Government urges industry to use local corn

Abdul Khalik, The Jakarta Post, Jakarta

The government will use any means at its disposal to encourage the country's corn-processing industry to use local corn to help stabilize the price of the commodity at home and help farmers.

Minister of Industry and Trade Rini MS Soewandi said on Wednesday that the government was also facilitating talks between farmers and businesspeople to deal with issues such as improving domestic corn quality.

She said that the government had been running programs since 2003 to encourage big corn millers to create a win-win partnership with small-scale farmers in corn-producing areas nationwide.

Rini added that it was in the interests of the industry to buy corn from local farmers as this would create a more stable domestic source of raw materials at stable prices.

"With a strong local corn supply, the big companies won't have to rely on the foreign market, which is very unpredictable. However, these companies will have to start buying local corn to create a stable and strong corn sector," she argued.

Rini said that the farmers could now sell their produce at a number of auction markets, including the ones in Bengkulu, Lampung, West Java, and several others in Kalimantan and Sulawesi, while adding that the government would increase the number of auction markets.

"The government has established a number of auction markets for corn farmers so that they can sell their products on the local and international markets," said Rini on the sidelines of the official launching of PT Suba Indah, a new Indonesian integrated corn processor.

She said that farmers managed to book Rp 73 billion in corn export through the West Java auction house alone in the first three months of 2004. This showed that the quality of Indonesian corn was not poor, as claimed by the processors, Rini added.

Many businesspeople had complained previously that the water content of Indonesian corn was too high, causing it to be graded as low quality.

"We have provided several drying machines in corn-producing areas, such as West Java and Bengkulu, and together with the Ministry of Agriculture, we will provide many more dryers," Rini said.

According to ministry data, national corn production stood at 10 million tons in 2003 while local demand amounted to only 6.5 million tons, 40 percent of which was purchased by the big companies. However, total corn imports last year reached 1.5 million tons.

Rini argued that local companies should not have to import corn as the local supply was enough for all of them.

The international market price for corn is Rp 1,600 per kilogram while the farmers need to paid Rp 1,000 only to break even. Corn can be processed into cooking oil, cornmeal and livestock feed ingredients. It is also used by the textile and paper industries.

Meanwhile, the president of PT Suba Indah, Teddy Tjokro Saputro, said that his company had to buy 70 percent of the corn it used from a number of South American countries due to the lack of supply on the local market.

"It's true that the supply is sufficient at harvest time, but there's not much corn around during the other months," he said.