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1. MAIZE HYBRIDIZATION TO PRODUCE IMPORT SUBSTITUTE.

The program of maize hybridization will be expanded in 2001 to cover shortage in corn supply. In 1999, corn production shrank to 9.8 million tons while requirement rose to 10 million tons. The shrinkage in production necessitated increase in import. In 1999, imports surged 97.2% to 618,050 tons from the year before.

In 1998, Indonesia enjoyed self sufficiency in corn supply with production totaling 10.17 million tons with domestic requirement of 9 million tons. Harvest success in 1998 reduced import by 71.5% to 313,463 tons that year, down from 1.1 million tons in 1997.

In 1998, when rupiah tumbled to 16,000 to the U.S. dollar, the country's poultry farms collapsed resulting in a decline in demand for corn including imported corn.

Boosting production of hybrid corn

Indonesia's corn production is relatively small. The country still needs to import corn to feed animal feed industry. Despite increase in production animal feed industry is still in difficulty in securing feedstock. In 1998, production totaled 9.2 million tons, but the quality is not up to standard that imports were needed. In addition, production was not stable.

To cope with the fluctuation irrigation systems need to be improved to maintain good harvest every year. The agricultureministry has distributed corn drying machines to keep the quality of corn from declining. This year, hybridization -will be expanded to a target of 1 million hectares to increase production. A number of provinces have expanded plantations of hybrid maize, such as in Sulawesi, West and East Kalimantans, and in several areas in Sumatra and Java.

Currently, hybrid maize plantations nake up only 10%-15% or 300,000 - 400,000 hectares of 3.8 million hectares of maize plantations in the country - much lower than in other countries in this region such as 90% in Thailand. Thailand's dry corn production was 8 tons per hectare much higher than only 2.7 million tons per hectare in Indonesia.

Hybrid corn production is around 8-10 tons per hectare. The production is around 5 tons per hectare in rain fed plantations.

The productivity could be increased with better irrigation systems such as shown in an experiment in the village of Keputren, Bantul, Yogyakarta where production reached 11.6 tons per hectare with C-7 hybrid maize-up from 4.8 tons per hectare in 1999. Meanwhile, development of corn seeds in Indonesia is still hampered by regulations. According to an executive of PT Pioneer Hibrid Indonesian producers of corn seeds have to make an experiment supervised by the government and it would take around 2 years. As a result producers could not immediately start production. The policy contributed to causing Indonesia lagging behind the Philippines or Thailand in the production of maize seeds.

Currently, producers of hybrid seeds could produce new variety of seeds. In one to two years, local producers could turn out three new varieties.

Meanwhile, Indonesia has an excess of 50% in supply of hybrid maize seeds. The country has three producers of seeds with a total production of 8,000 to 9,000 tons a year, but the market needs only around 4,000 tons of the production. The expansion of plantations of hybrid maize is expected to absorb the excess.

Table - 1 Indonesia's production of corn, 1995 - 1999
Year Production Growth
 (million' tons) (%)

1995 8.25 --
1996 9.31 12.8
1997 8.77 -5.8
1998 10.17 16.0
1999 9.17 -9.8
Average growth 9.7



Source: Department of Agriculture/Data Consult

Imports up

Based on a deregulation policy in June 1994, the import duties on farm products not controlled by BULOG such as corn, coffee, tea and animal feed were reduced from 10% to 5%, but the import duty on corn was later abolished such as in the case of 19 other farm commodities.

Indonesia's imports of corn fluctuated and tended to decline in the past years. Imports peaked at 1.1 million tons valued at US$ 154 million in 1994. In 1996, imports dropped to 616,900 tons valued at US$ 132.8 million. A surge in consumption necessitated an increase in import in 1997 to 1.1 million tons valued at US$171.2 million or an increase of 78.1% in volume. In 1998, increase in domestic production and a decline in animal feed industry resulted in a sharp fall in import to 313,463 tons valued at US$ 47.8 million. But in 1999, imports rose again to 618,050 tons valued at US$ 80.3 million.

The agriculture ministry has proposed the imposition of import duty on corn to encourage domestic production. The ministry proposed an import duty of 10% in 2000 to be reduced to 5% in 2003. The protective imports duty is not against the WTO ruling that sets a limit of 40% for the import duty. The government, however, still maintains the 0% import duty. The price of imported corn, therefore, is lower than the local product. This policy has affected self sufficiency.

Table - 2 Indonesia's imports of corn, 1995-1999
Year Volume Value
 (tons) (US$'000)

1995 969,193 154,115
1996 616,942 132,888
1997 1,098,354 171,675
1998 313,463 47,837
1999 618,050 80,314



Source: CBS/Data Consult

Indonesia hss imported corn mainly from China and the United States. In 1999, imports from China totaled 365,140 tons valued at 46.8 million or 59% of the country's total import in volume. Imports from the United States totaled 190,250 tons valued at US$ 22.89 million, the second largest after imports from China.

Imports have also come from Argentina and a number of other countries as shown in the following table.

Table - 3 Imports of corn by countries of origin, 1999
Country of Volume Value
origin (tons) (US$'000)

China 365,138 46,815
USA 190,248 22,893
Argentina 35,846 4,500
Thailand 1,806 2,102
Malaysia 1,078 121
Vietnam 632 141
other countries 24,022 3,742
Total 618,050 80,314



Source: CBS
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Comment:1. MAIZE HYBRIDIZATION TO PRODUCE IMPORT SUBSTITUTE.
Publication:Indonesian Commercial Newsletter
Article Type:Brief Article
Geographic Code:9INDO
Date:Jan 16, 2001
Words:1012
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