Dec. 22 (Bloomberg) -- Bulog, Indonesia’s state food company, has agreed deals to import the most rice since 1999 to replenish stockpiles and help ease consumer prices in Southeast Asia’s biggest economy.
Bulog reached an agreement with Thailand earlier this week to buy an additional 250,000 metric tons, bringing total imports to 1.33 million tons, Trade Minister Mari Pangestu said at a briefing in Jakarta today. The final shipments will arrive in February, she said.
Indonesia, which was self-sufficient in rice in the previous two years, returned to the grains market this year as stockpiles fell to less-than-minimum levels and production growth failed to meet an official target. The government has been trying to cool food inflation that helped drive consumer prices 6.3 percent higher last month.
Rice futures traded in Chicago have jumped 47 percent from this year’s low of $9.55 per 100 pounds reached on June 30. The March-delivery contract was at $14 at 1:43 p.m. Singapore time.
In 2007, Indonesia bought about 1.2 million tons, mostly from Thailand and Vietnam, the two largest exporters. It bought 1.53 million tons during Asia’s financial crisis in 1999, after a record purchase of 5.96 million tons in the previous year, according to trade ministry’s data.
“We now have sufficient rice” to maintain food prices, Coordinating Minister for the Economy Hatta Rajasa said at the same briefing. “We don’t want to see inflation increase.”
The price of medium-grade IR64-3 rice, the most-consumed variety of the staple for Indonesia’s 240 million people, has climbed 14 percent in the past six months to 6,000 rupiah (66 cents) a kilogram as of Dec. 17 in Jakarta’s main market, according to data compiled by Bloomberg News.
The Finance Ministry is planning to introduce a regulation that will allow Bulog to import rice duty-free to help stabilize domestic prices, Pangestu said Dec. 20. Imports are charged 450 rupiah a kilogram ($50 a ton), Bulog said last month.
A total of more than 500,000 tons of imported rice is due to arrive this month and will be released into the local market to curb speculation, Sutarto Alimoeso, president director of Bulog, said on Dec. 20.
Jakarta-based Bulog needs to buy rice to maintain stockpiles at a minimum 1.5 million tons, a level deemed sufficient to manage prices, Rajasa said today.
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.
To contact the editor responsible for this story: Richard Dobson at Rdobson4@bloomberg.net