Asia Times: Indonesia's rice farmers in uproar over cheap imports



	March 10, 2000	atimes.com

Southeast Asia

Indonesia's rice farmers in uproar over cheap imports
By Kafil Yamin

BANDUNG, Indonesia - Floods have disrupted the harvest in a few areas of Indonesia, but for most of Indonesia's rice-producing regions, this season is expected to produce bumper crops.

Rice farmers in the still predominantly agricultural nation, however, are far from happy. In fact, many of them are threatening to stop growing the grain altogether as an influx of foreign - and cheap - rice sends the price of the local version in a downward spiral.

''We will call on rice farmers nationwide to stop growing rice,'' Run Pudjiatmoko, the head of the regional chapter of the Indonesian Farmers Association (HKTI) in Central Java, a major rice-producing area, said in late February. ''Then the whole nation will consume foreign rice.''

Indonesia has already become one of the world's biggest rice importers. Last year, it imported some two million tonnes of rice between April and December alone. And while only 5,549 tonnes of rice have been imported to Indonesia so far this year, the Logistic Agency (Bulog) says 3.5 million tonnes are still coming in. Such figures do not include the tens of thousands of tonnes of rice being brought in either illegally or through donation.

Government officials have argued that the importation of the staple grain is needed, given the periodic shortage of supply in domestic rice. But farmers say the 30 percent import duty slapped on foreign rice is too low, enabling sellers to price it far lower than the local version.

The most recent import of foreign rice sold at 1,600-1,700 rupiah (22-23 US cents) per kilogram while the domestic rice had price tags of 2,250-2,350 rupiah (31-33c) per kilogram. Unsurprisingly, in the last month or so, local rice prices have plunged to 1,800 rupiah (25c) per kilogram while unhusked rice is now being sold at 800 to 900 rupiah (11-12c).

Farmers say the reduced prices are hurting them badly, since they spend at least 1,000 rupiah for each kilogram of rice during the planting season. ''I'm suffering a huge loss,'' says Nasran, a rice farmer in Solok, West Sumatra. This is why, he adds, ''I will not grow rice anymore after this harvest. I've made up my mind.''

Nasran may take some comfort in the concern of Parliament members in his plight. The House of Representatives last month asked the government to review the 30 percent import duty on rice. Said Widjanarko Puspoyo, vice-chairman of the House commission overseeing food and agriculture: ''Thirty percent [is proving] ineffective. It should be 50 percent or so.''

But Jakarta does not seem inclined to rethink the figure. Trade and Industry Minister Yusuf Kalla has dismissed the House's call, saying that what the government is supposed to do is deal with the consequences of a policy and not to review it. ''The best thing to do now is to improve efficiency in rice consumption,'' he said, even as he noted the government's commitment to stabilize rice prices.

Kalla said the government has already allocated two trillion rupiah ($277 million) to purchase rice from farmers at the set rate of 1,400 rupiah per kilogram of unhusked rice. ''If needed,'' he added, ''we plan to provide another six trillion rupiah.'' The extra amount may come in handy, with expectations of 51 million tonnes of rice from local farmers this year. But that is if Bulog deems it fit to follow Jakarta's orders.

Bulog is the agency designated by the government to make the state purchases from the rice farmers. But it has yet to do such buying - while sacks of rice continue to pile up in the farmers' storage spaces. Late disbursement of the Bulog's budget allocation is being pinpointed as one of the causes of the delay. More importantly, the state agency is apparently waiting for prices to return to normal. Says a Bulog official: ''If we make purchases now, we will not be able to sell them because prices out there are much lower.''

Meanwhile, a trade and industry ministry official who declined to be named says that the import duty on rice is actually part of a deal struck by the government with the International Monetary Fund (IMF). ''The IMF even wanted no import duty at all,'' says the official. ''We can convince them that we still need import duty to maintain food stability.''

Minister Kalla, however, has been arguing for an ''open economy'', even indicating that the old aim of national self-sufficiency is passe. ''If we think business,'' he said recently, ''why do we fight for self-sufficiency if we can buy cheaper rice, no matter where it comes from?''

He conceded the need for the government to do something about the decline in the price of local rice. But, Kalla said, ''the government should do it on the principle of open economy . . . where anyone or any institution [is] free to import rice''.

Some development experts are expressing confusion, if not disappointment, over the House's call for higher import duty. ''Not long ago, they [House members] called on the government to liberate trade and lift import barriers as part of our commitment to the free market,'' points out Ganjar Kurnia, head of the Center for Development Dynamism at the Padjadjaran University in Bandung. ''Now they [are saying] otherwise.''

Kurnia hints that the legislators may be looking at the problem the wrong way. As it is, he says, farmers' earnings are still below the national minimum wage even with the set selling rate of 1,400 rupiah per kilogram. That is, unless a farmer has at least a hectare of paddy field - which is often not the case. ''The majority of our rice growers possess less than half [a hectare] and produce less than 500 kilograms,'' says Kurnia. But he says this ''shortage'' of land can be overcome with the adoption of better technology and proper rice growing techniques.

''Intensify the limited land, grow better quality of rice, watch the market demand - that's the solution,'' he says. ''If you can produce better rice with more competitive prices, then you don't have to worry about the foreign rice.''

(Inter Press Service)

back to the top

©1999 Asia Times Online Co., Ltd.