India, Indonesia negotiate rice trade deals

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NEW DELHIJAKARTA, Nov 10 (Reuters): Indonesia, the world's third-biggest rice consumer, has asked India for supplies of the staple food grain after floods hit top rice exporter Thailand, potentially disrupting shipments. India, the world's second-biggest producer and consumer of rice, is willing to sell 500,000 tonnes from government stores as warehouses are overflowing after bumper harvests. But it has also sought a cut in Indonesia's export tax on crude palm oil, which threatens to hurt local refiners. India is the world's biggest vegetable oil importer. Indonesia needs about two million tonnes of imported rice to stave off shortages at home as this year's crop is smaller than a year earlier. Bulog, Indonesia's state-run grain procurement agency, has permits to import 1.6 million tonnes. The government-backed firm has already sealed deals with Thailand and Vietnam to import about one million tonnes. Indonesia expects domestic output of 65.4 million tonnes of unmilled rice in 2011, slightly above expected annual demand of around 63 million tonnes, so Bulog's imports are intended to ensure supplies of rice remain stable in a country where food security and inflation are a priority for policymakers. Indonesia has been in talks with India on the possibility of buying rice for weeks, given attractive Indian prices. The country wants 250,000 tonnes of rice for February or March delivery. India has said it could sell up to 500,000 tonnes this year from government stocks. Indonesia has three options: it can buy from the Indian government or it can ask the Indian authorities for supplies at a discount or it can import from private companies.