Govt urged to push industry to use local farm goods

Zakki P. Hakim, The Jakarta Post, Jakarta

The government's focus on developing certain manufacturing sectors that could optimize use of domestic agricultural products has been warmly welcomed, as it would eventually benefit farmers who represent the majority of the population here, according to the plantation farmer's association.

Agus Pakpahan, executive board chairman of the Federation of Indonesian Plantation Farmers Associations, said the move would help boost demand for farm products and eventually improve commodity prices.

"Just imagine, if instant noodle maker Indofood started giving preference to buying local farm products instead of importing them. The livelihoods of local farmers' could be improved," said Agus, a former director-general for plantations in the Ministry of Agriculture.

According to Agus, publicly listed PT Indofood Sukses Makmur, the world's biggest instant noodle maker, imported at least 350,000 tons of grain every year.

If the government can convince Indofood and Indonesians that noodles made from rice flour was as good as those made from other grains, then the instant noodle maker would surely prefer to purchase local grains, he said.

Agus said rough calculations showed that importing 350,000 tons of grain was equivalent to purchasing 10 million tons of local unhusked rice.

Ministry of Agriculture data shows that up until July last year, unhusked rice production reached 53.67 million tons, meaning that the country is now has a rice surplus of some 3 million tons.

The government should encourage farmers, and farmer organizations, to sell products that can be processed in order to obtain added value.

"Industrialization is not the sole responsibility of big factories. Groups of farmers could also be part of the process by, for example, simply packaging their products instead of selling them in bulk," he said.

Another way to use industrialization for the benefit of farmers is by increasing their participation in manufacturing processes, particularly through ownership of factories and firms, Agus said.

"This is a common practice in industrialized countries, such as in the U.S. Farmers in developed countries control some major firms that use farm products as their raw materials," he said.

He was quick to add however, that such a scheme would require support from the government -- such as access to bank finance -- as well as a strong farmers' organization that could afford to pay professionals to run the factories.

The National Development Planning Agency (Bappenas) has issued guidelines for the nation's economic development called the Mid- term 2004-2009 Development Plan (RPJM), which targets an average growth of 8.56 percent for the manufacturing sector.

Under the program, the government would focus on 10 priority industry clusters, based on their ability to absorb unemployment and utilize natural resources.

These include food and beverage industries, seafood and maritime products, textiles and clothing, footwear, palm oil, wood products, rubber and rubber products, pulp and paper, electrical machinery and appliances, and petrochemical products.