Corn is among the four strategic commodities that receive special attention in the blueprint of the ASEAN Economic Community (AEC). The AEC’s food blueprint aims to enhance food security & sovereignty of corn, rice, soybeans and cassava in the ASEAN region. Indonesia is currently the region’s largest corn producer. However, Indonesian corn consumption continues to outpace domestic corn production, resulting in a deficit. This column provides an overview of Indonesia’s corn sector in the context of the AEC.
The AEC will come into effect by the end of 2015 and will transform the ASEAN region into a region characterized by the free movement of goods, services, investment, skilled labour, and a freer flow of capital. Regarding food security, the blueprint of the AEC requires that production and trade of the four aforementioned commodities is safeguarded in all ASEAN member countries through enhanced information systems and innovative solutions.
Indonesian President Joko Widodo also emphasized the importance of corn self-sufficiency in Indonesia. Together with rice, Widodo wants to achieve corn self-sufficiency within two or three years. However, this may be a far too ambitious goal as it has been reported that corn demand in Indonesia is growing at a pace of 40 percent per year, while domestic corn production only grows 6 percent per year. In 2013, Indonesia produced 18.5 million tons of corn, while corn demand totaled 20.8 million tons.
Corn Production & Consumption in ASEAN Region - 2013:
Source: ASEAN Food Security Information 2013
Indonesian Agriculture Minister Amran Sulaiman remains optimistic that corn self-sufficiency can be achieved next year through state efforts:
• Adding one million hectares of corn plantations in Indonesia. The government has budgeted IDR 2.5 trillion (approx. USD $187 million) for the purchase of land and IDR 750 billion (approx. USD $56 million) for corn seeds;
• By promoting the use of hybrid corn seeds which are expected to raise corn productivity beyond 8 ton per hectare (from 5 ton per hectare in 2014);
• Improve Indonesia’s irrigation system. Reportedly, over half of Indonesia’s irrigation infrastructure is damaged hence seriously curtailing output. In 2015, the Indonesian government targets to repair 1.5 million hectares of plantation that is plagued by damaged irrigation systems;
• The government aims to provide farmers (not only corn farmers but also farmers of other crops) across Indonesia with the necessary machinery, such as water pumps and tractors;
• The government will educate farmers to intensify production through multi-cropping; an agricultural method of planting multiple species on one piece of land, either during the same growing season or in successive growing seasons;
• The government will send 800,000 experts (trainers) to all corners of the country to teach local farmers about optimal farming techniques;
• Providing subsidized fertilizers to Indonesian farmers;
• Relying on state logistics agency Bulog for the availability of corn reserves and price stability. The agency will receive IDR 3 trillion in the second half of 2015 from the government to accomplish these tasks.
According to analysts, key to increase corn output in Indonesia is to raise the size of corn plantations. However, similar to other plantations, corn has to compete with roads, and industrial or property development for land. This makes land acquisition highly expensive (aside from the bureaucratic difficulties that are involved in land acquisition). Meanwhile, it is also a costly affair to repair the damaged irrigation infrastructure at existing corn plantations.
It is also important to see the establishment of more domestic industries that process corn. Currently, existing Indonesian industries that use corn are mainly the animal feed industry and some biomass power plants. The latter shows that corn should not only be used to fill people’s (and animals’) stomach but can also be used to boost much-needed power generation in Indonesia.