Eko Listiyorini & Supunnabul Suwannakij – Indonesia, the third-biggest rice importer in Asia, is seeking to "strengthen" its stockpiles to protect the poor against rising costs, Deputy Minister of Agriculture Bayu Krisnamurthi says.

"The price is expensive so the government needs to strengthen inventories," Krisnamurthi said in a text message replying to Bloomberg questions on Friday. "Supply is enough but the problem is the price, especially international prices."

Rice futures climbed to $16.3 per 100 pounds in Chicago on Feb. 3, the highest level since November 2008, as US farmers prepared to cut plantings by 25 percent to the lowest since 1989, according to the median of a Bloomberg survey of nine analysts and farmers. The cost of rice in Indonesia, a dietary staple, advanced to a record in December, the United Nations said on Thursday.

Thailand, the top exporter, is negotiating with Indonesia and Bangladesh to supply the grain under government contracts, Chatchai Chookaew, a Commerce Ministry spokesman, said on Feb. 2. Indonesia wants to buy as much as 800,000 tons from Thailand, while Bangladesh is seeking 200,000 tons, Chatchai said by phone. The amounts were yet to be finalized, he added.

Any "imports are to add to stockpiles, not to supply the market," Krisnamurthi said, without specifying the amount.

Bulog, the state food company, aims to keep stockpiles at a minimum 1.5 million tons "at all times" through domestic purchases and imports, President Director Sutarto Alimoeso said in an interview last month. "With leftover inventories at 868,000 tons and the rest of our imports almost all arrived, we have 1.5 million tons of stockpiles now," Alimoeso said.

Thailand's export price, the benchmark in Asia, may climb as high as $600 a ton by December from $534 on Jan. 26, a gain of 12 percent, according to the median estimate in a Bloomberg survey last month. Global food costs, measured by the United Nations Food and Agriculture Organization's Food Price Index, advanced 3.4 percent to a record in January after jumping last year as drought and floods ruined crops from Russia to Argentina.

Bulog agreed with Thailand in December to buy an additional 250,000 tons, bringing total imports to 1.33 million tons, the most since 1999, Trade Minister Mari Pangestu said Dec. 22. Indonesia, self-sufficient in rice in 2008 and 2009, returned to the market last year as stockpiles fell below minimum levels and production growth failed to meet an official target.

The government has been trying to cool food inflation that drove consumer prices 7.02 percent higher in January from a year earlier, the most since April 2009.

Indonesia removed import duties on 57 food items including wheat, soybeans, rice and animal feed for as long as one year to help cool prices. Rice imports are tax-free until March and tariffs on other commodities are lifted until December, Bambang Permadi Brodjonegoro, head of fiscal policy at the Finance Ministry, said on Jan. 27.

"Domestic supply of the staple is predicted to be normal," Krisnamurthi said. Corn and sugar-cane production will expand, while soybean output may be under pressure because of competition from other crops, he added.

Rice production could increase 2 percent to 3 percent this year, Krisnamurthi said. Unhusked rice output may climb to 68.8 million tons this year from an estimated 65.98 million tons last year, Agriculture Minister Suswono said Dec. 29.

The average domestic price in Indonesia climbed to Rp 9,082 ($1.01) a kilogram in December, up 4.8 percent from the previous month and 31 percent more than a year earlier, the United Nations said.

Bulog buys crops from farmers or from overseas and sells grain later to keep domestic prices stable. It also manages the government's emergency stockpiles for natural disasters.