September 10, 2003
Crop Harvest Down; Demand May Push up Indonesia Corn Imports
Indonesian corn buyers may have to step up imports to meet buoyant last quarter demand as dry spells in key growing areas are triggering concerns that the domestic crop may suffer, trade officials said on Wednesday.
Fears that crops in South Sulawesi, Lampung, North Sumatra and West Java might be hit come at a time when demand for corn is rising as the nation with the world's largest Muslim population prepares for the holy month of Ramadan next month.
"Corn production is down, thanks to the drought. The second harvest is going to be really small," said Budiarto Soebijanto, chairman of the Indonesian Feedmillers Association.
Indonesia harvests two corn crops a year, with about 60 percent of the output coming from the crop that is harvested in January-April. The October-December crop accounts for the rest.
Demand for sugar, edible oil and grains starts rising at this time of the year as Muslims prepare to observe Ramadan.
Agriculture ministry officials said the dry season had destroyed crops in an area spreading over 3,000 hectares and had put another 46,000 hectares at risk out of a total crop area of three million hectares spread across the archipelago.
"The potential loss is not worrying if we compare that to our production target," said Sutarto Alimuso, a senior official at the agriculture ministry.
But trade officials said more corn imports will be needed and traders were actively negotiating deals for Chinese cargoes.
"Second half imports might be around 800,000 tonnes," Soebijanto said, adding that Indonesia imported about 600,000 tonnes of corn between July and December of 2002.
Indonesia's farm ministry has set a production target of 11.75 million tonnes of corn for 2004 compared with an expected crop of about 9.66 million tonnes this year. But trade estimates are always much lower than that given by the government.
Trade officials said total imports in 2003 could rise to more than 1.6 million tonnes compared with 1.3 million in 2002. More than 70 percent of Indonesia's corn imports come from China.
FEED DEMAND REVIVING
Indonesia's feed output dropped to 3.7 million tonnes in 1999 from as high as 6.5 million tonnes before the start of the economic crisis in mid-1997.
But consumption has recovered sharply in the past three years and trade officials expect demand to rise to close to seven million tonnes in 2003 compared with 6.5 million last year.
"The commercial feed sector is doing very well and we are also seeing strong festival demand in the last quarter," said the association's secretary general Fenni Firman Gunadi.
Trade officials said Indonesian buyers had recently sealed some contracts for Chinese corn cargoes and a few more deals for November shipments were in the pipeline.
"Right now, we are getting offers for Chinese cargoes at prices around $120 a tonne C&F," Soebijanto said. "Some shipments are on and we will have to buy some more from China."