Farm sector should get more attention: Analyst

Farm sector should get more attention: Analyst

JAKARTA (JP): The new cabinet should pay more attention to the
development of the agricultural sector than the last one did to
reduce the country's dependence on imported commodities,
according to a noted agricultural analyst.

Bungaran Saragih of Bogor Agricultural University said the
development of the agribusiness sector should get top priority.

"A strong agribusiness sector will not only help the country
cope with the unemployment problem but will also encourage
farming activities," he told The Jakarta Post in an interview.

He said research activities should also be improved in order
to improve the quality of the nation's commodities.

"You can't expect small-scale farmers to do research for the
advancement of agricultural technology... Nor can you expect
them to build facilities needed for agribusiness activities," he
said.

Developing agribusinesses, he said, was the most appropriate
way to ensure an even distribution of wealth and resources,
generate more jobs and narrow the socioeconomic gap.

He said that in the past the government focused only on the
development of farming activities. This resulted in agribusiness
activities, such as the development of processing industries,
being neglected.

Farming activities and their processing industries could not
be separated, he said.

With insufficient processing industries, farmers could not
receive the added value of their commodities, he said.

"Ironically, however, these areas are out of the farmers'
reach, meaning that they are deprived of a significant piece of
the cake," he said.

In addition to the agroindustry, he said, the government
should upgrade and develop new technologies for use in the
farming sector.

He said that with a strong farming sector, Indonesia could
benefit from its rich natural resources to produce export-
oriented commodities.

Bungaran said that in the past agribusiness was overshadowed
by the government's fixation with the property and industrial
sectors.

"What happened was the government's macroeconomic policies
were not friendly with agribusiness development," he said,
explaining that the government's previous foreign exchange rate
policy had caused imported products to be cheaper than the local
ones due to the overvaluation of the rupiah.

He said that the high lending rates charged by local banks
also discouraged businessmen from entering the agribusiness
sector.

The monetary crisis which hit Thailand in July and forced the
Indonesian government to float the rupiah in August triggered a
sharp depreciation of the currency against the U.S. dollar.

The fall in the rupiah by over 70 percent since July caused
prices of imported products to increase by more than 300 percent.

As a result, many local industries, which relied on imported
commodities went burst as the imported raw materials were already
too expensive for them, he said, citing feedmill producers, which
mostly used imported corn for their production, as an example.

Such casualties could have been prevented if the government
had had a good policy for managing and supervising farming
activities, he said.

Indonesia ironically imports several important commodities
such as wheat, corn, soybeans and even rice.

The country imports 1.3 million tons of corn and one million
tons of soybeans per year.

Bungaran noted that Indonesia was already one of the world's
largest wheat importers, bringing in 3.5 million tons of wheat
per year.

The outgoing chairman of the State Logistics Agency (Bulog)
Beddu Amang said last month that Indonesia would need at least Rp
13.5 trillion (US$13.5 million) to import 1.1 million tons of
sugar, 700,000 tons of soybeans, 4.25 million tons of wheat and
3.3 million tons of rice in 1998/1999 fiscal year.

Besides those commodities, Indonesia also imports meat, milk
and milk products, corn, and others.

Bungaran said there were also many other constraints in the
development of the country's agribusiness sector such as poor
infrastructure, poor seedling and a lack of government
incentives.

"The government should, for example, provide as friendly
fiscal, monetary and technical incentives to the agribusiness
sector as it does to other sectors," he said.

Such incentives, he said, would encourage further investment
and development of agribusiness.

The government's monetary policy must simplify procedures for
banks loans at reasonable interest rates to help agribusiness.

Fiscal policies should include exemptions for agribusinesses
from income tax, export tax and capital goods import tax, he
said. (gis)