Indonesia, Southeast Asia's largest rice consumer, will curb medium-grade rice exports in an effort to combat inflation, the trade minister said on Tuesday, threatening to heighten world fears over stable food supplies.
Rice prices have more than doubled since the start of this year as some of the world's top suppliers have curbed exports to tame surging food inflation at home, creating fears of shortages in importing countries. Analysts say the anxiety will subside in the coming months as stocks rise and extra crops boost supplies but the Philippines, a leading importer, remains concerned and has called for a regional meeting to discuss the issue.
Under Indonesia's new rice export rules, state procurement agency Bulog is allowed to sell widely consumed medium-grade rice overseas only when national stocks are above 3 million tonnes and domestic prices are below a government's target price, said Mari Pangestu.
The target price will be set later. "This policy is indeed aimed at tightening rice exports. So, this policy will regulate the players and the requirements instead of the previous scheme under which anybody could export rice," she said. "In principle, the aim is to maintain rice stocks in the country and maintain price stability."
Indonesia's rice production is estimated to be about 2 million tonnes higher than consumption this year thanks to improving yields and an increase in the harvested area, but officials say that is not enough to guarantee national food security.
The Southeast Asian giant has been struggling to increase rice production, the main staple for its population of 226 million people, as it lacks good quality seeds, and faces competition for land and a shortage of fertiliser.
Concerns over rice supplies, triggered by rising demand and global stocks falling by half since their 1980s peak, have prompted exporting nations to focus on building stockpiles and boosting domestic supplies to prevent shortages and inflation.
US rice futures rose to an all-time high on Tuesday, extending this year's gains to more than 60 percent and further heating political concern over global supplies. Governments across Asia are likely to remain anxious for a while still given the importance of rice in the region.
Food accounts for almost 50 percent of the total expenditure for an average Indonesian citizen, while it's only 10 percent in developed countries such as the United States, Standard Chartered bank said in a research paper.