Rice harvests down and prices up in Indonesia, FAO warns that food security prospects are worsening

As the economic crisis deepens in Indonesia, with unemployment forecast to rise sharply to over 20 million by the end of 1998, and an estimated 100 million people - nearly half the country's population - expected to fall below the poverty line in 1999, the latest FAO/WFP report stressed the worsening food security prospects for the poor and unemployed. In 1998, Indonesia "is forecast to have amongst the highest rates of economic contraction in the world" according to the report. The ensuing problems are expected to be most acute amongst urban workers.

The paddy rice harvest for this year is forecast at 45.3 million tonnes, the smallest since 1991. The main paddy harvest has been cut by drought associated with El Niño, while dry season crops have been affected by pests, and by fertilizer problems linked to the soaring costs of imported agricultural supplies.

Record rice import requirements

The country's rice import requirements for 1998/99 have been revised up to a record of 5.14 million tonnes, 47 percent higher than earlier estimated. As of mid-September, BULOG, the government's logistics agency, had already imported 2.42 million tonnes and had contracted an additional 525 000 tonnes.

Taking into account confirmed rice pledges and deliveries, a deficit of about 1.43 million tonnes remains, to be covered by commercial/concessional imports, loans, grants and targeted food aid. Bilateral discussions are underway for an additional 1 million tonnes.

But the problem is not just the availability of rice. The report warns that prices are being pushed up by market uncertainty and consequent speculation and excessive demand for stock. "It is extremely important that imports and institutional stocks with BULOG are used as effectively as possible, through appropriate intervention to allay fears and reduce further speculative pressures", the Organization cautions.

Looking towards long-term solutions on the agricultural front, the report says: "Indonesia needs large scale international assistance to stimulate agricultural production to ensure greater food security, less volatility in the domestic food market and generate employment."

Go to Special Report

23 October 1998

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