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Indonesia moves worry global rice trade

G. Chandrashekhar

MUMBAI, Nov. 9

THE international rice market facing soft prices for several months and hoping for an improvement in trade volumes next year is sure to feel disappointed over the reported statement of Indonesia's Government agency - Bulog - that the country does not int end to import rice in 2001 because of abundant stocks.

However, not many are willing to take the statement at its face value and believe, Indonesia will have no escape but to import some quantity given the rate of economic growth and rising domestic demand.

As per the latest assessment, the world's largest importer of rice, Indonesia will in the current year produce close to 51 million tonnes of paddy, unchanged from the previous year. By end-September, practically, all of the main-season crop had been harv ested and planting of the secondary crop was nearing completion.

According to Bulog, the logistics agency through which rice imports are largely channelled, the country is said to be currently holding stocks of some 2.5 m.t. which the authorities feel are sufficient to meet domestic requirement.

Interestingly, Indonesia's rice imports have steadily declined since the peak of six m.t. in 1998, falling to 3.9 m.t. the following year and projected at two m.t. for the current year. In its last report, the US Department of Agriculture had forecast In donesia's import requirement for 2001 at three m.t.

There is also talk of the country raising the import duty on rice - currently at 30 per cent - in order to discourage private trade from importing. The announcement was sure to affect the market sentiment which was already weak, traders said; but hastene d to add that flat domestic production over the last two years might create supply tightness.

There is also belief that Bulog was trying to test the market with a ``no import in 2001'' statement in order to gauge the downside potential of prices. World rice trade for 2001 has been forecast at 24.6 m.t., up 10 per cent from the current year's proj ected figure of 22.3 m.t. Asian rice suppliers are all expected to closely monitor the developments in Indonesia over the coming months.

For India, already reeling under the burden of heavy but high-priced public stocks and a large paddy crop recently harvested, a further decline in international prices could further dampen export prospects. At this point of time, it is unclear if, like w heat, rice exports would be undertaken at subsidised rates.