floods that hit various parts of this country of more than 210 million people. In the February 2 issue of its "Rice Market Monitor", the United Nations Food and Agriculture Organization (FAO) it said the impact of the El Nino and floods "could stand in the way of the ambitious target of 53.9 million tonnes [of paddy] set by the [Indonesian] government for 2002 against the 50.1 million tonnes of output in 2001".

Natural disasters, however, are not the only reason for Indonesia's food-security woes. Widjanarko said that even without natural disasters, a decrease in Indonesia's total rice-growing areas alone was enough reason to cause declining rice production.

Indonesia became a major rice importer in 1996, after the failure of various programs to boast production. Government statistics show that rice imports hit a peak of 6 million tonnes during the crisis period of 1998. The figure fell to 4 million tonnes in 1999, and 1.5 million tonnes last year. This was a major setback for a country that won a 1985 FAO medal for the achievement of self-sufficiency at the time.

The jump in Indonesia's rice imports tells much more than the figures, according to Siswono Yudohusodo, chairman of the Indonesian Farmers Association (HKTI). He said that Indonesia had imported 10 percent of the total rice it needed between 1995 and 2001. The percentage is a substantial rise from the 1985 to 1995 period, when only 4 percent of rice needs was imported.

Today, Siswono stresses, Indonesia is in the critical stage of relying too much on imported food products. Apart from rice imports, Indonesia's imports of other basic food items have also risen. For example, soybean imports have increased by 40 percent and sugar by 45 percent from 1995 to 2001.

Siswono also agrees with Megawati, saying that these trends also highlight a change in traditional consumption patterns from sago or others to rice consumption. This has also contributed to bigger rice imports. Siswono says most Indonesians now prefer to eat rice. This can be seen in such areas as Maluku and West Papua, where people's main staple used to be sago. The same thing has happened in Madura, East Nusa Tenggara, and Gunung Kidul, where corn used to be main staple.

As a result, Indonesia is now one of the world's biggest rice-consuming countries, with per capita consumption as high as 133 kilograms. Its yearly rice production, however, stands at about 2 million tonnes below national demand. "Indonesia could face a food shortage," Siswono pointed out, "not because of the absence of stocks but more because of our dependence on imported foodstuffs."

This year, the Indonesian government, through Bulog, plans to import between 700,000 and 1 million tonnes of rice, while the rest will come from the private sector.

Widjanarko said Bulog will import about 500,000 tonnes of rice from Vietnam and 200,000 tonnes from other countries, including Thailand, China, the United States and Australia. However, the Thai Commerce Ministry announced after a March 4 meeting in Bangkok between Thai Commerce Minister Adisai Bhodaramik and Indonesian Trade Minister Rini Suwandi that Indonesia has agreed in principle to import 200,000 tonnes of 25 percent broken rice from Thailand on a government-to-government basis. The ministry also expects Indonesia to import at least 500,000 tonnes of rice from Thailand this year. In 2001, Thailand sold 446,972 tonnes of rice to Indonesia on a private basis.

Both Bulog and HKTI say that Indonesia's dependence on rice has also created another problem that hurts the economy - smuggling. Bulog's Widjanarko said rice smuggling into the country has increased due to the government's policy of putting import tariffs of about 30 percent on rice. He said that Jakarta lost about Rp700 billion (US$70 million) in 2000 due to rice smuggling.

He proposed that the government review the tariff policy as well as apply a quota system on rice imports, and share this between the government and the private sector. This is meant to prevent rice imports from hurting local farmers. Widjanarko said such a step would not go against World Trade Organization rules. HKTI chairman Siswono confirmed the point, saying the large amount of imports had caused an oversupply of 4 million tonnes between 2000 and 2001 and caused domestic rice prices to call. This, he said, led to lower income for domestic farmers and an increased tendency for people to shift to rice consumption.

In the end, Siswono said, the Megawati government has to make a political decision for long-term self-sufficiency in food production. Argued Siswono: "We should not have to import food when one considers the vast potential of Indonesia."

(Inter Press Service)