Agriculture Policy Change or Wishful Thinking?

UNCLAS JAKARTA 001125 SIPDIS SENSITIVE DEPT FOR EAP/MTS AND EB/IFD/OMA TREASURY FOR IA-SETH SEARLS COMMERCE FOR 4430/KELLY DEPARTMENT PASS EXIM BANK SINGAPORE FOR SBAKER TOKYO FOR MGREWE, AG MIN COUNS BERMAN, AYALA MANILA FOR AG COUNS PURDY, ATO VOBRIL USDA/FAS/OA YOST, MILLER, JACKSON USDA/FAS/OCRA CRIKER, HIGGISTON, RADLER USDA/FAS/OGA CHAUDRY, DWYER, HOUSE USTR WEISEL, EHLERS E.O. 12598: N/A TAGS: EFIN EINV ECON EAGR ETRD ID SUBJECT: Agriculture Policy Change or Wishful Thinking? REF: (A) STATE 52628 (B) STATE 53346 (C) STATE 53353 (D) TATE 56852 ¶1. (SBU) Summary. Emboffs met with Dr. Bayu Krisnamurthi, Deputy Minister (Agriculture and Marine Affairs) from the Coordinating Ministry for Economic Affairs on 5 June to discuss the three previously delivered Aide Memoires on agriculture (Ref A,B,C). Emboffs and Dr. Krisnamurthi discussed a wide range of issues, including biotechnology, shortages of human capital in the Indonesian agriculture sector, and the mechanics of Government of Indonesia (GOI) purchases of Japanese-held rice stocks (Ref D). Although Dr. Krisnamurthi prefaced many of his comments as his personal views, it appears that support for a shift in Indonesian agricultural policy may be increasing. End Summary. Biotechnology -------------- ¶2. (SBU) In discussing the Aide Memoires (Ref A,B,C),the Deputy Minister noted that he was presenting his personal views rather than GOI policy positions. On the issue of biotechnology, Dr. Krishamurthi noted that increased use of biotechnology in Indonesian agriculture is a matter of "how" not if. The Deputy Minister explained that, in his view, Indonesia should encourage investment by transgenic seed producers, rather than "just importing" the product in order to improve productivity in the sector. [Comment: Such investment will not be forthcoming unless the GOI develops a workable framework for approval and certification of transgenic products, a policy process that has languished for four or five years. End Comment.] Dr. Krisnamurthi understands the limitations of Indonesia's investment climate and has discussed the issue in depth with Monsanto representatives based in Jakarta and in Singapore. Human Capital Needs in Agriculture -------------- ¶3. (U) The Deputy Minister voiced concern about the dearth of highly qualified agriculture specialists in Indonesia. He noted that many of the leading local experts in agriculture had pursued graduate study in the US, funded by the USG. Emboffs provided current educational opportunities in the US for Dr. Krisnamurthi's consideration, including Fulbright scholarships tied to PL 480 agreements that the USDA provided in the wake of the Asian financial crisis. Emboffs noted that the GOI has never tapped this opportunity. Japanese Rice: Awaiting Trade Minister's Go Ahead -------------- -------------- ¶4. (SBU) The Deputy Minister was aware of the USG acceptance of a plan for Japan to release Market Access Stocks (MAS) of rice (Ref D). He noted that it is the Trade Minister's role to give the signal for the National Logistics Bureau (BULOG) to move ahead with rice purchases. Dr. Krisnamurthi confirmed that local discussions with representatives of the Japanese Embassy are occurring on the subject. Furthermore, he noted that the GOI has approached the issue by pointing out to the Government of Japan (GOJ) that purchase of MAS rice relieves the GOJ of storage costs, and will provide a significant public relations boost for the Japanese, particularly the GOJ executes the transactions prior to the G8 Summit in Japan in July. Hume