Indonesia Eyes New Rice Deal with India Amid Shortage

The country’s trade minister says Jakarta is mulling a new pact with New Delhi.

Indonesia Eyes New Rice Deal with India Amid Shortage

Rice paddies in Sumatra, Indonesia.

Credit: Flickr/Keith Cuddeback

Indonesia is mulling importing rice from India as the country struggles with a temporary shortage of the staple food product in early 2016, the country’s trade minister said Wednesday.

Last year’s prolonged El Niño had resulted in the rice planting season in Indonesia being postponed, leading to depleted rice stocks in the first quarter of 2016. While officials expect domestic production to rise again by April, Jakarta has nonetheless been looking for new import sources to fill the current shortfall and to forestall price hikes.

On Wednesday, Trade Minister Thomas Lembong said that Indonesia was considering signing a memorandum of understanding (MoU) with India. New Delhi, which exports around 10 million tons of rice a year, vied with Thailand for the title of world’s top rice exporter last year according to data from the Food and Agriculture Organization (FAO).

“We also encourage the signing of a memorandum of understanding with India,” he said according to The Jakarta Post.

In December last year, Lembong had told India’s ambassador to Indonesia Gurjit Singh that Jakarta would move to include India in a list of countries from which rice imports could be authorized. Lembong is reportedly expected to broach the subject of the MoU on rice during his scheduled visit to India, which will take place from January 28 to 29 and will include a meeting with his Indian counterpart. The two Asian giants will also discuss collaboration in pharmaceuticals as well as the state of their overall economic relationship.

If reached, the deal would be a boost for Indonesia. Jakarta had struggled to reach rice deals with Thailand and Vietnam last year and has been considering a number of other options. Just this week, a deal was finalized with Pakistan which will see the export of one million tons of rice valuing around $400 million over the next four years. The rice agreement, executed by the Trading Corporation of Pakistan (TCP) and the State Logistics Agency (Bulog) of Indonesia, is the first that Jakarta has reached with a non-Southeast Asian country.

Other rice import options which the Indonesian government has considered include Myanmar and Cambodia, both fellow members of the Association of Southeast Asian Nations (ASEAN).