VZCZCXRO1913
RR RUEHCHI RUEHCN RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHJA #1583/01 2660054
ZNR UUUUU ZZH
R 230054Z SEP 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 3378
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/USDA FAS WASHDC
RHEHNSC/NSC WASHDC

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