Indonesia's answer to rising food prices
A top rice importer last year, Indonesia's government is allocating more land to grow it and other food crops.
With a milling plant and a hectare of rice paddy, Aan Suharlan is fully invested in Asia's favorite food staple. Rice put his two grown-up children through school and has given him status in his village. But when he sees other farmers plow over their rice fields, he knows why they're giving up on the grain.Skip to next paragraph
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"It's expensive to plant rice because of high production and labor costs. It's difficult to find laborers here – everyone wants to work in the factories," he says.
For months, the soaring price of food – especially rice – has been on everyone's lips after international prices nearly tripled between January and April. Prices have since eased off, but the shock waves continue to reverberate across Asia, where politicians are talking up food security and tariff protection.
In theory, higher global prices should mean more income for rice farmers here on Java, the breadbasket of this archipelago nation of 228 million who together eat around 32 million tons a year. Some of the benefits are trickling down to farmers, but they may not be enough to halt the steady shrinkage of rice paddy, which agriculturalists say is one factor driving up prices.
So Indonesia's government is offering incentives to plant more rice and improve other inputs to raise yields.
A new draft bill before Indonesia's parliament would strengthen existing land-usage laws on 15 million hectares of agricultural land. The government is also opening up large tracts of land on Papua and other eastern islands for rice and other food crops, trying to offset the shrinkage on Java. The disadvantage is much lower crop yields on these islands compared with those on Java's fertile soil, typically 24 percent less for rice, says Siwi Purwanto, director-general of food crops at the Ministry of Agriculture.
Still, these measures are vital to produce more rice, he says. "We have to protect rice production areas. Our population is growing and we are building more housing and highways. Areas with good irrigation systems are the target of developers," he says.
The government is also subsidizing fertilizer and hybrid seeds, as well as repairing irrigation channels to ensure water supplies.
For now, Indonesia's stocks are in good shape: The national logistics agency, which buys and sells rice to stabilize prices, plans to stockpile up to 3.8 million tons this year from a harvest estimated to reach 34 million tons. Last year, Indonesia imported 1.3 million tons, putting it among the world's top rice buyers.
Indonesia's drive for self-sufficiency in rice and other staples is a logical response to the global food crisis, says Neil McCulloch, director of economic programs at the Asia Foundation in Jakarta and an expert on the politics of rice.