Reform urged for agricultural sector
JAKARTA (JP): People here are still wondering about the irony of this supposedly rich country having to increasingly import agricultural products to overcome food shortages.
People have recently had to rush into lines to buy rice, sugar, cooking oil, margarine, milk and other basic staples for fear of food shortages when the rupiah slumped against the U.S. dollar.
Experts say this is a time of great opportunities in the local agribusiness sector, but they cite policies hampering such development.
The time is ripe now, says Bungaran Saragih of the Bogor Agricultural University, to seriously develop the sector.
An official who spoke on condition of anonymity says that in the current 1998/1999 fiscal year, the government is providing Rp 5.3 trillion (US$883 million) in subsidies for the import of rice, soybeans, sugar, flour and fish powder.
The government has steadily increased imports of agricultural products worth up to $9.3 million to cope with the food shortages.
Data from the Central Bureau of Statistics reveals that in 1997, imports of fruits and vegetables increased to $273 million from $240 million in 1996, sweet corn to $171 million from $133 million and fish and sea food to $13.5 million from $11 million.
Saragih says the government has been distracted by its success in reducing the country's annual population growth rate from 2.8 percent in the early 1970s to the current level of 1.8 percent. Indonesia's population is now about 202 million people.
"But we forget that 1.8 percent of 202 million means 3.6 million people, who require additional supplies of food and other basic needs every year," he says.
"When all goods from hi-tech raw materials to agricultural produce are imported, then foreign exchange reserves will run out," he adds.
He says problems in the agricultural industry stem from certain current policies, including the overvaluing of the rupiah against foreign currencies, high interest rates and privileges provided to unproductive industries.
Saragih suggests that aid from the International Monetary Fund or any other institution should focus on developing the agricultural industry and protecting natural resources.
"If not, then a similar economic crisis will recur," he says.
Executive director of the Center of Agricultural Policy Studies H.S. Dillon has earlier cited studies of the multiplier effect of the agricultural industry. He has said that a 1 percent increase in agroindustrial output would result in a 1.5 percent growth in other sectors of the economy. (kod)