As agreed last month, this November Indonesia will start importing about 1.5 million tons of rice from Vietnam. Earlier this year, Indonesia had already imported 60,000 tons of rice to stabilize rice prices as a spike in rice prices, which the government blamed on mark-ups by market traders, caused concern. Rice is the main staple food for the Indonesian population, implying that the poorer segments of society spend a relatively large portion of their disposable incomes on rice. This means that rice inflation can cause a surge in poverty.
Due to the impact of El Nino, a weather phenomenon that involves periodical warm ocean water temperatures off the western coast of South America that can cause climatic changes across the Pacific Ocean, rice production in Indonesia may decline. The El Nino weather phenomenon, which occurs once every five years on average, can lead to severe droughts in key agricultural-producing countries in Southeast Asia, hence impacting on the global commodities market. In Indonesia, the dry season usually lasts from May to August. However, due to El Nino, it took until October-November to see some rain in parts of Southeast Asia's largest economy.
Amran Sulaiman, Indonesian Minister of Agriculture, said these rice imports from Vietnam are merely to safeguard the country's rice reserves and possibly will not need to be sold on the market. Currently, Bulog (National Logistics Agency), the agency that holds a monopoly on rice imports, monitors the distribution process and safeguards rice price stability in the country, still has rice reserves of around 1.4 million tons. The agency also said local rice farmers have begun to plant rice this month, meaning that the harvest season can start in February.