Saturday, January 07, 2006

The Politics of Rice 8

The government has decided to lift import ban as reported in Kompas today, as the main headline. Good. The next good thing would be to let importation be done by anybody who wants. Or, create another institution to compete with Bulog. And another, and another, and another.

Meanwhile, opposition keeps arising. To which, I would address the following:

Some say the government does not stand for farmers' interest. They want the price high so as to protect farmers' income. I have stated so many times that the farmers they want to protect are actually net consumers, not producers, who will be happy with lower price. But, even if I was wrong; that is, if all farmers -- and most importantly, the majority, or the poorest of the poor -- are net producers, I would like to ask this question to the opponents of rice import: Suppose the rice price increases (as they like), do they not think that would also trigger increase in other prices? Most Indonesians eat rice. Higher price means higher spending. Marginal consumers will cut on other spending, and marginal consumers who produce will pass the burden on to other consumers through increase in the price of whatever they produce. And it will snowball. This is what the opponents of rice import fail to see (or choose not to see). They think rice lives in its own and has nothing to do with other prices that would impact on them.

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