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Indonesians gain from switch on rice
The grin stretching across Andi’s face as he labours under the weight of two 20kg sacks of rice he has just bought off the back of a government logistics agency lorry suggests he has won a lottery.

“This makes such a difference,” says the 20-year-old who sells porridge in the nearby Boplo market in central Jakarta. “The amount I’ve saved is at least the same as two days’ income.”

Such scenes were repeated tens of thousands of times across Indonesia last week as the government launched what is likely to be a weeks-long campaign to drive down rice prices, which have risen by a third in each of the past two years and 6 per cent this month alone.

The market operations were combined with a de facto lifting of an import ban when it was announced that the government would import at least 500,000 tonnes and potentially twice that to reverse the staple’s seemingly inexorable price rise.

“We have to do this for the sake of the people,” said Andi Mallarangeng, a spokesman for President Susilo Bambang Yudhoyono, after an emergency meeting of governors of rice-producing provinces. “Eighty-one per cent of Indonesians are net rice consumers so we have to bring prices down.”

Rice’s significance in Indonesia cannot be overstated.

Indonesians eat on average 130kg of the crop each year, compared with 60kg in Japan, according to Rusman Hariawan, the head of the national statistics agency. When its price soared by a third in 2005, the poverty level rose from 16 per cent to 17.75 per cent of the 220m population, the first climb for five years.

Meanwhile, the number of people considered officially vulnerable to poverty jumped to 49 per cent of the nation.

Poverty data have yet to be compiled for 2006 but with rice prices again rising by a third, according to the state logistics agency, it is unlikely that poverty will fall much.

President Yudhoyono, however, appears impervious to the need to change track despite declaring fighting poverty one of his pri-orities for 2007. He has so far been more convinced by rich farmers and traders insisting on the need for higher prices than a very detailed and credible analysis of the situation by the World Bank late last year. This included statistics that 63 per cent of farmers are net rice consumers and three-quarters of farmers have less than half a hectare of land.

The district around Kebumen in central Java, one of the nation’s rice baskets, is typical. “The vast majority of people in this area are rice farmers but I don’t know of many whose stocks last more than six months,” says Mr Mulyawidadi, the head of Kali Pancar hamlet. “The people who make the money are the traders, not the farmers.”

It took floods across Jakarta and many rice-producing areas earlier this month to break the opposition to rice imports, although the government is still only able to sell the policy as an emergency measure.

“The steps that we’ve undertaken are because of the unexpected effects of climate that have delayed the harvest [that was due in February],” says Mari Pangestu, the trade minister, stressing that the government is committed to ensuring farmers get a “fair return”.

The strategy seems to be working. Once vocal critics of imports are now grudgingly accepting that Indonesia’s current production cannot meet demand. Officials are hoping that as politicians start thinking about the 2009 general election, opposition to imports will cease completely.

“I think the people in parliament who oppose rice imports will realise how stupid they are when they get out and see that the government’s trying to help the people,” says Muchlis, an official overseeing the distribution at Boplo market in central Jakarta.

That will only happen, analysts say, if ministers also help boost productivity from the current 4.6 tonnes per hectare to six tonnes.

Most economists agree that the current import and distribution operation, which has already seen prices start to drop in some areas, should bring down poverty levels.

“But the quality of poverty reduction is another matter,” says Anton Gunawan of Citibank. “Health, sanitation and other issues are not seeing a big improvement. That’s where the big test will lie.”
MGR Archive 21.2.2007
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