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Government May Extend Rice Export Period
Dion Bisara | May 25, 2009

A man counts money at his rice shop in Jakarta. (Photo: Dimas Ardian, Bloomberg) A man counts money at his rice shop in Jakarta. (Photo: Dimas Ardian, Bloomberg)
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In a stunning turnaround from a year ago, the government is considering extending the rice export period until August and is suggesting that exporters postpone plans to ship premium-quality rice because world prices have fallen so dramatically.

“Prices in the global market are declining,” said Bayu Krisnamurthi, deputy minister of agriculture, fisheries and forestry at the Coordinating Ministry for the Economy. “If we enter the market now, we cannot make a profit.”

The international price of rice on the Chicago Board of Trade now sits at $554 per metric ton, having nearly quadrupled last year from $250 per ton to $1,100 per ton last April.

With the nation’s rice price set by the State Logistics Agency (Bulog) at a much lower $436.80 per ton last year, some domestic producers, realizing they could make more money selling their crop overseas, even started smuggling rice out through Singapore.

What a difference a year makes.

“The harvest season has now passed and there is enough to keep the domestic price from rising,” Bayu said.

The Ministry of Agriculture set its rice export quota in January, licensing nine companies to export up to 100 tons of premium-quality rice through June in anticipation of harvest surpluses in 2009.

However, Bayu said, the quota has not been met. The government, he said, is considering extending the export period until August, when the second harvest season begins.

“Our observations are that the quota has not been met, and, domestically, the price and supply have been stable,” he said, adding that there was a slight chance that the price would rise again in the global market.

Rice prices have fallen 12.1 percent in Chicago trading over the last three months.

To boost exports, Bayu said that the government should consider excluding certified organic rice from the quota so that it could be exported at any time and any price.

“Exporting certified organic rice should not be limited because currently it only accounts for a small amount,” he said.

The nation’s farmers produce 10,000 metric tons of organic rice per year, Bayu said, a tiny fraction of the government’s total yearly rice target of 43 million tons.