* Presidential candidates champion farm land expansions
* Outgoing government struggled to meet self-sufficiency
* Imports of sugar, wheat and soybeans seen unlikely to fall
By Michael Taylor
JAKARTA, July 4 Indonesia's two presidential
candidates have pledged to increase the amount of farm land to
improve self sufficiency, although previous such plans by Asia's
top importer of wheat and a major buyer of other grains and
edibles have often stumbled.
In the case of rice, a high-profile attempt by former
autocrat Suharto to restore Indonesia's self-sufficiency in the
1990s under Central Kalimantan's Mega Rice Project on Borneo
island proved disastrous due to the ill-suited peat land soil.
The rich volcanic soil on Java can support up to three rice
harvests a year but land is running out on the densely populated
central island of the archipelago. Indonesia plans to import at
least half-a-million tonnes of rice this year.
Pawan Kumar, an analyst at Rabobank International, said rice
and corn offered the best opportunity to increase production,
mostly through improving yields given a scarcity of land.
"But commodities like soybeans, wheat and sugar would be
more challenging," said Kumar, citing the cost of land
conversion and cultivation compared to cheaper imports.
Indonesia's agro-food imports have more than quadrupled in a
decade to about $18.4 billion in 2013, according to the
Organisation for Economic Cooperation and Development.
Indonesia has to import all its wheat, with rising wealth
encouraging people to eat more bread, noodles and fast foods.
But unless it lifts output of soybeans, corn, sugar and rice
Indonesia will have to rely on imports from places such as
Australia, the United States, Brazil and Thailand.
President Susilo Bambang Yudhoyono introduced
self-sufficiency targets in 2009 after food prices soared, but
many have not been met partly due to red tape and corruption
scandals over import quotas that caused shortages for food such
His administration also tried to encourage a greater use of
home-grown cassava to replace rice in meals.
In Yudhoyono's second term, agricultural land only rose by
700,000 hectares, well below a target of 2 million hectares,
Agriculture Minister Suswono told Reuters. Indonesia has less
available agricultural land than many countries. According to
the OECD, agricultural land covers about 53.6 million hectares,
or around 30 percent of the total land area.
The two contenders to replace Yudhoyono have also made
promises to increase food production, though they have given few
details. Front-runner Joko Widodo has said he will fix damaged
irrigation systems to open up 3 million hectares of agricultural
land if elected on July 9.
His rival, ex-general Prabowo Subianto, has said he would
open up 2 million hectares of new land for rice, corn, soybeans
and sugarcane, that he says will also provide 12 million jobs.
Agriculture policy will be among issues discussed by the
presidential candidates during a televised debate on July 5.
Agriculture accounts for about 15 percent of GDP in
Southeast Asia's largest economy and around 35 percent of the
population depend on it as their main source of income.
But much of sector remains deeply inefficient. Almost 40
percent of fresh fruit and vegetables spoil before reaching
market, according to one industry group.
In addition to a lack of land and investment, water
shortages, poor infrastructure and land rights issues are also
blamed for limiting improvements in agriculture.
To protect domestic farmers, the government also imposes
limits on some imports and trading of food staples, which has
been criticised by consumers and international trading partners.
With both candidates having spoken in favour of
protectionism, there are also concerns over the environment for
overseas investment that could modernise the small-holder
dominated agriculture sector.
International agribusiness giants such as Cargill
and Olam International have been expanding in
Indonesia and could do this faster with fewer import curbs.
Andrew White, managing director of the American Chamber of
Commerce in Indonesia, said he was expecting the new government
to work on striking the right balance between imports and
locally grown produce, although obstacles remained.
"Clear implementing regulations have yet to be issued and
land acquisition and permitting remains a key stumbling block."
Indonesia was once self-sufficient in rice and sugar, but
like many other food crops, output has gradually fallen due to
competition for farmland from either cash crops like palm oil or
for housing as the population booms.
Early last year, the agriculture ministry drafted a
regulation to stop agricultural land, mainly rice paddies, being
converted for industrial or housing use but it is yet to be
signed by the president and remains in limbo.
Some ministers have been pushing to allow in genetically
modified crops to increase output, but the approach has not so
far got enough support within government.
Abah Ofon, an analyst at Standard Chartered, said
self-sufficiency was a key goal due to risks from food price
"For Indonesia there definitely is a need to boost
self-sufficiency. How you go about this, is open to question."
(Additional reporting by Dennys Kapa and Yayat Supriatna;
Editing by Ed Davies)