Sunday, January 23, 2011

Coping with food shock in 2011

Food price volatility in international markets during 2010 alarmed many involved parties, including in Indonesia. A warning of a possible food crisis in 2011 has been advocated by the Food and Agricultural Organization (FAO).

Related international bodies and individual countries should properly address and create various solutions to such a potential crisis.

As reported by the FAO, the benchmark index of farm commodity prices shot up in December 2010, exceeding the levels of the 2007-2008 food crises.

International media also reported that in 2010, the prices of staples such as corn, wheat, soybean and sugar increased by more than 20 percent. In particular, the prices of wheat and corn increased by more than 60 percent.

Today’s food shortages around the world are primarily caused by crop failures. Natural disasters, climate change and pest attacks are the common factors of crop failures. Some main food producing countries experienced serious impacts of crop failures, such as failed wheat harvests due to droughts in Russia, Ukraine and Kazakhstan.

Heavy floods also destroyed farming fields in China, the US and Australia.

Other factors contributing to world food shortages are increasing demand for food from new economic powers with huge populations such as India and China, and increasing demand for food to be converted into ethanol fuel.

Indications of food crisis have also been visible in Indonesia. A significant increase in the price of basic commodities has been widely reported by national media from day to day.

The fact that Indonesia imported 1.33 million tons of rice in 2010 marks the serious condition of national food supply. Import policies must be introduced to maintain stockpiles and help ease consumer prices.

Skyrocketing chili prices also recently become a national issue. While the price hike of rice and sugar was not as fantastic as that of chili, many claims from housewives are addressed to the recent price hike of main foodstuffs.

If the food crisis and price shocks continue, poor households either in urban or rural areas will face the most serious impacts and hardships. The number of households and or people living below the poverty line will significantly increase.

The issues of food and energy crises were among the most important topics recently discussed at the National Summit on the implementation of development programs in 2011 that was chaired by President Susilo Bambang Yudhoyono.

Several policy conclusions generated from the summit related to the issue of food security were for a short-term solution to be achieved through food price stabilization via market operations, fiscal incentives and increasing rice stocks at the State Logistics Agency (Bulog).

In terms of middle- and long-term solutions, there will be various programs to increase rice production. According to the Coordinating Minister of the Economy Hatta Rajasa, the government has targeted to expand farming fields by 500,000 hectares in 2011, including for food estates. In addition, the Agriculture Ministry aims to increase food production by 5 percent, including rice.

Short-term policies to cope with a potential food crisis including through importing rice, are also, to some extent, necessary. However, we should be more careful and consider out middle and long-term strategies.

Indonesia has potential to become one of the main food producing countries if it is managed properly. More attention and comprehensive support should be paid to help Indonesia tackle food security problems and to allow it to become a player in world food trade.

The availability and proper management of farming land, water, seeds, technologies and capabilities in adapting and mitigating climate change impacts on farming practices will likely be among the keys to our future success.

Opening new farming areas on a large scale through a food estate program will not automatically solve the food supply problem. In the absence of a regulation that requires distribution of farming products from food estates for domestic needs, corporations will likely prefer to export products for more profit. The possible involvement of small holders and landless farmers and the potential impacts and malignant damage to the environment will also be the main issues related to enlargement of farming areas.

Since its independence in 1945, Indonesia has been unable to expand farming land to 14 million hectares despite several new programs. Massive farming land conversion into non-farming purposes has continuously taken place mainly in the most fertile area of Java. More than 100,000 hectares of rice fields have been altered into non-farming areas annually.

On the other hand, Indonesia has almost 30 million hectares of dry farming land. Those fields have the capacity to produce various food crops if properly managed. Dry rice and many kinds of root and tuber crops will be among the products.

Comprehensive policies for foods produced from dry fields could help expand a food diversification program that would ease the burden of rice supply. We have consumed so much rice for so many years that we have become the highest consumer of rice per capita in the world.

The introduction of seeds that have high resistance to pest attacks, drought and or flooding is desperately needed. However, the future world challenges for farming practice are climate change shocks, such as drought and flood.

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