[Kabar-indonesia] Indonesia To Provide US$162m In Rice Subsidies in '07

[Joyo at aol.com]

Indonesian Govt To Provide IDR1.5T 
(US$162m) In Rice Subsidies in '07

JAKARTA, October 9 (Dow Jones)--Indonesia's government will allocate
IDR1.5 trillion (around $162 million) in subsidies from its 2007 state
budget to maintain 350,000 metric tons of reserve rice stocks, an
official said Monday.

"It has been proposed that the government should (maintain) 350,000
tons in reserve stocks of rice, (which will require) subsidies to the
value of IDR1.5 trillion," Widjanarko Puspoyo, chief executive of the
country's state logistics agency, or Bulog, told reporters.

These subsidies have been approved by a budgetary working committee,
Puspoyo said, without elaborating further.

Bulog - which maintains the government's reserve stockpiles of rice -
was mandated with importing 210,000 tons of rice this year after
reserve stocks fell below what the government considers a benchmark
safety level.

Reserve stocks fell below 350,000 tons - the minimum level considered
necessary to adequately provide for disaster relief and maintain
stable domestic supply conditions - after emergency relief was
distributed to survivors of a string of natural disasters this year.

The government was initially hesitant to import rice, fearing this
might disrupt currently stable local market prices, cutting farmers'
profit margins, but eventually decided that imports were necessary and
last month mandated Bulog to procure the rice.

The rice imports, worth around $64 million, were funded by loans from
local commercial banks.

Bulog forecasts that around 705,000 tons of rice will remain in its
warehouses at the start of 2007 and that the amount will likely drop
to around 547,400 tons by the start of 2008, Puspoyo added.

While that amount is well above the benchmark safety level, the
possibility of imports next year cannot be ruled out, Puspoyo said.

"(Whether or not rice will be imported in 2007) will be determined by
the domestic crop. If this is sufficient (to meet demand and maintain
safe reserve levels,) then we will not need to import," Puspoyo said.

Meanwhile, Bulog's warehouses should Friday receive the first
shipments of 210,000 tons of rice to be imported from Vietnam, Puspoyo
said.

The rice will be imported in several lots, with the amount and timing
of each imported lot to be determined by domestic conditions, he said
without elaborating.

The government uses its reserve rice stocks for emergency relief, and
to conduct "market operations," whereby reserve stocks are released
into local markets to cap drastic price spikes.

As of Sept. 6, Bulog warehouses held around 222,160 tons of rice, Puspoyo 
said.

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Joyo Indonesia News Service
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