Alternative Corn Policy

KOMPAS/ADI SUCIPTO

Sumali, a chicken farmer in Mantup, Lamongan regency, East Java, feeds his hens on Sunday (23/9/2018). The prices of animal feed, corn and dedak (grains for chicken feed) have increased while the price of eggs have dropped.

Lack of synchronization between the national corn production and the poultry feed industry’s needs reflects the need for a review in our national food and agriculture policy and strategy.

We need to readjust our food and agriculture policies in line with domestic and global changes. Indonesia established its food sufficiency strategies and policies, especially for rice, in the late 1950s.

Now, domestic and global situations have changed significantly. Indonesia now has more than 260 million people. The world now faces climate change and increasingly scarce land and water resources. Agriculture area continues to shrink.

The world sees fiercer competition in the supply and demand of food commodities. With some commodities, limited production is the problem. With other commodities, however, production is too high, leading to commodity abundance and low prices.

Under such huge shifts, we need to rethink our food policy and strategy. We must be wiser in responding to these various changes upon selecting which commodities we are prioritizing for self-sufficiency. Upon making policy decisions, the government must be prepared for all their consequences.

In determining priority commodities for self-sufficiency, it will be wiser if we consider our comparative advantages. This way, it will be easy to drive the commodity’s competitiveness when compared to similar commodities in international markets.

This must be considered, as Indonesia has ratified the agreement establishing the World Trade Organization (WTO) alongside its annotations, including on trade of agriculture products, through Law No. 7/1994 on the agreement of WTO establishment. The law has been in effect since Jan. 1, 1995. It will be wise for the government to really consider corn’s comparative advantage for a self-sufficiency policy, especially the “sacrifices” other commodities will have to bear under its pursuance.

Corn is only suitable for certain soils, in line with climate and land availability, when compared with other commodities such as rice – which often has a political value – or horticultures with better prices than corn.

The scattered planting of corn, far away from  the center of consumers, namely the poultry feed industry, will only make domestic corn lose its comparative and competitive edges when they are sent to the feed industry centers – most of which are in Java.

Expensive corn will affect broiler and layer farmers and, in turn, consumers. Better prices for corn farmers must be considered in correspondence to price hikes that will burden consumers. If corn is cheap, an opportunity for export will open up. Furthermore, an import ban on corn will lead to higher wheat imports to substitute for corn.

Therefore, we need a new strategy by thoroughly and wisely considering the commodities with comparative advantages for self-sufficiency, such as oil palm, spices and cacao. As for corn, exports should target countries with competitive logistical costs.