April 15, 2008 / 10:44 AM / 11 years ago

Manila eyes more rice imports, Indonesia curbs exports

MANILA/JAKARTA (Reuters) - The Philippines will accelerate rice imports, it said on Tuesday, while Indonesia imposed controls over exports as Asian nations battle inflation and food security concerns caused by soaring global prices.

A farmer sifts rice at a paddy in the town of Baliuag, Bulacan province north of Manila April 13, 2008. REUTERS/Cheryl Ravelo

In Manila, the world’s top importer, the state grain buyer said it would seek another half a million tonnes to stock up ahead of the typically lean third quarter, although President Gloria Macapagal Arroyo said supplies were sufficient for now.

Indonesia, Southeast Asia’s largest rice consumer, confirmed new rice export rules meant to head off a potential rush by farmers to offload their crops at export prices that are nearly double local rates.

Benchmark Thai rice prices have doubled since the start of the year to hit a series of record highs, boosting inflation for major rice consumers and raising the specter of unrest linked to food prices.

Under Indonesia’s new rules, only state procurement agency Bulog is allowed to sell overseas, and only when national stocks are above 3 million tonnes and domestic prices are below a government target price, said Mari Pangestu, the trade minister.

“In principle, the aim is to maintain rice stocks in the country and maintain price stability,” Pangestu said, adding that the target price will be set later.

Government data showed Indonesia’s average rice prices fell about 0.5 percent to 5,351 rupiah ($0.583) per kilogram in the first two weeks of April during rice harvests, putting it sharply below $925 a tonne for Thai 100 percent parboiled rice.

Indonesia is not a big rice exporter, shipping just 50,000 tonnes of organic rice last year, but the fall in domestic rice prices when global rice prices are soaring had raised concerns over the possibility of rice smuggling out of the vast archipelago, especially into the neighboring Philippines.

“The thing that needs to be watched carefully is illegal exports to the Philippines. There is price disparity between those in Indonesia and the Philippines,” minister Pangestu said.

In the Philippines, President Arroyo said a new rice tender would likely be held on May 2, the second purchase in as many months.

“Supply is secure for the foreseeable future,” Arroyo told a cabinet meeting on Tuesday devoted to dealing with the Philippines’ rice situation.

An official with the National Food Authority (NFA), the grain-importing arm of the government, told Reuters that the May tender would likely be for around half a million tonnes.

LEADING THE CHARGE

Indonesia joins a list of countries including Egypt, India and Vietnam that have all moved to restrict or control exports in order to keep a lid on rising local inflation.

With rice production estimated to be about 2 million tonnes higher than consumption this year thanks to improving yields and an increase in the harvested area, Indonesia could potentially export excess supplies to take advantage of high prices.

Rice is more than just a staple in large parts of Asia, but especially in the Philippines and Indonesia.

Arroyo fears hungry voters would take to the streets if rice shortages were to emerge and has taken extraordinary steps to guarantee sufficient supply including deploying soldiers armed with M-16 rifles to guard sales of subsidized rice.

On Tuesday, her newly-created anti-rice hoarding taskforce filed hoarding charges against 13 people. No one has been convicted of hoarding in the Philippines in recent memory.

“Anyone caught stealing rice from the people must be thrown in jail,” Arroyo said.

Indonesia has been struggling to increase rice production, the main staple for its population of 226 million people.

Slideshow (2 Images)

More than half of the labor force depends on the farm sector and rice is a sensitive issue in Indonesia, where farmers plundered warehouses and paddy fields when rice prices surged at the height of the Asian financial crisis in 1998.

The Philippines is boosting domestic production but output gains are insufficient to meet demand from a rapidly rising population with 3 babies born every minute.

Manila imports about 10 percent of its domestic rice requirements and a tender for 500,000 tonnes is being held on Thursday.

Editing by Raju Gopalakrishnan and Michael Urquhart

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