The government has
decided to import 520,000 tons of rice up until the end of March to secure
supplies and stabilize prices, which have continued to rise and could
result in higher-than-expected inflation.
Vice President Jusuf Kalla said in a press
conference Thursday that rice imports were needed to cover possible
shortfalls in the national rice buffer stock, which has been declining due
to recent market interventions designed to contain prices, and the
provision of subsidized rice to the poor.
"Why are we importing? For the sake of the
nation's food security. We don't want to take any risks," he said.
"We will import rice for the national buffer
stock up until the harvest in March."
Kalla said the government, through the State
Logistics Agency (Bulog), would start accepting offers for imported rice
supplies this week.
He explained that the government had calculated
rice import needs at 160,000 tons for January and February respectively,
with another 200,000 tons being required to further secure supplies.
Bulog has been releasing up to 250,000 tons per
month from the national stock to secure supplies and keep rice prices
The government considers one million tons as a
safe level for the national rice stock. The stock could become critical if
it is not replenished and, for example, a natural disaster were to occur,
The Vice President gave assurances that the
decision to import rice would not prejudice rice growers, especially given
that many growers now found themselves in a position where they had to buy
"The government wants to bring rice prices back
down to around Rp 4,000 (44 U.S. cents) per kilogram, the level that
prevailed in November," he said.
The price of rice has recently surged to Rp 5,000
per kilogram. Although rice prices usually rise between the harvest and
the end of the year, this year the rise has been exceptional, suggesting
distribution problems and possible speculative hoarding.
Rising rice prices could also derail the
year-long effort to bring down inflation, which slowed to an on-year level
of 5.3 percent in November after having reached 17 percent at the
beginning of the year.
In its latest report on Indonesia, the World Bank
suggested lifting the ban on rice imports as it had contributed to a 33
percent increase in rice prices over the year, and, as a result, swollen
the ranks of the poor.
Kalla said that the decision to resume rice
imports had been discussed with President Susilo Bambang Yudhoyono, who
had instructed that the efforts to secure supplies be expedited, and that
subsidized rice continue to be distributed to the poor.
Kalla, therefore, expressed the wish that the
issue would not become politicized.
However, the decision has already been met with
objections from the Indonesian Farmers Association (HKTI), which offered
to help the government procure additional supplies from local rice
surpluses in a bid to stave off imports.