Rendi Akhmad Witular, Jakarta – The government will provide subsidies for farmers engaged in planting palm oil, cacao, rubber and corn in an effort to boost the country's plantation output and create jobs.
Agriculture Minister Anton Apriyantono the assistance would take the form of loans channeled by banks to palm oil, cacao and rubber farmers. Corn farmers will receive seeds.
"The interest-rate subsidy will be for farmers in Sumatra and Kalimantan, while the free seeds will be for corn farmers in Sulawesi only," said Anton after meeting with Vice President Jusuf Kalla Thursday.
He expected the subsidies to help the government met its target of expanding plantations by 500,000 hectares annually.
The government will allocate a total of Rp 1.7 trillion (US$182 million) this year to cover the subsidies, of which some Rp 200 billion would be distributed through state-owned Bank Rakyat Indonesia (BRI).
BRI president director Sofyan Basir said that of the 18 percent interest rate imposed on farmers, the government will pick up 8 percent while farmers pay the remaining 10 percent.
"The amount of the subsidies will depend on developments with the interest rate. The loan will have a grace period of five years for palm oil farmers and seven years for cacao and rubber farmers," said Sofyan. The bank will use the farmers' plantations as collateral.
The government has yet to finish calculating the amount of the subsidies allocated for cacao and rubber farmers. With the aid, palm oil farmers are expected to be able to establish some 50,000 hectares of new plantations this year, with as much as 300,000 hectares estimated for next year.
According to the Indonesian Palm Oil Producers Association (GAPKI), there are 5.2 million hectares of palm oil plantations in Indonesia. With crude palm oil production forecast to reach 15.2 million tons this year, Indonesia is likely to overtake Malaysia as the top producer in the world.
Meanwhile, Anton also said that his ministry would allocate Rp 100 billion this year for the free corn seeds, and Rp 500 billion next year to help open some 600,000 hectares of new corn plantation land in Sulawesi.
Last year, the country produced 11.4 million tons of corn and imported around 400,000 tons. Demand for corn is expected to grow by at least 10 percent this year, with around 21.17 million estimated for 2010.
Due to the availability of idle land, the government has declared Sulawesi as the country's center for corn production. "The subsidies will be taken from the state budget. The government will continue providing them every year until 2009," said Anton, adding that Indonesia's agricultural sector had lagged behind in comparison to other countries in Asia.
The sector's slow development is primarily due to mismanagement of resources by previous governments and corruption among officials and local regulatory bodies, who take advantage of unclear regulations. At present, the nation's agricultural growth stands at an average of 3.5 percent per annum.