Indonesia's Food Security Challenges

UNCLAS SECTION 01 OF 02 JAKARTA 001583 SIPDIS DEPT FOR EAP/EP, EAP/MTS, AND EEB/TRA E.O. 12598: N/A TAGS: EAGR EAID ETRD SENV KGHG PREL ID SUBJECT: Indonesia's Food Security Challenges REF: A. SECSTATE 96050 ¶B. Jakarta 1473 ¶1. Summary: The Government of Indonesia (GOI) recognizes four major challenges to food security. One is the need for human resource development through agriculture research, education and extension. Another is the need for substantial new investment in agricultural infrastructure. They are exacerbated by two newer and less predictable challenges: financial and commodity market turbulence, and agronomic adaptation to climate change. Regional and global cooperation are required to ensure rice supplies -- by far the most important food security issue, although protecting and sustainably managing its marine resources will also be critical to Indonesia's long-term food security. Indonesia does not see maintaining open access to food and agricultural imports as a part of a strategy related to food security, even though it is heavily reliant on imports of basic foodstuffs. Any APEC engagement should address this fundamental issue. Agriculture, fisheries and forestry account for 41 percent of employment in Indonesia and are vital areas for food security-related research and education extension services - and for which Post is developing proposals. End Summary. Indonesia: The Background -------------- ¶2. Indonesia has made significant progress in food crop production, and population growth remains relatively low by regional standards. The sudden and unprecedented rise in food and fuel prices during 2008 put tremendous pressure on the Indonesian economy, particularly on the most vulnerable. Indonesia quickly realized that international financial and commodity market turbulence can be a challenge to food security. Nearly 50 percent of Indonesia's population lives on less than two dollars a day, and about two thirds of their meager income are spent on food. Though food prices have since stabilized, the ongoing global economic crisis and the potential for significant job losses continue to make food security a priority issue for Indonesia. While currently manageable, adverse weather or external shocks in the near term could lead again to a rapid deterioration. Food Security Challenges: The Indonesian View -------------- ¶3. The GOI has four major concerns which Post recognizes as legitimate and appropriate areas for potential action. The first is an inadequate agriculture research, education and extension system. There is a need for Human Resource Development, focusing on higher edcation and agricultural research. Thi"""u d be pat of a potential Land Grant University linkage pogram, as we promote linkages and exchanges betwen Indonesian and U.S. uniiversities. The second s the need for substantial new investment in agrcultural infrastructure, both hard (irrigation faciities, storage, and rural roads) and soft (bradband links to agricultural research centers, for example). ¶4. These needs are exacerbated by two newer and less predictable challenges which Indonesia cannot entirely address unilaterally. One is financial and commodity market turbulence. The second is agronomic adaptation to climate change - especially in the arid regions of eastern Indonesia - as well as potential impacts of climate change on ocean fisheries. Agriculture, fisheries and forestry account for 41 percent of employment in Indonesia. Sustainable management of this sector and anticipating climate change impacts are therefore vitally important to the wider economy as well as food security. Commodity Price Volatility: It's About Rice! -------------- ¶5. Any discussion of food security in Indonesia begins with rice. Rice is the most important agriculture commodity in Indonesia, in terms of local production, consumption, and Indonesia's political economy. Poor and near poor families, which constitute almost half the population, spend roughly one third of their income on rice. In early 2008, the price of rice in Indonesia increased by 12 percent leading to real concerns about the potential socio-economic impact on the most vulnerable. The World Bank estimates that every 10 percent increase in the cost of rice results in another 2 million people falling into poverty. Official figures set annual per capita rice consumption at 139.5 kg. The food security strategy as it relates to rice is: 1) price stabilization, 2) affordable prices for consumers, and 3) fair prices for farmers. ¶6. Commodity market turbulence requires regional and global cooperation. Last year's rice export bans in major rice producing countries showed Indonesia that interfering with free trade can have a serious impact on food security. It also highlighted the need for JAKARTA 00001583 002 OF 002 serious discussion and agreement among countries on the management of rice buffer stocks, in order to avoid a repeat of last year's situation. APEC could facilitate such a discussion. In addition, there is room for improved Indonesians' understanding of food commodity markets and hedging mechanisms. Engaging for Change -------------- ¶7. Our engagement with Indonesia on food security initiatives, especially through agricultural research, education, extension and university linkages could have a significant impact on how Indonesians perceive food security. While we define food security as maintaining the availability of affordable and sufficient supplies of food, the GOI tends to define it as self-sufficiency in food production. It does not see maintaining open access to food and agricultural imports as a part of a strategy related to food security -- even though it is heavily reliant on imports of basic foodstuffs such as soybeans (for tempe and tofu) and wheat-based food products such as noodles. In part due to this attitude there are currently a number of market access barriers and constraints on biotechnology (commercialization of transgenic seeds),both important elements of any strategy related to food security. Fish and Agroforestry... -------------- ¶8. In Indonesia, food security is linked to marine resources, which are likely to be affected by climate change. Indonesia possesses one of the world's most important fisheries. It has almost 20% of the world's coral reefs, adjacent to the most extensive and biologically diverse mangrove forests and sea grass beds in the region. These coral reefs, mangrove and sea grass form the ecological basis for spawning, nursery and feeding grounds of large number of fish and shrimps at the coastal area. This biodiversity is the basis for supporting the livelihood of 34 million people and 6.8 million jobs in coastal communities. In addition, more than half of the national protein supply comes from fishery products. Protecting these resources will be critical to Indonesia in achieving its long-term food security. ¶9. Recognizing this, Post has proposed the establishment of an Indonesia-U.S. Center for Sustainable Ocean Fisheries (ref B). This joint research institute would explore and study waters that house the world's highest ocean biodiversity, and the applied economic structures that govern their use. These understudied waters are critical not only to the 120 million people living in the maritime nations of the Coral Triangle, but also for Americans and global consumers of pelagic fish species. Indonesian waters provide a significant portion of the Indian and Pacific tuna catch. Indonesia's inability to manage its domestic fishery or participate in international pelagic fisheries management jeopardizes both food security and economic development. The establishment of such an institute would address both food security and climate change adaptation. ¶10. Similarly, another research, education, and extension effort for promoting food security could be through an Agroforestry Center. Post's Foreign Agricultural Service section is developing a concept paper, taking into account the importance of forest-related industry to employment in Indonesia as well as the severe threats to Indonesia's biologically diverse forests. Meanwhile, agroforestry is receiving increased global attention as a sustainable land-management option. Agroforestry focuses on the wide range of working trees grown on farms and in rural landscapes. Among these are fertilizer trees for land regeneration, soil health and food security; fruit trees for nutrition; fodder trees that improve smallholder livestock production; timber and fuelwood trees for shelter and energy; medicinal trees to combat disease; and trees that produce gums, resins or latex products. Many of these trees are multipurpose, providing a range of benefits. ¶11. This proposed Agroforestry Center would address livelihoods and landscapes in future land-use planning, taking into account the cross-cutting issues of food security, climate change and deforestation. It could take the form of a U.S. Land Grant University Linkage program. At least one U.S. university has expressed interest in the concept. Local partners could include a university or the Indonesia-based regional center of the World Agroforestry Center (ICRAF),which is linked to the Centre for International Forestry Research (CIFOR) in Bogor, Indonesia. U.S. Forest Service involvement could also be considered. HUME