Minister calls for new direction in agro-policy

JAKARTA (JP): Higher consumer spending on value-added food products and increasing demand for processed foods will force the government to create policies that favor agriculture and agro- based processing industries, a minister says.

Minister of Agriculture Sjarifudin Baharsjah said yesterday that agribusiness and agro-industry would be an increasingly important sector as it linked natural resources to greater employment and higher earnings by adding value to raw materials.

"Indonesia's current economic climate provides favorable conditions for the further development of agribusiness, as shown by the domestic consumption pattern and agricultural production," Sjarifudin said at the opening of the Seventh World Congress of the International Food and Agribusiness Management Association.

Sjarifudin said consumer spending was increasing at an annual rate of about 6 percent.

"The growth in the demand for processed foods, will, in turn, promote a development of technology, investment and marketing systems," he said.

Sjarifudin said the change from an on-farm-based agricultural system to an off-farm-based agribusiness system required a shift in government policies.

New policies should favor agriculture and agro-based processing industries which give rural people greater access to job opportunities, he said.

"This implies adjustments to fiscal and financial policies," he said.

He said new policies should adopt a more market-oriented agribusiness approach.

Academic Bungaran Saragih of the Bogor Agricultural University's School of Agriculture said that while the role of agriculture in the country's gross domestic product was declining, the number of workers in the sector was still on the rise.

He said it would take several years before Indonesia could shift the labor force in the on-farm sector to off-farm economic activities, which included agribusiness, agro-industry and supporting services.

"Currently we have too many subsistence farmers. But the trend is slowly changing," Bungaran said.

Sjarifudin said that the agricultural sector's labor force, including forestry, was growing about 1.05 percent a year.

During the Sixth Five-Year Development Plan which started in 1994, the total labor force was predicted to increase 12.6 million. Of this number 15 percent was expected to be absorbed by the agricultural sector and about 24 percent by the industrial sector.

IAMA President Herman H.F. Wijffels said in his opening remarks that technology would play a major role in agribusiness.

"Increased production must come from productivity gains because the amount of arable land will continue to shrink," he said.

Biotechnology would be an increasingly important field, although ethical debates were bound to arise from time to time, he said.

He said that producers would not be able to neglect consumers' concerns about the environment and food safety issues in the future.

"Consumers should be able to trust the technology applied to agricultural products. They must be assured (the products) are sustainable and safe," he said. (pwn)