Grace Nirang, Sukra – Tarjan stands barechested in the middle of his small rice field. Dejected. Already suffering from three years of economic crisis in Indonesia, Tarjan has watched rice prices tumble this season, forced down by too much rain and a flood of cheap imports.

"Normally I get around three million rupiah for my unhusked rice. This harvest I get only less than two million," he said in his field, in Sukra, part of Java's rice bowl about 175 km east of Jakarta. Cheap imports – needed because Indonesia can no longer feed itself – has combined with bad weather to push prices down to 600 rupiah/kg. That is less than half the official reference price, and the lowest in years.

A prolonged rainy season has disrupted drying activities, forcing farmers to sell quickly at rock-bottom prices before the crop starts to decay because of high moisture levels. But the crisis has its roots in disgraced former President Suharto's drive to industrialise the world's fourth most populous nation.

Focus switch

After a scheme that made his country self-sufficient in 1984 in rice – a staple for most of its 200 million people – Suharto turned his focus on building up the industrial sector. Millions of hectares of rice fields, especially in Java, were converted into industrial parks and housing complexes to cater for factory workers.

By 1986, imports were needed again and the state commodities agency Bulog, through its so-called silent operation, imported 500,000 to one million tonnes of rice a year to meet demand. That jumped to almost two million tonnes in 1998 after a drought caused by the El Nino weather phenomenon hit crops. And imports turned into a flood after Bulog's monopoly was abolished in September of that year as part of a programme of reforms agreed with the International Monetary Fund in return for foreign help in combatting the economic meltdown.

With a glut driving down international prices, imports undercut domestic Indonesian prices and traders turned to imports for their supplies. Traders said Indonesia signed deals to import about 3.6 million tonnes of rice last year, some of which is still to arrive.

Indonesia produced 49 million tonnes of unhusked rice last year, milled into 31.5 million tonnes of rice. Domestic consumption was 33 million tonnes. In 2000, unhusked rice production is expected to reach 51 million tonnes, to be milled into 32 million tonnes of rice.

Consumption is seen at 34 million tonnes and the government expects only about one million tonnes of rice to be imported because of the increase in production and stocks.

In January, the government imposed a 30 percent tariff on imported rice to help local farmers, and new Bulog chief Rizal Ramli has suggested raising the level to as high as 125 percent. He also wants Bulog's monopoly restored. "We can't help farmers with our position now," he said.

But analysts doubt the government will agree, saying it would be a setback for economic reform and would draw stiff opposition from the IMF.

Reference price

At the same time, the government has ordered Bulog to step in and buy from farmers at the government reference price of 1,020 rupiah/kg in an effort to shore up prices. It remains to be seen if that is the answer. The government has allocated 500 billion rupiah for the plan this harvest.

But slow disbursement means it may be too late for some farmers. "Most farmers had already sold their rice to private collectors when I received the money," said Djibran Asran, head of Bulog's office in Indramayu. The plan is is already creating fresh problems for Bulog, sticking the agency with tens of thousands of tonnes of rice it can't unload.

"I have 20,000 tonnes in my warehouses and I'm only able to sell 3,100 tonnes," said Asran. "And what happen next harvest, do we have to buy rice again? I think the government have to find a way to settle this problem." Since Bulog started buying at the official level, market prices have already jumped to 1,000 rupiah/kg from recent lows of 600 rupiah, giving new hope to the country's 22 million rice farmers and their families. "It's a little bit late but at least I can get fairer prices," Tarjan said.