INDONESIA REJECTS WORLD BANK FARM REFORM PROPOSALS
Indonesia rejected World Bank
recommendations for sweeping reforms to its farm economy, as
the country's foreign aid donors met to consider giving it 2.5
billion dlrs in grants and soft loans.
    Agriculture Minister Achmad Affandi, in written remarks
distributed today as Indonesia's 14 foreign donor nations met
at The Hague, said, "The general argument presented by the Bank
for this free trade, open economy view is weak."
    The Bank called for overhauls in how Indonesia manages the
largest farm area in South-east Asia, and said agricultural
growth was stagnating under subsisides for rice farming.
    The Bank report said Indonesia's rice production had peaked
and the subsidies are a waste of money.
    Affandi replied that rice is the main staple and provides
an income for 17 pct of the workforce. The subsidies were
needed to support the fertilizer industry, including importers,
exporters, producers and distributors, he said, as well as
assisting in small part the majority of Indonesian farmers.
    Affandi agreed with a bank recommendation that farmers
should be free to choose their own crops, but he said the
government would continue to maintain production targets for
"strategic commodities" such as rice and sugar.
    The Bank report was especially critical of Indonesia's
drive to plant sugar, saying domestic sugar prices are double
the world average because of inefficiencies, and the country
would save money by importing the commodity.
    However, Affandi said volatile world sugar prices, the need
to save foreign exchange and an already up-and-running sugar
industry were good arguments for continuing the sugar drive.
    He also said import barriers and trade monopolies in the
agricultural sector were needed to help domestic industry
develop and because of "over-production and price intervention
in the developed nations."
 REUTER
