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Indonesia rice imports for 2004 has been lowered
USDA, April 9, 2004
The first and main season crop (harvested Feb/April) benefited from good precipitation and growing conditions. While initial reports suggested damage to some rice areas due to heavy rains, the impact on production was only minimal, being far outstripped by the overall good growing conditions. As a result, production in 2004 is forecast to be up about 3 percent compared to the previous year. For 2005, assuming a slight increase in area, production is expected to again grow marginally.

Rice consumption in Indonesia is relatively stable as more availability and familiarity of alternative staple foods (such as noodle/bakery, corn, cassava, and sago) curbs growth. The GOI, through Bulog, maintains some stocks (around 5% of total consumption) for rice rations (military and civil servant in remote areas), assistance during natural disasters, and to conduct market operations for price stabilization (if needed). Bulog also continues to conduct a subsidized rice distribution program for needy families, who can buy 20 kg of rice per month at Rp. 1,000/kg. Bulog’s domestic purchase of rice for 2004 is planned to be around 2.0 MMT of rice with purchasing price set at Rp. 2,790/kg.

The forecast for 2004 rice imports has been lowered from 2 to 1.5 million tons due to relatively abundant local supplies and stable local prices in the face of rising international prices and shorter export availability. As prices from key suppliers have risen, the risk of trying to bypass the import ban and bring rice in has become unattractive. Furthermore, by most accounts, the import ban is being strictly enforced. While some imports have trickled in during the first quarter (around 200,000 tons), import activity has been dramatically lower than in previous years. It is expected that local supplies will remain sufficient until at least August, when the lifting of the ban combined with drawing down of local stocks will result in an acceleration of imports. While the ban is still in effect through June of 2004, Bulog is authorized to import 50,000 tons of rice should prices rise 25 percent above average historical prices; but it is expected that this will not be necessary. Bulog is expected to import about 200,000 tons in 2004, but most of this will occur in the last quarter.

For 2005, imports are pegged at 2.0 million tons.

Carry-over stocks are forecast to be drawn down by the end of 2004. As of early April, Bulog stock was 1.6 million tons milled rice equivalent. Over the course of the year, Bulog is expected to purchase approximately 3.1 million tons of un-husked rice, or 2 million tons milled rice from local farmers.

The GOI has taken several steps to encourage production, such as providing special credits, and also to protect the domestic rice industry, and most dramatically the recent temporary rice import ban (which is effective until June 2004). The GOI is also improving/building new irrigation facilities, providing seeds for flood farmers, subsidizing fertilizer prices, and facilitating the opening of new rice areas. At this time, the GOI is not considering increasing rice floor prices, i.e., the purchasing price paid to farmers. Debate regarding increasing the import tariff (currently at Rp. 430/kilogram) continues, but no action in this regard is expected in 2004.

Under the temporary rice import ban regulation, rice (including rice for seeds, glutinous rice, rice flour and other flours) imports are subject to inspections and verifications in the exporting countries. Through Ministerial Decree No. 67/MPP/Kep/2/2004 dated February 24, 2004, the Minister of Industry and Trade appointed PT. Sucofindo and PT. Surveyor Indonesia (both are state enterprises) as the authorized surveyors to conduct inspections and verifications. The decree also allows the Minister to appoint new surveyors and/or replace those currently appointed. The surveyors are to submit monthly reports regarding country of origin, rice specification (Harmonized System Code and description of rice), tonnage, and rice variety, shipment date, and ports of destination. This point of origin inspection requirement will also remain in effect once the ban has been lifted beginning in July 2004. Also at that time, importers must be registered to be eligible to import rice. Reportedly, the registration process has been difficult, and it remains to be seen just how many importers will be eligible to import once the market is open again.
MGR Archive 10.4.2004
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