WB to organize food aid for RI

WB to organize food aid for RI

WASHINGTON (Reuters): The World Bank will coordinate an international humanitarian relief program to aid Indonesia, Australia's foreign minister said on Friday.

"The World Bank has now agreed to coordinate a very significant humanitarian relief effort for Indonesia," Foreign Minister Alexander Downer told a news conference after meeting with World Bank President James Wolfensohn in Washington.

Australia, the United States, Japan and the European Union plan to take part in the program, which would respond to food shortages and other humanitarian crises, Downer said.

"We can't just sit by and let that happen," he added.

Downer provided few details about the cost and size of the program, saying only that the package would be "very significant."

The World Bank confirmed that it was working with donor nations on providing food and medical aid for Indonesia, and said the details were still being worked out.

"We are working on this, to try to coordinate these efforts," a bank spokesman said. The bank declined further comment.

The collapse of the rupiah currency has plunged Indonesia into its worst economic crisis in decades.

The crisis has caused social unrest, with university students in major centers on Java and Sumatra demonstrating in recent weeks over rising food prices and unemployment.

Downer said aid agencies and donor nations planned to meet "fairly soon" to discuss the World Bank plan.

He said the World Bank would assess Indonesia's food needs and coordinate relief efforts. If all goes as planned, the program would be in place by mid-year, he added.

"It will take some time to put this package together, but it is going to be crucially important to help the people of Indonesia through this very difficult time," Downer said.

Indonesia would receive the humanitarian aid regardless of the outcome of negotiations with the International Monetary Fund, he added.

An IMF team is in Indonesia reviewing progress in reforming the country's battered economy, and discussing what needs to be done to secure the release of the next $3 billion installment of the IMF's $10 billion loan to Indonesia. The loan forms part of a $43 billion international rescue deal for the beleaguered country.

Australia has been urging more sensitivity to the social impact of economic reforms prescribed by the IMF.

"There is a wide measure of agreement between us and the IMF on this question of a package, which is both going to help restore confidence in the markets and, secondly, that is going to take into account the social fabric of Indonesia," Downer said.

Meanwhile, the U.S. Agriculture Department said Friday that Indonesia's economic crisis has devastated its poultry industry and the nation is expected to run out of chicken this month, posing "extreme stability concerns".

Poultry supply virtually all animal protein for Indonesia's population of more than 200 million, the USDA said in its monthly world livestock report.

Before the crisis began, Indonesia's breeding industry was producing nearly 15 million day-old chicks per week, representing about 900,000 tons (810,000 tons) of broiler meat annually, the report said. But poultry producers have slashed operations to just 30 percent of capacity.

"It is estimated that the country will exhaust its supply of chicken in March 1998, a time which will follow the elections and the lifting of fuel subsidies -- a scenario which poses extreme stability concerns," USDA said.

Sporadic riots broke out in Indonesia last month because of a rapid rise in food prices.

The industry has been hit hard by a near-doubling of feed costs since the Indonesian currency devaluation last year. The industry's dependence on imported feed and dwindling consumer purchasing power means that demand for chicken meat will plunge by as much as 50 percent this year, the report said.

The country's annual per capita consumption of poultry meat will fall from nearly 11 pounds (5 kg) in 1997 to an estimated 5.6 pounds (2.3 kg) in 1998, the report said.

The turmoil has hit small poultry farmers the hardest.

Nearly all small producers in Indonesia have liquidated their stock leaving only the four major integrators -- Charoen Pokphand, Japfa Comfeed, Subur and Anwar Sierad -- with breeding stock, the report said.

The devastation of Indonesia's domestic poultry industry will likely make the nation "one of the largest future markets" for poultry exports from the United States and other suppliers, the report said.

Two weeks ago, the Indonesian government said it would extend loans to the nation's 7,000 poultry farmers and begin subsidizing poultry feed.