Indonesian farmers face challenges in obtaining financing to invest in new technology, good quality seeds and fertilizer
Mr. Sutarto Alimoeso, President Director
What was the background to the establishment of BULOG (Persero) as a state body responsible for food security and logistics in Indonesia?
BULOG was established in 1967 as a state body engaged in food logistics and responsible for national food security in terms of guaranteeing stock, quality and affordability. In 2003, BULOG evolved from a government institution into a state owned enterprise. As a state owned enterprise we now focus on profitability which for us is determined by the effective management of food security. The government has recently introduced policies that will task BULOG with the responsibility of handling the supply of meat, soya beans and other commodities; making use of our experience in ensuring that rice supplies are stable.
The company not only focuses on price stabilisation, but also on our profitability and financial independence. In the long term, BULOG plans on expanding further into both upstream and downstream activities. In the case of upstream activities, this means working with farmers in the production of commodities such as rice. We are involved in the processing side of food production, responsible for processes such as husking and milling rice. Downstream, we have BULOG Mart which is the distribution centre for our products. In the future, we will be involved in more commodities such as sugar, taking an active role in both the upstream and downstream sugar industry.
The Indonesian government has set a goal for national self-sufficiency in rice. In your opinion can this goal be achieved?
Our rice stocks are now the highest they have been for a while, with 3 million MET more than before. We have already purchased more than 2.2 million MET from local rice producers and we have sufficient stock. Should there be no change in the situation, we do not expect to have to import to stabilise the price but the price of rice depends on the supply as we are entering the dry season. I hope that in the dry season the rice production is maintained at the same level, so that Indonesia will be self-sufficient in rice.
How does BULOG contribute to greater productivity in the production of key staples for the Indonesian market?
Indonesian farmers face challenges in obtaining financing to invest in new technology, good quality seeds and fertilizer. Our government now has a program to assist them in obtaining credit for this purpose whereby the rate is subsidised by the government. BULOG is participating in this program by guaranteeing that we will purchase the farmer’s products and so we work with the banks to aid in the distribution of credit to farmers.
Given the global importance of food security and sustainability, how do you envision BULOG working together with international partners for cooperation on this matter?
Indonesia cannot produce all of the foods that it requires, which means that many items are imported into the country. Therefore BULOG is preparing to work together with strategic partners from other markets to produce foods for the local market. Indonesia needs an increased supply of meat such as beef, and so BULOG plans on working together with partners to produce this particular food product. For rice, BULOG has already begun studying how to work together with partners in ASEAN but we have not yet realised a successful synergy.
Soybeans are an interesting area for international partnerships for new technology and research, as is the case for other key commodities that cannot yet be produced in Indonesia.
What would you like people to remember about Indonesia and BULOG as a final message?
Many people may not know what is taking place in Indonesia but they should understand that Indonesia is a large country with plenty of resources to offer. We still need a lot of partnerships and synergies with other countries for technology and other areas to ensure our future sustainability and security. At BULOG, we want to work together with partners for strategic foodstuffs such as beef to achieve further development of the Indonesian market.
Global Business Guide Indonesia - 2014