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Presidential Instruction could prevent food crisis

JAKARTA: The jump in world food prices that potentially accelerates inflation pace domestically shall encourage government to take quick and extreme response, including by revising the regulation which may block food supply.Food price stability is an

JAKARTA: The jump in world food prices that potentially accelerates inflation pace domestically shall encourage government to take quick and extreme response, including by revising the regulation which may block food supply.Food price stability is an urgency while dealing with extreme climate that causes disasters at many places in the world. Many worry that the condition could bring down the food prodcution and prompt the commodity prices.Coordinating Minister for Economic Affairs Hatta Rajasa said that one of government's steps for food security and price stability domestically is by freeing import tarrifs on a number of products such as rice, wheat and animal feed."This is part of efforts to promote price stability and mitigate inflation. Thus, we delay issuing few Minister of Finance's Decrees relating to the issues," he said after attending a coordination meeting on food stability yesterday.The meeting will be extended until tomorrow to finish the drafting of presidential instruction on anticipating the impact of world extreme climate. "On Wednesday [tomorrow], we will finist drafting the presidential instruction on anticipation against extreme climate. Regarding distribution of seed, fertilizer, and provision of seed subsidy to the farmers. We will also address farming situation, which is being hit by insects, flood, or anything caused by the climate change," he added.The presidential instruction will give a room for the government to take quick action. The government also allocates IDR3 trillion for the anticipation action, comprising IDR1 trillion for food stability and IDR2 trillion for anticipating the impacts of extreme climate." The presidential instruction is being formulated and expected to be completed by end of the year," he confirmed.Free import tariffs Minister of Finance Agus Martowardojo expects that tariff team will agree on Minister of Finance's decree on the implementation of free import tariffs on a number of food materials this week and to make it finalized immediately. "There will be inputs from Minister of Trade, Minister of Industry, Ministry of Agriculture, and other related ministers. We expect to bring it into a meeting with tariff team this week," he explained at Presidential Palace. Minister of Trade Mari Elka Pangestu confirmed to have submitted proposal for decreasing import tariffs on basic food materials. "Tomorrow we [today] tariff team will discuss it. We are waiting for the meeting of the tariff team and will take decision right afterwards," she said after a working meeting House Commission VI.She yet refised to detail out the kinds of food materials that have their tariffs decreased and the period of the decrease.The government recently increased the import tariffs on raw materials and capital goods including food materials, from 0% to 5%-10% as regulated in PMK No. 241/-PMK.011/2010 issued on 22 December 2010.The regulation invites rejection from industries as it will facilitate hike in production cost and prices of end products at the time PT PLN decides to revoke 18% capping policy over industrial subscribers.Executive Director of Indonesia's Flour Producers Association (Aptindo) Ratna Sari Loppies said that the 5% hike in wheat's import tariff will definitely bring up the flour price.The increasing flour price is believed to cause anxiety in the market as 70% or around 3 million tons of flour is consumed by micro businessmen which are 2 million business players.Chairman of Indonesia's Food and Beverage Producers Association (Gapmmi) Adhi S. Lukman said that application of impor tariffs as regulated in PMK is ironic when end products receive free import tariff incentive ahead of the implementation of free trade agreement.He predicted food and beverage prices to rise between 10%-15% this year due to the hike in basic ingredients, such as flour, sugar, salt, cooking oil, corn, soybean, milk and packaging. In line with the food price stabilility effort, House of Representatives yesterday began dicussion on the draft of law that will replace law No. 7/1996 on Food, considered to be outdated to address the current issue.President Director of National Food Logistics Agency (Bulog) Sutarto Alimoeso said that the implementation of free food import tariffs will ease government to bring down the prices without adding subsidy. "For market operation, government determines the purchase cost and if a tariff is imposed, the government shall provide subsidy."He thought the free import tariff implementation will significantly bring down the rice price imports, without causing loss. According to him, the free import tariffs and market operation shall be done, as rice price hike is abnormal, that is, above 30%. "Bulog targets rice price to normalize."Separately, ex Vice President Jusuf Kalla commented that government shall take any decisions related to food amid the rising world's rice price due to extreme climate."No more meetings. Food issue particularly rice is crucial. Rice consumption per person per day is 0.4 kg on average. Assuming one family consists of five persons, it will need 60 kg per family per month." (NOM)

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