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UN body sees food supply worsening

Source
Reuters - July 8, 1998 (abridged)

Jim Della-Giacoma, Jakarta – Indonesia's food situation has worsened in recent months and it is likely the key August harvest of rice, the country's staple, will fall below target, the United Nations Food and Agriculture Organisation (FAO) said. "The food supply situation in Indonesia has deteriorated since the FAO/World Food Programme assessment last March, due to the effect of the prolonged drought and the intensification of the financial and economic crisis," the FAO said in a statement obtained by Reuters on Wednesday.

Earlier predictions envisaged a strengthening rupiah and a deceleration in inflation in 1998, neither of which has materialised. The rupiah was at about 2,400 to the dollar in July 1997; it is now trading close to 15,000.

"The depreciation, in particular, has led to inflation and put added strain on the country's commercial import capacity," the statement said. "The prices of food and other basic necessities have risen sharply, amidst rapidly increasing unemployment, thus seriously eroding the purchasing power of large segments of the population," it said. "A cause for serious concern is the large and rapidly growing population groups facing acute food insecurity."

Since Indonesia's economic and weather-related problems began in 1997, the number of people living below the poverty line has surged. Official estimates now say close to half the country's population of 200 million will fall below the poverty line by the end of 1998. Poverty is defined as being unable to afford 2,100 calories and minimum non-food essentials per day per person.

The current greatest concern is over the 1998 rice crop. The FAO estimated in March that Indonesia would produce 47.5 million tonnes of rice, 3.6 percent below reduced production in 1997 and 6 percent below the 1996 harvest.

But the statement said this estimate was based on a prediction that the second rice harvest, which is due in August and accounts for one-third of the total production, would be average. This assumption no longer held true. "Since April, weather conditions have been generally favourable for the secondary rice crop, but plantings have reportedly been reduced and higher costs of fertilisers, pesticides and other inputs and the distribution problems could affect productivity," the statement said.

"Localised locust infestation to crops has also been reported from some areas. As a result, the output of the secondary crop is expected to be reduced," it said. "The current official forecast puts total paddy production at 46.29 million tonnes, some six million tonnes below the original 1998 production target," it said.

The report said a re-assessment of the situation in early August would be necessary to provide an accurate picture of Indonesia's food import and assistance needs. "The food situation in the country remains tight," it said.

Indonesia's rice import requirement for 1998/99 (April-March) has been estimated at up to 3.5 million tonnes, but the report said this was unlikely to be the case now. "Current indications are that total rice production could be lower than earlier forecast. If this were to occur, the rice deficit for the marketing year 1998/99 would be higher than the earlier estimate of 3.5 million tonnes," it said.

Up to June 24, international donors had pledged about 1.0 million tonnes and the commodities regulator BULOG had imported about 1.5 million tonnes of rice. "However, given preliminary indications of a possible higher rice import deficit and the financial limitations of the country, substantial further international assistance will be required," the FAO said, particularly for the rehabilitation of the agriculture sector in drought-stricken areas.

"It must, however, be stressed that notwithstanding the potential impact of the above-stated measures, prospects for future food security in the country will depend heavily on the health of the economy which would require large external funding," it said.

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