The country's failure to secure its rice-import target of 1.5 million tons from its traditional suppliers – Thailand and Vietnam – to beef up its stocks shows just how high a politically charged commodity this staple food is and how confusingly inaccurate the national data has been on rice output and consumption.

Many analysts cautioned early this year that the government should import rice because domestic production would fall owing to the impact of the El Niqo weather phenomenon. But President Joko "Jokowi" Widodo, apparently influenced by the optimistic output estimate by the Agriculture Ministry and hesitating to backtrack on his own political promises to stop imports, insisted that domestic stocks were still fairly adequate.

Only after rice prices continued to increase did the President eventually relent to allowing imports. But stocks in the biggest exporting countries – Thailand and Vietnam – had run out as several other Southeast Asian countries, hit by the prolonged drought, had also replenished their stocks with imports.

Allowing rice prices to continue to rise as a way to give higher earnings to farmers, as several politicians have suggested, goes entirely against common sense and will instead only hurt the majority of the people, 80 percent of whom are net-rice consumers themselves.

Data at the Central Statistics Agency (BPS) said that more than 75 percent of rice growers were net-rice consumers. High prices mostly hit the poorest group because almost 30 percent of their household spending goes to rice. Worse still, because of the country's long and porous coastline, close to several major rice exporting ports in Thailand and Vietnam, it is nearly impossible for our domestic rice prices to be kept much higher than border prices without causing import smuggling.

The present rice-pricing policy is fairly adequate because it manages rice prices within an annually reviewed range of floor and ceiling prices to ensure affordable prices for consumers and allows for fair margins for rice farmers. Importing rice only as a contingency measure has been considered fairly adequate as well. But this price mechanism must be based on fairly accurate data on national production and consumption.

The biggest challenge is to ensure that the government-controlled State Logistics Agency (Bulog) has enough funds for domestic rice procurement whenever needed to defend floor prices and maintain enough stocks to release to the market whenever prices tend to rise far above the fixed ceiling.

Yet more important is that Bulog, the only licensed importer of medium-quality rice, should be given the mandate to quietly carry out imports whenever necessary to beef up domestic stocks without having to go through the noisy process of gaining a political consensus.

The problem is that Indonesia, given its consumption of over 35 million tons of rice a year, could easily turn into the world's single largest importer whenever its own production declines as it did this year due to the impact of the prolonged drought. But there are only a few rice exporting countries.

Source: http://www.thejakartapost.com/news/2015/11/17/editorial-politically-charged-import.html