June 10 2005

Indonesia to invest in production to reduce dependency on imported corn and soybean

The Indonesian government needs to invest Rp 30.05 trillion (US$3.16 billion) in horticulture to reduce the country's dependency on imported rice, corn, soybean and sugar products, said the Ministry of Agriculture. Such an investment would increase growth in food crops by an average of 0.89 percent per annum during the next five years.

Indonesia's corn consumption is projected at 13.96 million tonnes by 2009, or up by an average 4.23 percent year-on-year, from 11.82 million tonnes this year. With the new investment plan, the Ministry is targeting national corn production to be self-sufficient by 2008, higher than national consumption of 13.27 million tonnes.

Soybean production is forecast to grow by an average of 6.5 percent annually, to reach a million tonnes in 2009 from 777,000 tons this year, with forecast consumption in 2009 at 2.39 million tonnes.

Even with the growths in production, the country would need to import an average of 1.6 million tonnes of soybeans a year, or almost two-thirds of the national consumption, during the next five years. 

With almost half of the projected investment being allocated to food crops, it is clear the government is prioritizing investment in the sector. But the general agriculture sector, which includes food crops, horticulture, plantations and livestock, is still reported to need Rp 77.07 trillion during the next five years.

Minister of Agriculture Anton Apriyantono said the funds would also be allocated to maintain and develop rural infrastructure as well as efforts to provide financing schemes for farmers. However with only Rp 4 trillion a year from the State Budget, the ministry will increasingly be looking towards private investment for extra funding.