Farm sector should get more attention: Analyst<\/p>\n
JAKARTA (JP): The new cabinet should pay more attention to the
\ndevelopment of the agricultural sector than the last one did to
\nreduce the country's dependence on imported commodities,
\naccording to a noted agricultural analyst.<\/p>\n
Bungaran Saragih of Bogor Agricultural University said the
\ndevelopment of the agribusiness sector should get top priority.<\/p>\n
"A strong agribusiness sector will not only help the country
\ncope with the unemployment problem but will also encourage
\nfarming activities," he told The Jakarta Post in an interview.<\/p>\n
He said research activities should also be improved in order
\nto improve the quality of the nation's commodities.<\/p>\n
"You can't expect small-scale farmers to do research for the
\nadvancement of agricultural technology... Nor can you expect
\nthem to build facilities needed for agribusiness activities," he
\nsaid.<\/p>\n
Developing agribusinesses, he said, was the most appropriate
\nway to ensure an even distribution of wealth and resources,
\ngenerate more jobs and narrow the socioeconomic gap.<\/p>\n
He said that in the past the government focused only on the
\ndevelopment of farming activities. This resulted in agribusiness
\nactivities, such as the development of processing industries,
\nbeing neglected.<\/p>\n
Farming activities and their processing industries could not
\nbe separated, he said.<\/p>\n
With insufficient processing industries, farmers could not
\nreceive the added value of their commodities, he said.<\/p>\n
"Ironically, however, these areas are out of the farmers'
\nreach, meaning that they are deprived of a significant piece of
\nthe cake," he said.<\/p>\n
In addition to the agroindustry, he said, the government
\nshould upgrade and develop new technologies for use in the
\nfarming sector.<\/p>\n
He said that with a strong farming sector, Indonesia could
\nbenefit from its rich natural resources to produce export-
\noriented commodities.<\/p>\n
Bungaran said that in the past agribusiness was overshadowed
\nby the government's fixation with the property and industrial
\nsectors.<\/p>\n
"What happened was the government's macroeconomic policies
\nwere not friendly with agribusiness development," he said,
\nexplaining that the government's previous foreign exchange rate
\npolicy had caused imported products to be cheaper than the local
\nones due to the overvaluation of the rupiah.<\/p>\n
He said that the high lending rates charged by local banks
\nalso discouraged businessmen from entering the agribusiness
\nsector.<\/p>\n
The monetary crisis which hit Thailand in July and forced the
\nIndonesian government to float the rupiah in August triggered a
\nsharp depreciation of the currency against the U.S. dollar.<\/p>\n
The fall in the rupiah by over 70 percent since July caused
\nprices of imported products to increase by more than 300 percent.<\/p>\n
As a result, many local industries, which relied on imported
\ncommodities went burst as the imported raw materials were already
\ntoo expensive for them, he said, citing feedmill producers, which
\nmostly used imported corn for their production, as an example.<\/p>\n
Such casualties could have been prevented if the government
\nhad had a good policy for managing and supervising farming
\nactivities, he said.<\/p>\n
Indonesia ironically imports several important commodities
\nsuch as wheat, corn, soybeans and even rice.<\/p>\n
The country imports 1.3 million tons of corn and one million
\ntons of soybeans per year.<\/p>\n
Bungaran noted that Indonesia was already one of the world's
\nlargest wheat importers, bringing in 3.5 million tons of wheat
\nper year.<\/p>\n
The outgoing chairman of the State Logistics Agency (Bulog)
\nBeddu Amang said last month that Indonesia would need at least Rp
\n13.5 trillion (US$13.5 million) to import 1.1 million tons of
\nsugar, 700,000 tons of soybeans, 4.25 million tons of wheat and
\n3.3 million tons of rice in 1998\/1999 fiscal year.<\/p>\n
Besides those commodities, Indonesia also imports meat, milk
\nand milk products, corn, and others.<\/p>\n
Bungaran said there were also many other constraints in the
\ndevelopment of the country's agribusiness sector such as poor
\ninfrastructure, poor seedling and a lack of government
\nincentives.<\/p>\n
"The government should, for example, provide as friendly
\nfiscal, monetary and technical incentives to the agribusiness
\nsector as it does to other sectors," he said.<\/p>\n
Such incentives, he said, would encourage further investment
\nand development of agribusiness.<\/p>\n
The government's monetary policy must simplify procedures for
\nbanks loans at reasonable interest rates to help agribusiness.<\/p>\n
Fiscal policies should include exemptions for agribusinesses
\nfrom income tax, export tax and capital goods import tax, he
\nsaid. (gis)<\/p>",
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