Indonesia Hit by Rice Shortage: Java, Indonesia January 14, 2006
-------------------------------------------------------------------------- Old news but interesting to see 'hoarding' as being blamed for the shortage of rice that occurred in Indo earlier this year. This is what tends to happen in this commodity group (staple foods) when you approach a point where supply doubts surface. It actually encourages consumption in the form of buying surplus to need. We haven't seen this on a global market yet but the way we are ploughing through stocks at the moment, we may not well be far off. And when the global market moves from buying hand to mouth to buying surplus to need, futures markets will not know what has hit them. YC --------------------------------------------------------------------------
An Interesting article in the Jakarta Post today head-lined a rice shortage in Indonesia. One would think that in a country where the main agricultural produce is rice, this would never happen. Go to any market to buy beras and there are a few grades of it to choose from. So why the shortage?. A heavier than normal rainy season and hoarding are being blamed.
Rice shortages blamed on hoarding Suherdjoko and Yuli Tri Suwarni, The Jakarta Post, Bandung/Semarang
A number of cities across the country are experiencing rice shortages, pushing up prices by 25 percent and raising suspicions over hoarding by traders.
In Central Java's two largest cities, Semarang and Surakarta, rice stocks have dwindled substantially over the last five days, raising the price of the low quality C4-type rice from Rp 3,550 (35 U.S. cents) per kilogram to Rp 4,100 per kilogram.
"I don't know why rice is hard to get. I ordered rice from Boyolali four days ago, but the rice did not arrive until today," said Kastawar, a rice trader in Semarang's Dargo rice market, on Thursday.
He acknowledged that with incessant downpours across Central Java, bad weather could also be a factor in the declining supply, which on normal days stood at up to 100 tons per day, but over the last five days had only been at 10 tons.
"I suspect the shortages are happening because farmers cannot dry their rice in time due to the bad weather," Kastawar surmised. Fears of a rice shortage, however, were dismissed by local officials, including Central Java Deputy Governor Ali Mufiz and West Java Governor Danny Setiawan.
"There might be not much of a rice supply in the markets, but I'm sure the traders have rice in their warehouses. They intentionally hoard the rice to sell it at higher price before the harvest in February and March," Ali Mufiz said.
"Before rice prices go down after the harvest, the traders want to earn more profits. That's common practice," Ali admitted.
Central Java Governor Mardiyanto said the shortages did not make sense because the province regularly ran a rice surplus, recorded at 931,094 tons last year from 8,473,163 tons of rice produced. Data from the state commodity regulating agency, Bulog, showed that Central Java's current rice supply of 194,500 tons was more than enough to cover the province's needs of 30,000 tons every month, and enough to last until July this year -- well after the new harvest.
In Bandung, Governor Danny Setiawan suspected hoarding for causing rice shortages, saying on Thursday he had asked West Java Police chief Insp. Gen. Edi Darnadi to investigate.
"Reports of rice shortages and high rice prices, which have hit Rp 5,000 per kilo in some areas, clearly show there is something wrong," he said. "Action should be taken against rice hoarders, who should be arrested and prosecuted."
One rice trader in Bandung's Caringin market, Fauzi, urged the local administration to allow imported rice to enter the market so he and his colleagues could deal with the shortage. However, Danny said his administration had refused to allow imported rice into the market over fears the imports would push prices too low, at the expense of farmers.
"They (the central government) promised not to let imported rice enter West Java. In the letter, I was informed that the imported rice would be distributed in areas outside Java," he said on Thursday.
The province, he said, produces 5.5 million tons of rice annually, enough to meet the residents' demand of 4.9 million tons. Currently, it has a rice surplus of between 600,000 and 800,000 tons from last year, which will used for the rice-for-the-poor program.
In Yogyakarta, farmers claimed rising rice prices were only profiting big rice traders, Antara reported on Thursday.
"All we can do is suck our thumb and turn green with envy," said Sutono, head of the Nudi Makmur farmers group in Minggir district, Yogyakarta.
