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Thu, 07 Oct 2010

FT/Floods sink Indonesia’s drive for self-sufficiency

Indonesians are the world’s biggest rice-eaters, consuming 139kg per person per year. With the global commodity markets in turmoil, producing all that rice at home is a point of national pride.

In fact, self-sufficiency in rice is a key policy priority - and that’s why such controversy has been stirred this week by unconfirmed reports that Indonesia has resumed rice imports from Thailand.

The government has refused to comment on those reports, but the cause of the supply squeeze is clear: heavy rains throughout this year’s dry season, which have damaged Indonesia’s domestic rice production.

“Some of our fields are flooded by the water; also the excessive rain bred more pests and rats that attacked our plants,” says Suparman Signodiarso, a farmer the island of Sumatra; his harvest has plunged 40 per cent.

The authorities remain defiant, saying that - in spite of the ongoing flooding - national rice production will rise by up to 2 per cent this year to 36m tonnes.

“We must never put our stomachs in the hands of others. We need to feed ourselves,” Krisnamurthi, Indonesia’s deputy agriculture minister, told beyondbrics.

But traders in Thailand told Reuters on Wednesday that a contract had been signed to ship 200,000 tonnes of rice to the state logistics agency, Bulog, which distributes subsidised rice. An additional 300,000 tonnes was reportedly on standby.

The goal of feeding the nation out of domestic supplies “reflects the sentiment of all Indonesians”, Krisnamurthi said.

Indeed, to meet that target, Indonesia had increased rice production by 15 per cent between 2007 and 2009, meeting domestic demand for the first time in three decades without relying on imports. Its long-term strategy is to further reduce exposure to foreign food supply shocks by boosting crop yields and diversifying eating habits.

“A decade ago the source of instability was the domestic market - flooding, socio-political unrest - but now the source of instability is the international market”, Krisnamurthi said, blaming commodities speculation, rising biofuel demand and climate change for unpredictable prices.

Indonesia pays a high cost for food stability. The government earmarked more than 13 trillion rupiah ($1.43bn) this year to subsidise rice for 17.5m poor families, an increase of 8 per cent from 2009. Food and fuel subsidies already weigh heavily on the budget of the emerging democracy of 237m, which is growing by about 3m per year.

Sutarto Alimoeso, head of the state logistics agency, declined to provide details about imports, but said the national stockpile of 1.2m tons is enough to maintain supplies until the end of the year. The Thai shipment, scheduled for delivery in December, would lift strategic reserves to the targeted 1.5m tonnes.

Indonesia, with its rich tropical soil and vast chain of islands, has achieved a level of rice production many countries envy. But the harder task will likely be the plan to wean Indonesians off of their daily fix of rice in favour of other crops, said Benny Sormin, deputy country head of the UN Food and Agriculture Organization.

“Culturally it is a big constraint. Eating other staple foods like corn or cassava is considered something for the lower classes, it’s not prestigious”, he told beyondbrics.

After all, it is eating habits - as much as natural disasters in Russia, Pakistan and Indonesia - which are straining global food supply.