Indonesia may face rice shortage due to El Nino

Workers unloading sacks of rice from farmers at the biggest rice market in Jakarta on Sept 9, 2015.
Workers unloading sacks of rice from farmers at the biggest rice market in Jakarta on Sept 9, 2015. PHOTO: AFP

Delayed decision on imports also contributes to failure to secure target of 1.5 million tonnes

Indonesia faces the prospect of a rice shortage, largely because of a prolonged dry spell caused by the El Nino weather phenomenon coupled with a delayed decision by the government to import the staple for the country's reserve stock.

Trade Minister Thomas Trikasih Lembong disclosed this week that the government had secured only one million tonnes of rice, half a million tonnes short of the target for the year end.

"We got only a small amount of rice at soaring prices," he told The Jakarta Post, addressing criticism about the delay in making a decision on imports that has cost the country not only in terms of stock availability but also price.

He said Indonesia was overtaken by the Philippines, which entered the market early to rake in 1.5 million tonnes, higher than its normal purchase of around 500,000 tonnes to 700,000 tonnes annually.

Indonesia secured imports at more than US$400 (S$570) a tonne, higher than the price of around US$340 in the second quarter of this year when the government floated the import plan for the first time.

HARD BARGAIN

We got only a small amount of rice at soaring prices.

TRADE MINISTER THOMAS TRIKASIH LEMBONG, addressing criticism about the delay in making a decision on imports that has cost the country not only in terms of stock availability but also price

Indonesia is the world's fourth most populous country with 250 million people and has been importing rice to meet domestic demand almost every year since 1985. It had previously been self-sufficient for 16 years. Indonesians consume about 2.5 million tonnes of rice every month. The Jakarta Post noted that it is a politically sensitive commodity in the country because it is the main food staple as well as farmers' main crop.

Mr Sutarto Alimoeso, chairman of the association of Indonesian rice-paddy huskers, told tvOne: "The government is doing a relatively good job in trying to ensure rice supplies are adequate because it needs to import only up to 1.5 million tonnes despite the fact that it is an El Nino year."

Campaigns for the consumption of cassava and potato as an alternative to rice and repairing dilapidated irrigation systems are among the keys to ensuring adequate supplies for Indonesians, according to Mr Sutarto.

President Joko Widodo has made it a priority for Indonesia to be self-sufficient in key commodities - such as rice, corn, soya beans and sugar - and as part of this push the government embarked on a range of programmes, including infrastructure improvements in the form of repairs to damaged irrigation systems.

Reports said Mr Joko earlier this year insisted that stocks would remain adequate even though they were running low and agreed to the import plan only late last month. He said the decision to import rice was necessary to maintain sufficient stocks in anticipation of failed harvests due to prolonged drought.

The declining supplies have affected prices. The price of the most widely sold "medium type" of the grain has gone up from 7,000 rupiah (70 Singapore cents) a kilogram in August to 8,600 rupiah now, according to rice trader Zulmawan, who goes by only one name, in Cilacap, Central Java.

"They decided to import late. Rice prices wouldn't have risen this much had they acted more timely," he told The Straits Times.

Drought has badly affected the rice-growing regions of Karawang and Indramayu in West Java as well as Klaten in Central Java, according to Mr Zulmawan. "Stocks held by traders and wholesalers are declining. The worries are for January and February, ahead of the March main rice harvest."

A version of this article appeared in the print edition of The Straits Times on November 14, 2015, with the headline 'Indonesia may face rice shortage due to El Nino'. Print Edition | Subscribe