Millions of Indonesians could fall below the poverty line in 1998, says Special Alert

Harvesting rice in Indonesia: production of the staple crop expected to drop once again

The combined effects of the Asian financial crisis and a prolonged drought may push close to half of Indonesia's 203 million people below the poverty line by the end of 1998, reports a Special Alert issued by FAO's Global Information and Early Warning System (GIEWS).

"Earlier predictions envisaging the strengthening of the exchange rate during the first quarter of 1998/99 and the deceleration of inflation during 1998 as a whole have not materialized so far," according to the report. The value of the rupiah has fallen to about one-sixth of what it was before the crisis began in July 1997. This devaluation has fueled inflation and sharply curtailed the country's capacity to import commercially. As prices for food and other necessities soar and unemployment increases rapidly, the buying power of large segments of the population has been eroded and thus are facing acute food insecurity. The situation is expected to get worse as fears of further unemployment rise, according to the report.

The government has taken measures to address the problem by ensuring that essential food commodities are available at affordable prices. The minimum wage has been increased and food-for-work projects have been established in drought-stricken areas. Despite these efforts, the report concludes, "the food situation over the next year will remain extremely tight".

The FAO/WFP Mission in March estimated this year's paddy production at 47.5 million tonnes, 3.6 percent below reduced production in 1997. This estimate was based on the expectation that the second rice harvest in August, which accounts for one-third of total production, would be average. However, despite reports of favourable weather conditions since April, latest official forecast puts the 1998 paddy production at 46.29 million tonnes, some 6 million tonnes below the original 1998 production target. Reduced plantings and higher prices for essential inputs such as fertilizer and pesticides as well as distribution problems caused by recent social disturbances may have led to the lower production forecast.

Domestic procurement of rice in 1998 by the National Logistics Agency (BULOG) is expected to be only 250 000 tonnes, the lowest volume in the last 20 years. Expectation of higher prices and the uncertain outcome of the secondary crop have reportedly led to hoarding of rice by farmers and traders.

The international community has pledged some 1 million tonnes of rice so far. The report commends the generosity of this response to the "unprecedented" food emergency in Indonesia, but warns that substantial further assistance will be required. In addition, FAO has stressed the urgent need to rehabilitate the agricultural sector in Indonesia's drought-affected areas.

As a result of an evaluation of emergency agricultural input requirements carried out by FAO's Special Relief Operations Service (TCOR), the Organization has recently issued an appeal for more than US$18 million to help restart and sustain food production in the hardest-hit areas. Financial assistance for the provision of Emergency agricultural inputs, including water pumps and pipe, fertilizer, and livestock and veterinary medicines, is essential for immediate distribution to rural farm families. Food and fodder seed and saplings, and breeding and young stock of fish, poultry, goats and cattle to introduce crop and food diversity are also needed to reduce the vulnerability of rural families to future drought.

27 July 1998 

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