Indonesia sets aside land for rice to avoid imports

Indonesia has reserved 570,000 hectares of land to produce an extra two million tonnes of rice, aimed at reducing the likelihood of Southeast Asia's biggest economy importing any more rice this year, state procurement agency Bulog said. Southeast Asian countries will sign a deal to build a regional rice reserve in October this year to help protect them against price volatility, but analysts say countries still need to boost agricultural investment for long-term food security.
In Indonesia, four state-owned companies will manage the new paddy fields, ranging across the archipelago from Aceh in northern Sumatra island to central Java island to eastern islands in the Nusa Tenggara chain. "It is estimated that the consortium could produce at least 2 million tonnes of rice, which will be entirely bought by Bulog," Bulog President Director Sutarto Alimoeso said.
With these extra supplies, Sutarto said he was optimistic that there will be no need to import any more rice this year. Indonesia is ambitiously aiming to be self-sufficient in rice production, a position achieved in the early 1980s but later lost as production lagged consumption and rampant smuggling of the staple put pressure on local rice prices.
The country surprised markets in January by buying nearly five times as much rice as expected, lifting prices, but has since said it sees output up 1.4 percent in 2011, to lead to a surplus that will grow in coming years as it opens up farmland.
Indonesia, chair of the Association of South East Asian Nations (ASEAN) this year, will contribute 12,000 tonnes of rice for a regional reserve and is ready to double this contribution, Agriculture Minister Suswono said. ASEAN has agreed together with China, Japan and South Korea to have a regional rice stockpile of over 700,0000 tonnes. The details of how the emergency reserve will work, such as whether countries will buy it or whether it could also be used to stabilise volatile prices, have yet to be thrashed out.
"Countries that don't have their own rice production can contribute money and can put their reserves in other (producing)countries," Suswono told Reuters.
ASEAN includes the world's biggest rice exporter Thailand, plus exporters Vietnam, Cambodia and Myanmar, while the Philippines, Indonesia, Malaysia and Singapore are all buyers of the staple. China and Japan buy limited volumes from Thailand. The Food and Agriculture Organisation (FAO) estimates that global net investments in agriculture must top $83 billion per year - up roughly 50 percent from current levels - to meet future demand. "Rice reserves are not going to be a magic cure that will stop any problems in the rice market. The most important thing is to invest in agriculture," said David Dawe, a senior FAO economist in Rome.