JAKARTA, 11 April 2008 (IRIN) - Sutini, a 50-year-old housewife, does not mind standing in line for almost an hour to get 1kg of free rice when rising food prices are hitting Indonesia's poorest.

"Nowadays even 1kg of rice is very precious. Staples are very expensive and poor people like us can hardly afford two meals a day," Sutini told IRIN, adding that the price of 1kg of rice had risen from 3,500 rupiah (about 40 US cents) to 5,000 rupiah.

Sutini was one of more than 1,000 people who queued outside the campus of the Indonesian Christian University in the heart of the capital, Jakarta, on 2 April for rice in a charity event organised by an inter-university student group called Forkot.

"This place is only three or four kilometres from the presidential palace and people are queuing for free rice," said Forkot spokesman Jefry Silalahi.

Price pressure

Millions of Indonesia's poor are feeling the pinch of rising global prices of staples such as rice, wheat and soybeans, the key ingredient of Indonesians' favourite dishes, protein-rich tempeh and tofu.

About 500 people took to the streets of Jakarta in March to demand the government bring down prices following media reports of cases of starvation that led to the deaths of a school-boy and a pregnant mother.

Some analysts have warned that the price increases would push more people into poverty in a country where millions live on less than $2 a day.

"The price hikes have affected people's ability to sustain themselves in a massive way," Latif Adam, an economic researcher at the Indonesian Institute of Sciences, told IRIN. "It is very likely that people who were nearly poor before have now become poor," he said.

High inflation

Rising food prices helped push up annual inflation to 8.17 percent in March, the highest since September 2006 when it hit 14.6 percent.

Indonesia is a major importer of soybean, wheat and rice as local production is often insufficient due to frequent disruptions to supplies because of crop failures and natural disasters.

The government announced in the first week of April that it had ample stocks for the next few months, estimated at 8.3 million tonnes, but would not export grain to ensure it meets domestic demand. Last year, the country imported 1.3 million tonnes of rice out of a quota of 1.5 million tonnes.

The government has taken several measures to contend with the price hikes, including increasing the amount of subsidised rice for families categorised as poor from 10kg to 15kg per month.

Import duties

In February the government announced it was scrapping a 5 percent import duty on wheat flour and a 10 percent value-added tax on wheat processed by domestic flour millers.

The previous month the government was forced to cut import taxes for soybeans after thousands of traders took to the streets in protest against rising prices.

Trade Minister Mari Pangestu tried to allay concerns about a possible food crisis, saying stocks were adequate. "If we look at a number of commodities, there are no problems with stocks and prices of some of the commodities have started to fall and stabilise," she told reporters in March.

Good harvest expected

Sutarto Alimoeso, director-general of food crops at the Agriculture Ministry, told IRIN he expected rice production to exceed domestic consumption by two million metric tonnes when the 2008 crop is harvested. He suggested this would enable the country to export some rice.

Henry Saragih, head of the Indonesian Farmers' Union, blamed the present woes on the government's long neglect of the agriculture sector.

"Most farmers today are not producers, they are peasants. They have to buy rice, wheat and soybeans themselves. While agricultural products are mainly sold in the cities, when prices increase, these peasants are among the hardest hit," he said.

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