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Cablegate: 2010 Food Security Planning: Indonesia

VZCZCXRO3474
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #2031/01 3450924
ZNR UUUUU ZZH
R 110924Z DEC 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 4109
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 04 JAKARTA 002031

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 USAIDQs 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 IndonesiaQs 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 IndonesiaQs 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 IndonesiaQs poor
families reveals the obstacles they must overcome to share
in IndonesiaQs 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

JAKARTA 00002031 002 OF 004


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 described by the local
official would be consistent with the five principles
described by Secretary Clinton in recent speeches on Food
Security Q 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 Q including
Jakarta-based multilateral development institutions and
international NGOQs 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 Q 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 NGOQs
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 OQLakes through an
agreement with USDA. Based on the model developed in
Indonesia, Land OQLakes 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 CenterQs mission is to improve

JAKARTA 00002031 003 OF 004


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

AMARTA, AN EMERGING SUCCESS

7. USAIDQs 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).


JAKARTA 00002031 004 OF 004


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

HUME

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