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Cablegate: 2010 Food Security Planning: Indonesia

VZCZCXRO1999
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #2024/01 3440357
ZNR UUUUU ZZH
R 100357Z DEC 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 4098
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/USDA FAS WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 JAKARTA 002024

SIPDIS

AIDAC FOR ANE, EGAT
DEPT FOR COS, F, OES AND EAP
COMMERCE FOR NOAA

E.O. 12598: N/A
TAGS: EAGR EAID ETRD SENV PREL ID
SUBJECT: 2010 FOOD SECURITY PLANNING: INDONESIA

REF: (A) STATE 097423; (B) JAKARTA 01583; (C) JAKARTA 001808 (D)
JAKARTA 001473

1. SUMMARY: Substantial potential exists for Indonesia to achieve
greater food security through cash crops and fisheries, and to
replicate its successes in other developing countries in the region.
Indonesia has over 110 million people living on less than $2 dollar
a day and around 13 million malnourished children. The Government
of Indonesia (GOI) is in the process of preparing a medium term plan
which includes the major areas for food security actions. Indonesia
could serve as an incubator for pilot food security activities. USDA
has a track record of successful partnerships in Indonesia.
USAID/INDONESIA is developing a new program to improve food security
by increasing employment and incomes for vulnerable rural families.
Indonesia USAID's program will address basic rural needs: investment
in agricultural universities for teaching, research and extension;
promotion of small enterprises for agricultural inputs, crop
processing and marketing; and public private partnerships to promote
horticulture, cocoa and coffee. Nutrition issues will also receive
attention. Given the needs and potential, the Mission requests that
Indonesia be considered for the food security initiative. End
Summary.

FALTERING RURAL ECONOMY

2. Almost half of Indonesia's 240 million population lives on less
than $2 a day (Ref B and C). Thirteen million children are
malnourished. Most poor families live in rural areas and depend on
the agriculture sector for family incomes. Indonesian agriculture
has been neglected by the GOI and donors for more than a decade. As
a result, the rural small farm sector is falling behind the urban
economy. The GOI gives high priority to self-sufficiency in rice,
sugar, soybeans, corn and beef. However, the best opportunities for
raising rural family incomes, reducing poverty, and increasing food
security are in small-holder cash commodities: horticulture and fish
for the demanding urban market, and coffee and cocoa for export.
Transforming agricultural and fisheries production, to meet ready
markets, requires determined, far-sighted investment by the GOI and
donors. To revitalize Indonesia's rural agriculture sector, the
U.S. and other donors need to return to substantial, steady
investment in the rural agricultural sector, giving first priority
to agriculture and fisheries institutions for teaching, research and
extension.

POVERTY AND HUNGER

3. Reducing poverty in Indonesia is less about increasing production
of staples than about having well designed rural employment and
income strategies, as well as effective policies and institutions.
Efforts to reduce poverty and to increase food security in Indonesia
face a range of challenges including widespread bureaucratic
inefficiency and political corruption. A profile of Indonesia's
poor families reveals the obstacles they must overcome to share in
Indonesia's success as a middle-income nation. Information from the
2004 National Social and Economic Survey (SUSENAS), analyzed in
detail by the World Bank in 2006, shows the underlying problems:

75% of low income workers are in the informal sector; more than 60%
of poor families depend on income from agriculture;
55% of the poor have less than a primary education and 16% are
illiterate;
50% of the poor lack access to clean water; 75% do not have adequate
sanitation;
25% of children under five are malnourished; Lack of adequate
economic infrastructure such as reliable rural roads and efficient
ports constrains growth for agriculture and agri-business.

INDONESIAN FOOD SECURITY STRATEGY

4. The new GOI is busy preparing a five year medium term plan. The
plan is expected to adequately cover food security issues and serve
as a basis for country owned joint action. Food security is
definitely a high national priority, although many Indonesian think
in terms of self-sufficiency, especially in rice, sugar, soybeans,
corn and beef. It is understood that the President will be
appointing a minister level person to head the food security
efforts.

INDONESIA AS AN INCUBATOR FOR DEVELOPING PILOT FOOD SECURITY
INITIATIVES

5. In terms of Global Food Security initiatives, Indonesia is no
longer in the category of a poor country. In the words of a
high-level Indonesian Food Security official, Indonesia has
graduated from the standard donor-recipient development assistance
model and is ready to participate in a new model. This new model as

JAKARTA 00002024 002 OF 003


described by the local official would be consistent with the five
principles described by Secretary Clinton in recent speeches on Food
Security - including the need to improve coordination at every
level. The new model would also emphasize investment in country-led
plans, and the importance of close working partnerships with
bilateral and multilateral institutions - to include private sector,
university, and NGO participation.

-- A number of Indonesia-based stakeholders - including
Jakarta-based multilateral development institutions and
international NGO's with decades of local experience - believe
Indonesia is uniquely positioned to serve as an "incubator" for
pilot food security initiatives. This belief is based on a number
of factors, including the diverse food security-related conditions
throughout the archipelago; the long-established working
relationships among the various stakeholders - to include
bilateral/multilateral institutions; the NGO community; and
university and private sector institutions; and the successful
implementation and sustainability of previous food-security and
development initiatives.

