Indonesia targets 1.2 mln tonnes of rice reserves by year-end

Indonesia aims to secure 1.2 million tonnes of rice reserves by year-end, or enough to meet 3.9% of national demand, preferably sourced from domestic production, a government official said on Friday.

Authorities have been seeking to build up adequate reserves of various staple foods to ensure price stability at a time of soaring inflation.

The annual inflation rate in Southeast Asia's biggest economy in September reached a new 7-year high at 5.95%, with volatile food inflation at 9.02%, above the government's target at below 5%.

The state food procurement agency Bulog currently has 700,000 tonnes of rice in its stocks, I Gusti Ketut Astawa, a senior official at the National Food Agency (Bapanas), told Reuters.

"We will prioritise procuring (the additional 500,000 tonnes of rice) from national production," he said when asked whether the agency would need to import the grain.

Rice output this year is estimated to grow 2.29% to around 32.07 million tonnes, with output in October-December alone estimated at 5.9 million tonnes, according to Indonesia's statistic office.

Under a new presidential regulation, which took effect on 24 Oct, Bapanas with the help of state-owned enterprises plans to have stocks of 11 staple foods, such as rice, corn, soybeans, shallots, chilli, sugar for household, cooking oil, as well as some meat and fish.

Bapanas aims to ensure stocks of the staples can meet up to 5% of national demand, Astawa said.

This year, Indonesia has suffered a number of food supply issues, including for soybean and cooking oil, which resulted in a three-week export ban of palm oil to boost local cooking oil supplies that rattled global vegetable oil markets.

Rising fertiliser costs due to high energy prices have also been undermining food affordability.