The most serious aspect of the food situation is that the problems caused by the falling rupiah are occurring at the same time as Indonesia is suffering its worst drought for many years. Rice production has already fallen by 10 per cent in the last year due to the effects of El-Nio and there is a strong possibility that the drought will continue into this year. Indonesia's food distribution agency, BULOG, will be forced to continue and increase its import of food staples to keep prices down and maintain food distribution. BULOG has been allowed to purchase foreign exchange at a subsidised rate of 5000 rupiah to the dollar, the effect of which is that food imports are being subsidised by the Central Bank at the cost of the country's already weak foreign exchange position. If currency and drought problems persist into the coming months, sustaining food imports will become an increasingly difficult task.