-- The Country Director for the World Food Program specifically
expressed her opinion in a meeting with Ambassador Hume that the WFP
would like to coordinate with other stakeholders in developing
"pilot initiatives" in Indonesia for their programs aimed at
maternal and childhood nutrition programs. These programs would be
targeted to the neediest areas in Eastern Indonesia with the goal of
working with various stakeholders in a fully coordinated matter - to
include the United States and other bilateral and multilateral
partners. Once implemented, these projects could be replicated
throughout the region through the assistance of the respective
stakeholders, including Indonesian stakeholders.

USDA DEVELOPMENT ASSISTANCE PROGRAMS IN INDONESIA: A TRACK RECORD OF
SUSTAINABILITY THROUGH PARTNERSHIPS

6. From 1999 to 2004, Indonesia was one of the largest recipients of
USDA food assistance programming. In many cases, the programs
implemented through participating NGO's became models for their
programming in other countries. Thus, there is a track record of
success in the development of pilot initiatives in Indonesia. Once
developed in Indonesia, the NGOs replicate the model in third
countries via participating stakeholders. Common ingredients of
successful models included an emphasis on private sector
involvement; creating sustainability beyond the USDA funding; and
ensuring proper coordination among the various stakeholders.
Examples of successful models include the following:

-- Susu Sekolah: Susu Sekolah is the local term used for the School
Milk Feeding Program funded through the USDA Section 416(b) program
beginning in 1999. The program included several government, private
sector and NGO partners and was implemented by Land O'Lakes through
an agreement with USDA. Based on the model developed in Indonesia,
Land O'Lakes has successfully conducted similar school milk feeding
programs in several other countries in Southeast Asia and South
Asia. In Indonesia, milk consumption has tripled over the past
decade, due in large part to the Indonesian dairy processors
involvement in USDA school feeding programs.

-- SEAFAST Center: The Southeast Asia Food and Agricultural Science
and Technology (SEAFAST) Center began as a partnership between the
U.S. Department of Agriculture (USDA), Texas A&M University, and
Bogor Agricultural University (IPB). At the time, it was the only
USDA food assistance program implemented by a Land Grant University.
Based at IPB, the SEAFAST Center's mission is to improve food
safety and nutrition in Indonesia and throughout Southeast Asia
through food science education, faculty development, research, and
product development. In pursuit of this mission, the SEAFAST Center
is successfully pioneering linkages between industry, academia and
government. Though USDA funding ended in December 2008, SEAFAST has
continued to implement related activities by using its own resources
or by leveraging resources from the private sector. By doing so, it
has maintained its university linkage with Texas A&M and has
recently expanded its outreach to include other university and
private sector institutions in Southeast Asia.

-- Cocoa Pest and Disease Management: Indonesia is a major cocoa
exporter and an important source of cocoa for U.S. chocolate
manufacturers. Its cocoa production, however, is threatened by pest
and disease. To help address these issues, USDA provided funding to
ACDI-VOCA through the Section 416(b) program beginning in 2000.
ACDI-VOCA used the model developed in Indonesia and has since
successfully implemented similar programs in other countries in
Southeast Asia, South America and West Africa. In Indonesia, many
of the extension programs have been sustained through local
government extension offices with support from the World Cocoa

JAKARTA 00002024 003 OF 003


Foundation and U.S. companies such as Mars Inc. and Cargill.

AMARTA, AN EMERGING SUCCESS

7. USAID's current agribusiness activity AMARTA supported value
chain development for 10 high-value commodities by increasing
productivity, establishing marketable quality, enhancing access to
new and better markets, and advocating improvements in the
regulatory environment and infrastructure. AMARTA is now
concentrating on horticulture, cocoa and coffee as the most
promising areas. AMARTA provides long- and short-term technical
assistance, public outreach and advocacy, limited commodity support
and training and conferences to address the quality, marketing,
institutional, and policy advocacy issues.

USAID ECONOMIC GROWTH PLANS FOR INDONESIA

8. Economic growth that benefits the poor is the main route to food
security and poverty reduction. The poor are producers,
entrepreneurs and workers who must find ways to increase
productivity and to increase sales. USAID aims to spur growth by
increasing production of selected high-value crops to generate
employment and incomes, and improving the policy environment for
encouraging employment, long-term savings, and poverty reduction.

In agriculture USAID will build on the results of AMARTA and
concentrating on horticulture, coffee, and cocoa, USAID will focus
its assistance on increasing incomes, food security, and ability to
adapt to climate change by:

A) Raising agricultural productivity through strengthened capacity
of leading Indonesian agricultural universities through linkages
with U.S. land grant universities.

B) Improving the GOI extension system to deliver production- and
income-enhancing services to farmers.

C) Reducing barriers to market access by increasing the capacity of
farmer associations and agribusinesses to advocate for less
restrictive regulations. Support macroeconomic and sector polices
that provide the necessary environment for economic growth.

Nutrition is also of concern to USAID as surveys of maternal and
child nutrition continue to show substantial malnutrition.
Currently around 13 million children are estimated to be
malnourished.

With additional funds, the new agricultural program can be
substantially expanded to deepen and broaden interventions.

FISHERIES

9. Another potential action to further food security in Indonesia is
to support the sustainable development and management of fisheries.
In particular, a valuable contribution would be the establishment of
an Indonesia-U.S. Center for Sustainable Ocean Fisheries (Ref D).

10. ACTION REQUEST: Please continue efforts to have Indonesia
considered for the food security initiative.

HUME

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