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Source: www.asiaecon.org |

INDONESIA, FROM RICE IMPORTERS TO RICE EXPORTERS


  In the past, Indonesia and many other rice producing countries have been very reluctant to export large amounts of rice. It has been almost a year since rice essentially doubled in price, and the fear of another shortage still seems to be in the back of many minds.


In the past, Indonesia and many other rice producing countries have been very reluctant to export large amounts of rice. It has been almost a year since rice essentially doubled in price, and the fear of another shortage still seems to be in the back of many minds.

Although farmers appreciate the idea of selling their rice crops on the international market, governments have always feared a domestic shortage and out of control inflation. Last year, Indonesia imposed a law preventing farmers from selling crops at export prices. Instead, farmers were forced to sell at local prices which were half of the export prices. Furthermore, domestic prices were given price ceilings, artificially forcing prices even lower. Because of theses low prices, many rice farmers switched to a higher profit producing crop, further exasperating the rice shortage.

However, Indonesia has made a strong effort to expand rice production and yields. Organic fertilizers and urea production have been increased dramatically as well as the quality of seed. Other improvements include field campaigning, safeguarding production, strengthening institutions and improving the planting and fertilizing strategies. These methods appear to have paid off and Indonesia can look forward to a productive 2009.

 The ministry’s director general of food crops, Sutarto Alemoeso, has said production of domestic urea fertilizer would be increased from 4.8 million tons to 5.5 million tons, NPK fertilizer production from one million to 1.5 million, ZA fertilizer from 800,000 to 923,000 tons and organic fertilizer from 350,000 to 450,000 tons. Hopefully this increase will prevent past problems of running out of fertilizer half way through the season.

Because of their efforts, Indonesia, traditionally a rice importing nation, may export as much as two million tons of rice in 2009, the most in at least 50 years. Only a year removed from importing 800,000 tons of rice in order to meet consumption, Indonesia, is on pace to have the largest surplus ever.

Having a surplus of rice is not a guarantee that Indonesia will export. In 2008, it was estimated that the rice surplus reached 2.34 million tons. However, perhaps due to concerns of the most recent rice shortage and rising rice prices, Indonesia  has become quite conservative when it comes to rice reserves.

Preliminary estimates put the 2009 rice surplus to be in the neighborhood of 3.8 million tons. If that target is met, Indonesia will have a surplus of over 6 million tons. Sutarto, explained, “Based upon our calculations, national stock should be safe at five million tons, while production in the past two years reached above six million tons. The surplus of one million tons must be exported.”

However, the decision to export is not a consensus. Indonesia’s Trade Minister, Mari Elka Pangestu, has said no decision has been made to export rice and no plan has even been discussed at the economic coordinating minister’s office.

Even Sutarto expressed some doubt later on saying, “It must however be admitted that some quarters still disagreed with the idea. The government however, must be optimistic and would consider it.”

A number of neighboring countries have shown keen interest, including the Philippines, Malaysia, Timor Leste and Brunei Darussalam.

 

 

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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