Can Indonesia Trust The World Rice Market?

Geography suggests that Indonesia will continue as a net rice importer for the foreseeable future, because it is an island nation without dominant river deltas providing abundant water and flat land suitable for rice growing. Yet policy makers remain reluctant to use the world rice market to achieve domestic food security goals for at least two reasons. First, there is concern that trade policies of other countries create a heavily distorted world market price. Second, there is fear of world market price volatility. It is argued here that distortions in the segment of the international market relevant to Indonesia are relatively small, and that world rice prices are considerably more stable now than during the 1970s world food crisis. Thus, the fear of price distortion and volatility appears unfounded, and engaging fully with the world market is a much more viable alternative than it was 30 years ago.