Subject: Subsidised rice not reaching the poor

also ETimor moves to stem inflated rice prices

TIMOR-LESTE: Subsidised rice not reaching the poor

DILI, 10 September 2008 (IRIN) - Timor-Leste's poorest are missing out on a government rice subsidy designed to relieve the pressure of the global food crisis.

The government imports rice and sells it for US$16 per 32kg bag, regardless of the market price, but much of it has not been reaching rural areas, where people are less likely to have cash.

"We've seen that the subsidised rice hasn't been available for the past six weeks," Joan Fleuren, country director for the World Food Programme (WFP) in Timor-Leste, told IRIN.

But the government said that while rice stocks have been lower than usual, it has still been distributing subsidised rice.

"So there is this mismatch between the two reports - it is not available on the market [yet] the government says they have sent it. So either the supply line is broken or the food is sold at different prices than was intended [by the government]," Fleuren said.

Missing the target

Orlando Mota lives in the mountain town of Hatuboulico, Bobonaro District, a six-hour drive from the capital, Dili."The small shop [in town] was selling [government rice] for $29," he told IRIN - nearly double the subsidised price.

He said the police told the shopkeeper this was not allowed. "But now they won't sell the rice [at all] because of the police."

Mota said shop owners also claimed they had to charge inflated prices to pay the extra cost of transporting the rice along bad roads from Dili, despite the government covering most of this cost.

The government said it had implemented a law regulating the sales price.

"We have had a lot of complaints," Joao Gonsalves, Minister for Economy and Development, told IRIN.

"Six businessmen involved in the distribution had put the rice in different packets to sell at increased prices, some kept it in the government bags - but we have taken action against these six that have been caught," he said.

People who live in remote communities have also arrived in town to buy discounted rice only to find it sold out. They blame poor information flow from the government in Dili about the timing of deliveries.

"Until now we have not had good communication with the districts," Epifano Silva da Costa Faculto, national director for domestic trade, told IRIN.

Other solutions

The WFP cautioned that the government should consider ways to target food subsidies to the most vulnerable. At present, the poorest and the richest alike can buy subsidised rice.

Fleuren said a system where the most vulnerable get full subsidies and others means-based subsidies, would be more effective.

Fleuren said another solution could be cash handouts for those living in places where the market was functioning, and food handouts for those in more remote locations. But Gonsalves said cash handouts were not a "viable alternative. We'd rather give them food than cash money," he told IRIN.

"There has been a push for [cash handouts] from the World Bank and the International Monetary Fund, and we do not agree with that."

He said the government was not looking at alternatives to the rice subsidy but only to the mechanisms of distribution to deal with the current problems.

Local production

Part of the government's long-term strategy is to increase local production of rice. The country consumes 100,000 tonnes each year, but less than a third is produced locally.

The government buys local rice for the same price as on the international market.

WFP said the government should combine strategies to alleviate pressure from rising food costs into one cohesive plan, because at the moment the efforts could work against one another.

"For instance, if you want to import a lot of food to subsidise sales on the market, in the end this short-term solution goes against finding a long-term solution, namely improved national food production," Fleuren told IRIN.




Date: 09 Sep 2008

ETimor moves to stem inflated rice prices

Reports are coming in from all around East Timor that the country's poorest people are missing out on a government rice subsidy aimed at relieving the pressure of the global food crisis.

The government policy is to import rice and sell it for $16 per 32kg bag, regardless of the market price, but much of that rice has not been reaching those who live in rural areas.

Orlando Mota is a resident of Hatabaulico, a remote mountain village six hours drive from the capital Dili.

Speaking through a translator, he told Radio Australia's Stephanie March, there's currently no affordable rice available for sale.

"The small shop in my town was selling the rice for $29 then the police came and said they cannot sell for $29," he said.

"They said if they want to sell for $29 dollars they need to wait for permission from the ministry.

"So now they are not selling any of the rice."

People in very remote areas say they're not being told when cheap rice will be distributed to shops in rural centers, and arrive only to find it is sold out.

Some traders are repackaging the government rice and trying to pass it off as private imports so they can charge more.

As the so-called 'hungry season' approaches, the problem doesn't appear to be getting any better.

The country director of the World Food Program in East Timor, Joao Fleuren, says his monitoring teams are reporting there is no subsidised rice available on the market.

"Subsidised rice has not been available for the last six weeks or so," he told Radio Australia.

The government says while rice stocks have been lower than usual, it's still been distributing the subsidised product.

Joao Fleuren says because the market place indicates there is no rice, there is either a break in the supply line or the food is sold at different prices than was intended.

Clamp-down on rogue traders

The government has now passed a decree law banning traders from selling subsidised rice at inflated prices and there have already been arrests.

The price of rice is a touchy subject in East Timor.

It's caused riots in the past, and the government has recently been criticised over allegations of nepotism and corruption due to its tendering process for rice imports.

Joao Fleuren says the government should start looking at other measures.

"A system that the vulnerable who need food hand outs in the short or long term they get it for free, but other people get a subsidised quantity of rice, either 10 per cent subsidy, or 20 or 40 depending on their economic status," he said.

Over the long-term, the government plans to deal with rising food prices by increasing local production.

But Joao Fleuren says long-term strategies need to be dovetailed with immediate measures or they will backfire.

"A lot of things are being done now but not as concerted strategy," he said.

"For instance if you want to import a lot of food to subsidies sales on the market, in the end this short term solution goes against finding a long term solution, namely improved national local production."



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