May 19, 2006

Indonesia to extend US$219 million in loans to develop corn production

Indonesia, which is targeting self-sufficiency in corn by 2008, would loan some Rp 2 trillion (US$219 million) to farmers to develop corn production in its Sulawesi island, National Corn Council chairman Fadel Muhammad said Thursday ( May 19).

Fadel said the loans, from State-owned Bank Rakyat Indonesia (BRI) would be made available this year during the planting season, with regional administrations in Sulawesi providing guarantees for farmers to secure loans.

The funds would be used to promote efforts to make Sulawesi the country's main center for corn production, said Fadel. 

Sulawesi was picked as a corn production region due to the abundant land and labour there. The island has 2.7 million hectares of potential agricultural land unused.

The local government would be allocating land and providing the infrastructure to support corn cultivation.

Last year, the country produced 11.4 million tonnes of corn and imported around 400,000 tonnes. Demand for corn is expected to grow by at least 10 percent this year.

At present, Sulawesi only produces 1.1 million tonnes of corn annually.

Fadel estimated that an investment of about INR 3.5 trillion (US$328 million) would be needed to rapidly expand the corn acreage in Sulawesi up to 2007, and another Rp 1.5 trillion (US$ 164.3 million) by 2010.