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* Rice harvest data inflated to keep subsidies flowing -officials
* Latest incorrect data could lead to near-term rice shortage
* Agriculture ministry denies it manipulates rice data
By Bernadette Christina Munthe and Michael Taylor
JAKARTA, Jan 22 (Reuters) - Indonesian agriculture officials routinely inflate rice harvest data to present a rosy picture to the government and keep farm subsidies flowing, but their latest phoney numbers could lead to a severe shortage of the staple in coming months, officials say.
If the data had been correct, Indonesia would be awash with rice supplies and the country’s president would have less to worry about. The number rigging, critics say, flies in the face of food self-sufficiency targets that Joko Widodo has been aggressively pursuing since taking office in 2014.
“These numbers are so exaggerated,” said a senior government official, who declined to be named because of the sensitivity of the issue. “We’re scrambling right now to build stocks in case there’s a failed harvest in February and March.”
Another government official, who works on agriculture issues, confirmed that the numbers are rigged.
Only last month, supply shortages forced the government to hurriedly import rice from Thailand and Vietnam to avoid a surge in prices, which in the past has sparked civil unrest and contributed to the downfall of autocratic leader Suharto.
Warehouses should be bulging with tens of millions of tonnes of rice, if harvest data is to be believed, but every January officials reset the numbers to zero and the stock just evaporates from the books, the senior official said.
“There’s actually some very real vested interests behind some of these distortions,” he said, referring to Indonesia’s endemic corruption but giving no details.
Dwi Andreas Santosa, a professor at the Bogor Institute of Agriculture, said his research showed the government’s figures for rice output in 2015 were 17-19 percent higher than estimates from the U.S. Department of Agriculture (USDA). USDA numbers are considered to be the global benchmark for crop forecasts.
The government estimated a 7 percent year-on-year rise in production last year, shrugging off a crop-damaging dryness linked to the El Nino weather pattern that prompted the region’s leading exporter, Thailand, to slash its rice output forecast. Indonesia is the world’s third-largest producer.
Santosa said he interviewed farmers in 61 Indonesian regions and found that output had actually fallen: in 67 percent of the area surveyed, he found an average drop of 20 percent from 2014.
“Production data can’t be trusted,” he said. “Our food policies are in disarray because of disarray in the data.”
The USDA estimated Indonesia’s 2014/15 rice harvest at 35.56 million tonnes, down 2 percent from the previous year.
It forecasts output of milled rice at 36.3 million tonnes this year. The agriculture ministry’s estimate for this year is 75.13 million tonnes of unhusked rice, which after milling would come to about 47.2 million tonnes, said Santosa.
Indonesia’s agriculture ministry and statistics bureau are responsible for compiling rice production data, which is used to decide whether state-owned food procurement body Bulog should import or focus on domestic buying.
Last June, Bulog’s chief was removed after just five months in the role, a reflection of Widodo’s frustration with missed targets.
Domestic prices of rice shot up in 2015 as supplies dwindled and the government dithered on imports. It ultimately imported 848,000 tonnes from the fourth quarter until mid-January, an additional 600,000 tonnes is on its way and Indonesia is now in talks with sellers in Pakistan and India for more.
The agriculture ministry denied that it manipulates the rice data, which is compiled through a wide network of contributors that include regional and central government agencies.
“This is the best way we have,” said Hasil Sembiring, director general for food crops at the ministry.
“We are very open to critics. Please show us if there is any other way. If people are saying that the agriculture ministry is setting up the data ... it’s not true.”
Industry officials said the numbers are often exaggerated to reassure the president that his self-sufficiency policies are working, but other motives are to attract central government funding and fertiliser subsidies that are based on production.
The agriculture ministry was allocated 30.1 trillion rupiah ($2.17 billion) for fertiliser subsidies in the 2016 budget, up from 18.8 trillion rupiah ($1.35 billion) in 2011.
“The darker underside of this is like this: larger numbers lead to larger budgets,” said the senior government official.
“So if you say we have tens of millions of farmers, that gives more budget allocation to the agriculture ministry. Or if we say we’re going to push for X million tonnes of production, that argues for more fertiliser subsidies.”
Additional reporting by Nicholas Owen, John Chalmers and Gayatri Suroyo in Jakarta, Ho Binh Minh in Hanoi and Patpicha Tanakasempipat in Bangkok,; Reporting by Bernadette Christina Munthe and Michael Taylor; Editing by Randy Fabi and Himani Sarkar