The Politics of Rice 11

Finally, a newspaper editorial on the rice furor that makes sense (Over at the Cafe Salemba, Ape has pointed out the other sensible editorial, also by the same newspaper). The Jakarta Post has another good editorial today about what it calls, "The Politics of Rice" -- sounds familiar? (The problem with the Jakarta Post's web version, it doesn't provide permanent links, so don't be surprised if you click the link tomorrow and you are brought to another piece of article. To avoid you missing this important piece, I copy paste it in its entirety below -- I hope JP doesn't mind).

The politics of rice (© The Jakarta Post, Jan 12, 2006)

The current furor over rice imports flared up when late last year the trade minister gave clearance to the State Logistics Agency (Bulog) to import over 70,000 tons of rice to supplement its buffer stock. The agriculture minister protested, saying the country's stocks were sufficient, and that importing rice would depress domestic prices, penalizing rice growers, most of whom are subsistence farmers.

After several meetings, the agriculture minister backed down and agreed the country needed to import rice to fortify Bulog's stocks. Earlier this week, the government announced it would allow Bulog to import another 110,000 tons of rice from Vietnam through the end of January.

From this, it may be safe to assume the country does need additional rice supplies to keep prices from rising out of control. Higher rice prices are bad for inflation, as rice plays a major role in the calculation of the consumer price index. At the same time, there are people who are making huge profits importing the rice. Well, that's the politics of rice.

It is necessary to take a more rational look at the issue of rice imports. Seen from the interests of the nation, i.e. keeping rice available and affordable for most people, importing rice is not bad, and is also a way to contain inflation.

But we need to take a look at the bigger picture of the role rice plays in Indonesia. As the most important staple food for a large portion of the population, rice is not just another commodity. It is both a market and a political commodity, and any government that failed to ensure the availability of rice at affordable prices would face serious problems.

But just how far should the government go in controlling the rice trade, and who should the government favor in its rice policy -- the growers or the consumers?

By keeping rice prices low, the government sides more with consumers than growers, while at the same time keeping inflation in check. By allowing prices to go up, the government helps farmers and penalizes consumers.

So a balance must be reached. But even such a balance would not be a true balance, as one group would benefit over the other. The easiest and least politically risky decision would be to keep rice prices low. It is rarely beneficial for a politician to favor the interests of rice farmers, who are largely uninterested in politics. Which is why most politicians would rather come down on the side of consumers, especially urban residents who want low rice prices, are politically active and make campaign contributions.

Keeping rice prices low also benefits farmers, who normally become consumers between harvests. So, consumers outnumber growers, making siding with consumers more morally defensible.

Given all of this, the best rice policy would be to keep prices affordable to most people, while importing rice is the best remedy when domestic prices begin to creep up. Imports should also serve as a way to improve the efficiency of our rice growers, so they can eventually become more competitive.

As long as the domestic market remains protected, importing rice will remain attractive for anyone eager to make a big profit. Putting domestic prices on a par with prices in the international market should be the ultimate objective for the country, which would protect farmers from rice imports.

Rice imports are not a problem, but a solution. The problem lies in the process of importing rice. When done by cronies of government officials and Bulog executives, through dubious tenders, the people have a right to raise questions. The government must make the process more transparent. Then no one will raise questions, and the people will have all the affordable rice they can eat.

I hope to see many of this.