InSook, I received this via email tonight. I don't like hearing about people with food problems, but this should help old ADM. I have only purchased a third position but will wait and see how this market plays out for a while to add the next third.
Joan
Global Intelligence Update
Red Alert
September 3, 1998
Indonesia Faces Potential Famine
Already pummeled by the general Asian economic collapse and the downturn in
crude oil prices, Indonesia is facing yet another crisis -- impending
famine. The Indonesian newspaper "Kompas" reported on August 28 that rice
supplies in Rengasdengklok, Jatirage, Plumbonsari, and Cilamaya are
depleted. The South Sulawesi logistics board reportedly has 10 months'
supply of rice on hand, while in Bali, the rice supply situation will
reportedly be "critical" in four to five months. Kompas cited Agriculture
Minister Soleh Solahuddin as attributing the rice shortage and accompanying
price rise to speculating farmers who were hoarding rice in an attempt to
drive up prices. Soleh reportedly warned that "famine might occur between
October and December, in which case the logistics board would implement a
large 'market operation.'"
Indonesia's official "Antara" news agency reported on September 2 that
failed harvests and distribution problems threaten thousands with food
shortages. Antara reported that "about 1,800 people in West Java province
have already run out of rice, and another 84,000 are in danger." After
receiving aid shipments from Thailand and China, East Kalimantan province
reportedly has a three month stockpile of rice. Antara added that the
provinces of East Nusa, Tenggara, East Timor, and Irian Jaya also face food
shortages. The situations in East Timor and Irian Jaya are already
unstable, as both have active, militant separatist movements.
Compounding the crisis, Indonesia's economic woes forced Jakarta on
September 2 to cut subsidies and eliminate import duties on sugar, flour,
and soybeans, effective immediately. Announcing the decision, Industry and
Trade Minister Rahardi Ramelan said "there will be no more subsidy and
monopoly. We will leave it to the market mechanism." Ramelan blamed
farmers for setting the high sugar prices, and said that "the rise in the
inflation rate is mostly caused by these basic commodities." Subsidies
currently remain on rice and cooking oil, but Agriculture Minister Soleh
said on August 26 that a rise in the price of rice was "inevitable."
The sudden lifting of fuel subsidies earlier this year sparked riots
throughout Indonesia. The lifting of food subsidies just as shortages set
in can lead to no better. Indonesia is receiving some food aid from the
United States, Australia, Japan, Germany, Norway, and other countries and
international organizations, but with China and perhaps Russia soon to face
food shortages as well, it is questionable as to whether or not sufficient
aid will be available to forestall civil unrest.
With famine poised to compound the country's existing economic collapse,
Indonesia's foremost question is whether the army, and therefore the
country, will remain intact through the ever-increasing crisis. Its second
question is, what regime will the country see next? President Habibie is a
non-starter. Indonesia's two most likely options are a Suharto-style
kleptocratic dictatorship or a Sukarno-style charismatic, nationalist
dictatorship. As the former is the freshest failure in the public's mind,
and as recrimination for the country's economic woes is already falling on
the Chinese minority, the second option is the most likely. It is not a
healthy time to be a foreigner in Indonesia. |
