Corn floor price policy opposed

JAKARTA (JP): Minister of Agriculture Sjarifudin Baharsjah said yesterday the government is unlikely to set a floor price for corn because this may prevent feed producers from buying the commodity in partnership programs.

Speaking at a press conference yesterday, Sjarifudin said the government has no plans to reapply the floor price mechanism for corn as it had in the past.

"What we will introduce instead is a negotiated price mechanism between farmers and feed producers, which is based on current market prices," he said.

He estimated that negotiated prices will be around 75 percent of the current import price.

Last week, a report issued by the Ministry of agriculture's Extension Service Supervision Agency stated that floor prices are needed for corn to keep prices stable during the harvesting period as well as to encourage farmers to continue planting corn.

Until 1990, the government set the corn floor price at Rp 155 (US$0.07) per kilogram at the farmers' gate, while the National Logistics Agency bought corn from village cooperatives at Rp 165 per kg.

Since then, the government has rescinded the floor price policy for corn.

The government is currently striving for national self- sufficiency in corn, which is expected to be achieved, among other things, by the development of 456,150 hectares of hybrid- corn fields and 50,000 hectares of composite-corn fields.

The overall project, which is estimated to cost at least Rp 190 billion, is expected to meet domestic demand which has in recent times had to be satisfied by huge volumes of imports.

Indonesia imported 1.5 million tons of corn last year but imports are estimated to increase to two million tons this year.

According to the report, partnership programs between farmers, poultry feed producers -- who use corn as a raw material -- and cooperatives are important to guarantee the sustainability of the corn market.

Sjarifudin yesterday dismissed the board's proposal, as he considered floor prices ineffective to prod feed producers to buy corn from domestic farmers.

"In fact, floor prices may encourage feed producers to opt for imports," he said.

Negotiated prices, on the other hand, will let the farmers know early on what price they will get for their corn, and discourage feed producers from importing what they need. (pwn)