Govt urged to push industry to use local farm goods

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.