August 26, 2010

Indonesia seeks floor price for soy

In a bid to bolster domestic production and reduce imports, Indonesian Ministry of Agriculture has suggested to have floor price for soy.

Acting Director General of Crops at the Ministry of Agriculture Gatot Irianto revealed soy self-sufficiency had to be achieved by 2014 since Indonesia had been dependent on imported soy.

Currently, soy price is at the same price as rice due to land availability. Soy has to compete with paddy and corn. The low domestic soy price is attributable to the invasion of cheap imported soy.

Gatot explained the temporary calculation showed the ideal floor price for soy was between IDR6,100 and IDR6,700 per kilogramme. If soy price was 1.5 times higher than rice price, farmers would be eager to plant soy.

He added to maintain the price the State Logistics Agency (Bulog) should play its role of absorbing soy from farmers, creating market security. The government would also keep providing incentives and subsidies, such as fertiliser assistance, high-quality seed direct assistance, capital lending, trade system and price.

Meanwhile, soy production this year has been disrupted by the rainy season. Farmers planting soy amid the rainy season will not be able to get maximum results, he noted.

The National Soy Board chairperson Benny A. Kusbini believes the government would not find it difficult to reach soy self-sufficiency of 2.7 million tonnes by 2014.

Land is not an issue since the sizes of area in West Kalimantan and NTB reached 1.6 million hectares and 1 million hectares, respectively. Benny said the additional areas from the two provinces would create surplus in the domestic soy production.

He was optimistic to meet the target to produce 1.3 million tonnes of soy this year. The Ministry of Agriculture also targeted soy production to increase 20.05% per annum.

However, he reminded the government had to stay alert for efforts made by some foreign parties to curb the soy self-sufficiency programme. According to Benny, soy commodity price slumped during the soy harvest season.