VZCZCXRO0595
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0859 1201006
ZNR UUUUU ZZH
R 291006Z APR 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 8870
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 1901
RUEHBJ/AMEMBASSY BEIJING 4994
RUEHBY/AMEMBASSY CANBERRA 2423
RUEHUL/AMEMBASSY SEOUL 4552
RUEAIIA/CIA WASHDC
RHEHAAA/WHITE HOUSE WASHDC

UNCLAS JAKARTA 000859 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EAP/MTS AND EEB/TPP/ABT/ATP 
TREASURY FOR IA-SETH SEARLS AND JWEEKS 
SINGAPORE FOR SBAKER 
TOKYO FOR MGREWE 
COMMERCE FOR 4430/BERLINGUETTE 
USDA/FAS/OA YOST, MILLER, JACKSON 
USDA/FAS/OCRA CRIKER, HIGGISTON, RADLER 
USDA/FAS/OGA CHAUDRY, DWYER 
USTR FOR WEISEL, EHLERS 
 
FROM AMBASSADOR HUME TO U/S JEFFERY 
 
E.O. 12598: N/A 
TAGS: EFIN EAGR ECON ETRD PGOV ID
SUBJECT: INDONESIANS REQUEST US HELP TO CALM RICE MARKETS 
 
 
¶1. (SBU) Summary.  This is an action request.  Indonesian Trade 
Minister Mari Pangestu has requested that the U.S Government seek to 
persuade Japan and China to release rice stocks in an effort to calm 
world rice markets.  Rice prices in Asia have tripled in the past 
four months, despite ample stocks.  Indonesian officials expect the 
country will need to import rice later this year. I would request 
that Under Secretary Jeffery contact Japanese and Chinese 
counterparts this week to support Minister Pangestu's request. 
 
Trade Minister Seeks US Assistance 
---------------------------------- 
 
¶2. (SBU) Indonesian Trade Minister Mari Pangestu has requested U.S. 
assistance in persuading Japan and China to release rice stocks in 
an effort to calm world rice markets.  She expects that Indonesia 
will need to import rice during the third or fourth quarter this 
year, despite signs that the 2008 harvest will exceed last year's 
level.  If current trends continue, Indonesia is likely to face rice 
prices three to four times higher than last year.  Minister Pangestu 
noted that market failures, in the form of export restrictions 
primarily by India and Vietnam and panic buying from the 
Philippines, are the primary causes of recent price increases. 
Although rice prices have tripled in the past four months in Asia, 
the region as a whole is in rice surplus.  The equilibrium price of 
rice in Asia should be around $600 per metric ton, or half the 
current level, according to the Minister. 
 
¶3. (SBU) In the Minister's view, China and Japan hold the key to 
calming markets in the short term and countering the perception that 
the region is facing a rice shortage.  Experts estimate that the 
current rice shortfall in international markets is roughly 4 million 
metric tons.  China holds 37 million metric tons of rice in storage, 
equivalent to 3 months of consumption needs, according to Pangestu. 
Most other nations hold one month of consumption needs for emergency 
purposes.  Japan holds an additional 1.5 million metric tons of rice 
in storage that it has imported from California.  Minister Pangestu 
believes the Japanese government will hesitate to release these 
stocks without the tacit consent of the United States, given 
long-standing U.S. efforts to open the Japanese rice market. 
 
¶4. (SBU) Minister Pangestu is meeting with her ASEAN counter-parts 
this weekend in Bali, where they will discuss the rice price issue 
in detail.  Ambassador Susan Schwab will meet with Minister Pangestu 
on the margins of the ASEAN meetings on Friday, May 2.  I hope you 
can be in touch with your Japanese and Chinese counterparts in time 
for Ambassador Schwab to be able to provide feedback to Minister 
Pangestu on her request. 
 
HUME