Large-scale commercial producers of food crops, such as rice, soybeans and corn, will only be able to sell their produce on export markets, the government said on Friday.
The government said it would issue a regulation in February covering so-called food estates, large-scale commercial farms, before the end of its first 100 days program. The regulation was initially due to be issued in October 2008 but has been delayed many times.
The aim of the new regulation is to give clarity to large-scale commercial farmers in order to boost investment in the sector.
However, apart from preventing large producers from supplying the domestic market, other details, such as lease terms and the percentage of large-scale farms that foreign investors will be able to own, have yet to be determined, Agriculture Minister Suswono said.
“At the end of the 100 days program we expect to launch the food estate regulation, so that investors will have exact guidelines,” he said.
Suswono said food produced on large commercial farms would not be able to be sold on the domestic market because big producers would have cost advantages by exporting. Without the restrictions, big farms would continue to force down prices and hurt small farmers.
The chairman of the Progressive Fishermen and Farmers Association (KTNA), Winarno Tohir, said he agreed with the limits the government was putting on food estate producers.
“Exporting food from the estates is the right step because small-scale farmers are already able to produce enough food for the domestic market,” Winarno said.
But he said the government should put limits on the amount of food large-scale producers can export and make sure there was enough food available to the domestic market.
Large-scale commercial farming is rare in Indonesia with crops such as rice, corn and soybeans usually grown by small scale farmers on plots of two hectares or smaller.
The government is currently developing the Merauke Integrated Food and Energy Estate in West Papua and a number of local investors, including Medco Group, Artha Graha Group and Sinar Mas Group, are setting up large-scale farms there.