Fertilizer subsidies likely to be reduced despite drought

JAKARTA (JP): The government will likely continue its policy of gradually reducing fertilizer subsidies despite the protracted drought, Minister of Agriculture Syarifuddin Baharsyah says.

"Although the final decision will come out after a limited cabinet meeting in October, I can say that most likely we will continue on the track of subsidy reduction," Syarifuddin told reporters during a break in a hearing with Commission IV of the House of Representatives (DPR) yesterday.

Fertilizer subsidies, formerly the largest agricultural subsidies due to its vital role in rice production, have been gradually phased out since 1989 as part of the government's effort to make the economy more efficient.

Rice is the main staple of more than 90 percent of Indonesia's population of 189 billion.

Syarifuddin also told the commission, which deals with agriculture and forestry affairs, that the government will focus on expanding rice fields to secure adequate supplies of the staple.

"In South Sulawesi, there are now an additional 40,000 hectares of rice fields," he said, citing an example.

The minister also stated that the government has appealed to farmers to use water from the existing irrigation schemes more efficiently, reminding that in Indonesia, the efficiency rate of irrigation use is only about 50 percent.

Damaged

According to the Ministry of Agriculture, the current drought has affected about 843,000 hectares of rice fields, of which 150,000 hectares have been completely damaged.

This indicates that the damaged areas have increased by 39,000 hectares since Director General of Food Crops and Horticulture Amrin Kahar said last month that the drought had damaged 111,000 hectares of rice fields.

Kahar also said that the drought might slash four percent off last year's production level of 48.1 million tons.

The official weather agency said on Monday that the rainy season is coming late this year for many parts of Indonesia, including West and East Java, which are regarded as Indonesia's "rice bowl" areas.

The dry season usually lasts from April through September.

Vietnam

Food Minister Ibrahim Hasan, who also chairs the State Logistics Board (Bulog), announced recently that the government's rice stocks of 1.1 million tons are "sufficient to feed the nation for seven months."

He also said that Bulog will receive shipments of some 100,000 tons of rice from Vietnam and Thailand as "repayments of Indonesia's rice loans."

However, a news report from Vietnam last week stated that Hanoi was selling 265,000 tons of rice in the next two months to Jakarta at about US$200 to $220 per ton.

Last week, two shipments totaling 15,200 tons of rice arrived in Jakarta from Vietnam and Thailand.

It is still not clear whether these rice were "loan payments" or imports.(hdj)