UPDATE 1-Indonesia opens premium rice export to competition

JAKARTA, April 1 - Indonesia will allow private and state firms to export premium-grade rice, overturning an earlier decision to award export permits only to the state procurement agency, Bulog, an official said on Wednesday.

Premium-grade rice is not popular among many of Indonesia's 226 million people due to its higher price and exports of this type of grain would not threaten domestic food security.

"In practice, Bulog can work together with private firms. Currently, 10 suppliers have been cooperating with Bulog to export around 100,000 tonnes of rice," Bulog chief Mustafa Abubakar told reporters.

He said following the revision of rice export policy, the Ministry of Trade may issue permits to exporters by mid April and exporters can start shipping out rice in May.

Indonesia has said it aims to make its first major rice sales overseas this year after a 16-year export drought after recording rice surplus last year.

But the government has said exports of the mostly widely consumed medium-grade rice would only be allowed in the third quarter once it was clear harvests were bigger than consumption.

Indonesia produced a rice surplus of 1.6 million tonnes in 2008 due to bumper harvests. It was the first time in more than two decades the country has been self-reliant in the commodity.

Higher domestic production allowed Bulog to freeze rice imports in 2008, when global prices had spiralled to a record high on fears of shortages.

The government has said that for the whole year it may allow export of just 100,000 tonnes of premium rice while Bulog has previously said that around 240,000 tonnes of premium rice ready for exports.[ID:nJAK421029]

The amount of premium rice production per year is unclear as government data does not normally separate premium and medium-grade rice, an official at the Ministry of Agriculture said.

Indonesia's statistics bureau has projected 2009 unmilled rice output to rise 1.13 percent to 60.93 million tonnes, or equal to around 38 million tonnes of milled rice, lower than an earlier Agriculture Ministry forecast of 63.5 million tonnes. [ID:nJAK151734]