Plantation industry aims big despite economic crisis

The Jakarta Post, Bogor, West Java | Mon, 03/16/2009 11:36 AM  

Betting on higher prices for top commodities and the emergence of new markets, the country’s plantation industry is seeking to buck the trend and expects export values this year to increase by 16 percent. 

“We believe we can raise our income from exports to US$21.68 billion from last year’s $18.85 billion. This is based on the fact there are new markets available and we believe main commodities prices will improve,” Herdrajat, the Agriculture Ministry’s plantation protection director, said Saturday.

He cited China, the Middle East and India as some of the new export markets.

“Last year’s achievement, which surpassed the original target of $11.55 billion income set in early 2008, was also a big factor in our confidence to increase this year’s exports” he added.

Indonesia is home to plantations of some of the world’s key commodities, including crude palm oil (CPO), rubber and cocoa.

But since the second half of 2008, as the global economic turmoil kicked in, commodities-rich countries like Indonesia have been hit hard by a drop in demand and prices.

However, Herdrajat expected demand would pick up from the new markets, while commodity prices would also recover, providing an eventual boost for the industry. 

Still, Herdrajat said it was vital for the government to immediately disburse the stimulus package, in particular the parts designated for the development of agriculture and plantation infrastructure.

“The industry needs the stimulus to improve irrigation and repair broken roads to enhance effectiveness and efficiency,” he said.

Data from the ministry shows the government also plans to revitalize up to 290,000 hectares of CPO, cacao and rubber plantations in 27 provinces this year.

“[For the project] the government plans to give banking credit subsidies to support farmers in revitalizing the plantations,” Herdrajat said.

“We hope to encourage farmers to revitalize the plantations using the subsidy. We will also fund them for fertilizers in the first year, but we hope they can be self-sufficient in the following years.”

During revitalization, the plantations will not produce commodities for a few months while they are cleaned out.

“For that reason, the government will also give training programs on developing seasonal commodities for farmers to ensure their income during revitalization.”

Plantation revitalization and intensification, which has often caused a rift with other industries, is one of the main challenges the industry still has to face in the future.

“Often the local regent publishes two authorizations on land development for two different stakeholders. For instance, one is for the mining industry and the other for CPO plantations; this situation often causes conflicts,” he said.

“And most of the time, people regard mining as more important than plantations.”

The CPO industry, which absorbs around 3.7 million laborers, contributed around $10.7 billion to the country’s economy in 2008.

“With these training programs, we hope farmers will have more initiative to take action, not just wait for government officials to do the job for them,” Herdrajat said.

“We will also give them technical training on plantation development, sanitation and fertilizing techniques.” (hdt)  

Plantation exports (in US$ billion) 

Year         Target          Realization

2007            11.25              14.64

2008            11.55              18.85

2009            21.68                 --

Source: Agriculture Ministry