Indonesia could double rice imports as election, El Niño loom
Indonesia could more than double its rice imports this year to keep domestic food prices stable as an election looms and with a possible El Niño weather pattern on the horizon, industry officials and analysts said.
The outgoing administration of President Susilo Bambang Yudhoyono could set aside its key self-sufficiency targets, importing as much as 1.5 million tonnes of rice to guard against spikes in food prices that could risk social unrest, they said.
Bangkok wants to offload grain from a controversial stockpiling scheme at the heart of its recent political turmoil, while Hanoi is looking to follow up on its successful bid to supply 800,000 tonnes of rice to the Philippines.
"My understanding is that there has been a bit of a shortfall in production, or not as much of an increase as they were anticipating."
Dry weather late last year and flooding in early 2014 hurt harvests on parts of the main rice-growing island of Java.
And forecasts that El Niño is likely to develop around mid-year could keep local prices strong. The weather phenomenon usually brings dry conditions to Southeast Asia.
"They definitely don't want prices going up during the election," said Dawe, who met with Indonesian officials in Jakarta last week. He estimated total imports at 1.1 million tonnes in 2014.
With campaigning underway ahead of the presidential election on July 9 and a new government to be inaugurated in October, Yudhoyono will have one eye on his legacy and will not want to risk unrest over food prices, analysts said.
Although the private sector is allowed to import small amounts of specialist rice such as jasmine and basmati, Indonesia's powerful food procurement body Bulog is the dominant rice buyer, tasked with maintaining annual stocks of 1.5-2 million tonnes.
The main rice harvest in the nation of 240 million is usually in June or August, with Bulog typically deciding whether to import from June onwards.
Bulog is yet to ship in any rice this year, CEO Sutarto Alimoeso told Reuters, adding that while it currently had no plans to import, the government was analyzing the situation. He said that stocks stood at 1.93 million tonnes.
The agency said it did not import rice at all last year, but some industry sources estimate the nation shipped in up to 700,000 tonnes. Government data is often disputed by market participants in Indonesia.
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