TIMOR-LESTE: Rice price hike leads to government subsidies

Irin, 20 May

DILI, 20 May 2008 (IRIN) - It is 8am and Star King in Dili, Timor-Leste's capital, is about to open. For most of the year, Star King, a dimly lit warehouse that sells tinned milk, noodles and cooking oil, is a store among a dozen just like it. But today police have been called to help manage the 100 or so anxious people waiting outside.

After weeks of rising global food prices, the government has agreed to subsidies rice and Star King is only one of about eight stores in Dili where rice is cheap enough for the average family - though the discounted supply does not last long.

Rice is the primary staple food for the population of about one million. According to the Ministry of Agriculture, Timorese eat 83,000 metric tonnes of rice annually but only 40,000 MT is locally produced; the rest is imported from Indonesia, Thailand or Vietnam.

A 35kg bag of imported rice should cost about US$16, in line with local produce. However, over the past six months, the price of rice globally has risen from 40 US cents/kg to $1.20-$1.30/kg, pushing the cost of imported rice well beyond the means of most families, who subsist on only a few dollars a day.

The UN Mission in Timor (UNMIT) has blamed rising costs on environmental disasters, greater population demands, increasing fuel prices and a shortage of reserves. A rice crisis hit Timor last year and then as now, the government responded with subsidized rice. A 35kg bag of subsidized rice is $17.

Epifánio Faculto, the Timor-Leste director of domestic trade under the Ministry of Tourism, Commerce and Industry, told IRIN the plan had been well received: "The people are happy with the price, but we still have some complaints about the [insufficient] stock."

Indeed, every morning there is a queue outside Star King. Lay Siu Kiat, the owner, said he sells 25 tonnes of subsidized rice - his entire daily ration - in about two hours.

Limited discount stocks

Isabelle Soares, 57, came from Aileu District, three hours away, to Dili for subsidized rice. She said her bus did not leave until 8am and by the time she got to Star King the subsidized rice was gone.

Soares, a mother of six, ended up buying a $25 bag, which she said would have cost her $35 in Aileu; a bottle of cooking oil and some instant noodles. She had traveled six hours to and from Aileu to save $10.

"The government doesn't help us," she told IRIN. "I have to come to Dili just to buy rice and then take it back to Aileu."

Faculto acknowledged the subsidized rice had been slow to reach the districts, but he said 1,360kg of rice would be delivered to all 13 districts by the third week of May.

UNMIT has praised the government's efforts at providing discount food. UN acting special representative for the Secretary-General Finn Reske-Nielsen said, "[T]here is no cause for alarm as the situation we are seeing elsewhere is not the situation we are seeing in Timor-Leste."

Beyond the short term, the UN Food and Agriculture Organization (FAO) in Timor is encouraging farmers to take advantage of the extended rainy season and plant additional rice and maize, the second staple crop.

Push for maize "We will make good seed, planting material and fertilizer available for roughly 30,000 families," said Chana Opaskornkul, FAO's country director in Timor-Leste. "We think by these measures we will encourage people to plant a second crop and we will increase the food production by around 30,000MT in the country."

Compared with the rest of Asia, Timor-Leste has a robust maize yield. Because of the mountainous terrain and low rainfall, maize can be grown more easily than rice in many areas, but many Timorese prefer to eat rice and rely on maize when rice is not available.

Reske-Nielsen said the rice crisis could be an opportunity to change eating habits, which could spur better nutrition and give economic advantage to maize farmers.

"If handled correctly this could, in fact, have a positive impact on poverty alleviation in the rural areas, including on nutritional standards in the country," UNMIT's acting chief said.