Reports are coming in from all around East Timor that the country's poorest people are missing out on a government rice subsidy aimed at relieving the pressure of the global food crisis.

The government policy is to import rice and sell it for $16 per 32kg bag, regardless of the market price, but much of that rice has not been reaching those who live in rural areas.

Orlando Mota is a resident of Hatabaulico, a remote mountain village six hours drive from the capital Dili. Speaking through a translator, he told Radio Australia's Stephanie March, there's currently no affordable rice available for sale.

"The small shop in my town was selling the rice for $29 then the police came and said they cannot sell for $29," he said. "They said if they want to sell for $29 dollars they need to wait for permission from the ministry. So now they are not selling any of the rice."

People in very remote areas say they're not being told when cheap rice will be distributed to shops in rural centers, and arrive only to find it is sold out. Some traders are repackaging the government rice and trying to pass it off as private imports so they can charge more.

As the so-called 'hungry season' approaches, the problem doesn't appear to be getting any better.

The country director of the World Food Program in East Timor, Joao Fleuren, says his monitoring teams are reporting there is no subsidised rice available on the market. "Subsidised rice has not been available for the last six weeks or so," he told Radio Australia.

The government says while rice stocks have been lower than usual, it's still been distributing the subsidised product.

Joao Fleuren says because the market place indicates there is no rice, there is either a break in the supply line or the food is sold at different prices than was intended.

Clamp-down on rogue traders

The government has now passed a decree law banning traders from selling subsidised rice at inflated prices and there have already been arrests.

The price of rice is a touchy subject in East Timor. It's caused riots in the past, and the government has recently been criticised over allegations of nepotism and corruption due to its tendering process for rice imports.

Joao Fleuren says the government should start looking at other measures. "A system that the vulnerable who need food hand outs in the short or long term they get it for free, but other people get a subsidised quantity of rice, either 10 per cent subsidy, or 20 or 40 depending on their economic status," he said.

Over the long-term, the government plans to deal with rising food prices by increasing local production. But Joao Fleuren says long-term strategies need to be dovetailed with immediate measures or they will backfire.

"A lot of things are being done now but not as concerted strategy," he said. "For instance if you want to import a lot of food to subsidies sales on the market, in the end this short term solution goes against finding a long term solution, namely improved national local production."