Indonesia Bulog gets green-light to import more rice-UPDATE 1

Trade the News

Thursday July 07, 2011 02:16:11 PM GMT

* No shortage of rice supplies -trade minister

* Bulog waits on government import permit

* Bulog analysing whether to import from Vietnam -CEO (Recasts, adds details, trade minister comments)

By Yayat Supriatna

JAKARTA, July 6 (Reuters) - Indonesia may import more rice this year to keep healthy stock levels after earlier saying it has enough of the food staple to avoid overseas purchases, and is awaiting a trade ministry permit to determine volumes, government officials said.

State procurement agency Bulog has been permitted to import more rice this year, an official said, while the trade minister said the move is aimed at keeping rice stocks at a safe level and did not indicate a shortfall .

"It was a government decision to allow Bulog to import rice," said the official from the procurement agency, who declined to named. "But until now, we have not gotten an import permit from the trade ministry.

"We still need to have an import permit from the trade ministry to realise the government decision."

In late May, an Indonesian farm ministry official said the country saw higher paddy output of 70.6 million tonnes in 2011, leading to greater surplus and no need for further imports this year, as the world's third-largest rice grower strives for self-sufficiency.

Bulog CEO Sutarto Alimoeso told Reuters in response to the green-light given for more imports , that the agency is analysing whether to import rice from Vietnam.

Last week, traders and a Vietnamese state-run newspaper said Indonesia has been in talks to import between 400,000 and 600,000 tonnes of rice from Vietnam to capitalise on lower prices, with shipment possible in the third quarter of this year. Traders had said high prices in Indonesia prompted the move to import more.

Trade Minister Mari Pangestu later told Reuters Indonesia has not yet determined the rice import volume, as it is evaluating the situation and awaiting output numbers.

"We do import just to maintain and keep rice stock at a safe level for the people," Pangestu said. "But, it does not mean that our stock is in shortage.

"Our rice stock is still enough now for our consumption... People do not need to worry," she added. "Import is also needed to anticipate the lowering stock at the end of the year when there is no crop to harvest."

Last week, officials said Indonesia would produce more unmilled rice this year and see a bigger surplus of the grain as it expands production areas. Unmilled rice production was seen at 68.06 million tonnes in 2011, 2.4 percent higher than last year and up slightly from a forecast earlier this year for 67.31 million in 2011.[ ID:nL3E7I10IX]

Pangestu also said Indonesia had a bilateral government-to-government agreement with Vietnam and Thailand in rice trade.

Traders in Vietnam said last week that an Indonesian team had held talks with Vinafood 2, Vietnam's top rice exporter.

Vietnamese rice prices have strengthened in the past week thanks to potential new demand as buyers shun away from increased prices in Thailand, traders said on Wednesday.

Domestic prices rising have also shelved a Vietnam Food Association plan to buy 1 million tonnes of milled grain for a three-month stockpile.

The benchmark Thai 100 percent B grade white rice was at $545 per tonne, unchanged from Monday, and was up from last week's $525 a tonne.

BULOG RULES

Indonesia, Southeast Asia's largest economy, has had a ban on rice imports by private traders in place since early 2004, in an effort to combat smuggling that squeezed local prices, particularly during the harvest period.

It did not import rice in 2008-2009, but resumed purchases last year and surprised markets early this year by buying around 1 million tonnes, or five times as much rice as expected, in a move to boost stockpiles and help moderate food prices.

High food prices could still hit growth in Indonesia and policymakers fear they could spark social unrest, so improving self-sufficiency has become a top policy priority towards cooling food inflation.

The country's July monthly inflation may be above 0.55 percent -- picking up from June, when inflation slowed to a 12-month low of 5.54 percent year-on-year -- due to higher food prices as the fasting month of Ramadan nears.

Rice imports for price stabilisation, disasters, and shortages can only be done a month before and two months after the main harvest and only state procurement agency Bulog is allowed to carry out imports.

The main harvest runs from March to May/June, followed by a smaller one in August-September.

Bulog, also in charge of maintaining grain stocks for the government, undertakes market operations such as selling when rice prices are too high or buying from farmers when they dip below specific levels. (Additional reporting by Apornrath Phoonphongphiphat in BANGKOK and Ho Binh Minh in HANOI; Writing by Michael Taylor; Editing by Ramthan Hussain)

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