Indonesia, France food security engagement

10 March, 2011 | Source: The Jakarta Post

On Feb. 25, 2011 the French Economy, Finance and Industry Minister Christine Lagarde was accompanied by several senior French officials and around 40 CEOs and key figures from private French companies on a visit to Jakarta to meet several Indonesian senior officials, in particular Indonesian Finance Minister Agus Martowardojo and Central Bank Governor Darmin Nasution.

The top priority of the meeting was to discuss ways to develop bilateral ties between the two countries, and in particular to convey France’s intentions to intensify its investment in Indonesia — which explains why there were so many CEOs.

But more importantly, the meeting was held to discuss how Indonesia, as the chair of ASEAN, and France, as the chair of G20 in 2011, can work together to address the world’s economic challenges, especially on food security issues — a pressing issue not only for Indonesia but for the world as a whole.

The recent weather phenomenon, the increasing size of the human population and the practice of commodity speculation have worked together to create surging increases in food prices around the globe — including in Indonesia.

The recent World Bank report states that the world food price index increased by 15 percent between October 2010 and January 2011. The index is now 29 percent above its level a year earlier. As can be expected, the number of undernourished citizens around the world soared from 850 million in 2005 to 925 million in 2010.

The condition in Indonesia is not much different, with the prices of almost all food commodities becoming steadily increasing.

One solution to this problem, as pointed out by many studies including those from the Food and Agriculture Organization (FAO), would be to initiate an extensive investment program to revitalize agriculture industries.

The World Bank in 2007 reported that the agriculture sector had experienced severe underinvestment from both public and private sources, which in turn was bringing about severe inefficiencies within the sector.

This has not only limited production capacity, but has also deprived farmers of appropriate standards
of living.

Take Indonesia for example; even though the budget for agriculture has been increased significantly by 88.8 percent from Rp 890 billion (US$ 100 million) in 2010 to Rp 1.67 trillion in 2011, that figure still only accounts for around 2 percent of the total Indonesian state budget.

Since the recent spike in world food prices in 2007/2008, several initiatives by international bodies and individual countries have taken place.

In September 2009, leaders at the G20 summit in Pittsburgh called on the World Bank to develop a multilateral trust fund to scale-up agricultural assistance for low-income countries.

To answer the call, the World Bank thus enacted the Global Agriculture and Food Security Program (GAFSP) in early 2010.

ASEAN countries were already one step ahead when they established the ASEAN Integrated Food Security Framework and Strategic Plan of Action on Food Security, in 2009 in Cha-Am, Thailand.

African nations have also established similar initiatives by enacting the Comprehensive Africa Agriculture Development Programme. Nevertheless, these initiatives have not brought in enough capital to revitalize the agriculture sector. As reported by the FAO, the world needs to invest US$200 billion per year on the industry, and $150 billion of this amount needs to be invested in the Asia–Pacific region.

This is the amount the organization says is required for us to double food production by 2050 — which is required to feed the ever-growing population. But for us to reach this target we still need to boost annual investment in the sector by 50 percent.

In February, senior United Nations experts and G20 ministers expressed concerns at the need to
call for greater investment in agriculture from both the public and private sectors, to improve smallholder productivity.

In its communiqué after the Paris G20 minister meeting in February, the group expressed concerns about the consequences of potentially excessive commodity price volatility and asked that G20 deputies work with international organizations and report back to ministers on the underlying drivers and challenges posed by these trends for both consumers and producers, and consider possible actions.

They also reiterated the need for long-term investment in the agricultural sector in developing countries by keeping in mind the impact of this volatility on food security.

The limited funding capacity of these initiatives has left Indonesia and many developing nations short of benefits of agricultural investment at its maximum potential.

The investment/funding we have received so far has been very limited. Significant increases in agricultural investment in Indonesia would allow us to increase the production capacity of our agricultural sector thorough improved use of technology and better agricultural management.

Such investment would also open job opportunities for our people, and thus revitalize our economy.

Such assumptions are outlined in the World Bank report in 2007, which presses the importance of agricultural sector development in poor and developing countries — especially considering the large number of people who are employed in this sector.

Cooperation between Indonesia and France as the chairs of these two organizations, ASEAN and G20, is essential to push these initiatives forward to a broader extent.

Indonesia should utilize its alliance with France to make sure food security remains a focus of the G20 discussion and that a tangible commitment to an increased agricultural investment is made.

However, it would not be easy to convince countries, especially developed countries with already overheating debt conditions, to invest more in any areas, especially considering their stance on budget consolidation.

It is very fortunate for us to learn that France will be a strong ally in this regard. France is one of the most outspoken countries pushing for such investment.

To broaden these initiatives, Indonesia must seek, with France’s support, to incorporate the ASEAN initiatives on Integrated Food Security Framework into the G20 framework.

ASEAN needs the G20 because its initiatives will not run well without the support of developed nations that are mostly members of the G20. Conversely, the G20 will need ASEAN as its developing partner considering the region is the main target of agricultural development.

The meeting between Minister Lagarde and our government was short, but it opened a door to the possibility of a solution to the world’s common problem of food security that we must seek to utilize.
Considering the unquestionable importance of food security for our society and the world as a whole, a failure here is not an option.


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