THE ROLES OF GOVERNMENT AND PRIVATES IN ENSURING FOOD SECURITY:

Synergising Food Supply and Logistics

Achmad SuryanaSenior Researcher, Indonesian Center for Agriculture Socio

Economis Policy Studies

Food Problems: Key Facts

• Food demand increases in term of quantity, diversity, quality, nutrition, safety.

• Food supply increses at slower rate than that of demand.

• Total food production/availability is higher than total food needs.

• One of problems in ensuring sustainable food security is DISTRIBUTION AND LOGISTICS

– Among and within regions

– From producers to consumers

World Food Availability for Consumption

WORLD FOOD AVAILABILITY WAS ENOUGH FOR EVERYONE

Average daily per capita food availability for consumption:

Region 1984-86(kcal)

1997-99(kcal)

2,015(kcal)

World 2,655 2,803 2,940

Industrialized Countries 3,206 3,380 3,440

Near East + North Africa 2,953 3,006 3,090

East Asia 2,559 2,921 3,060

Developing countries 2,450 2,681 2,850

Source:WHO, 2015

Imbalance food availability and consumption/intake: Indonesia

Description Energy (kcal/day)

Protein (gr/day)

Availability 3,755 92.6

Consumption 1,974 56.9

Standard req. for consumption 2,150 57.0

Huge differences between food availability and actually consumed

Average daily per capita food availability and food consumption/intake, 2011-2013

Source: IAFS.

Root Causes for Imbalance Food Availability and Consumption (1)

1. Poverty/low purchasing power of the poor

2. Weak food distribution and logistic systems

3. High food losses and waste

4. Limited market access for smallholder farmers

Root Causes for Imbalance Food Availability and Consumption (2)

1. Number of the poor or undernourish people was significantly high.

Year: 2012-2014

World : 805.3 million (11.3%)

Developing regions : 790.7 million (14.5%)

Asia : 525.6 million (12.7%)

Southern Asia : 274.6 million (15.8%)

Indonesia (2014) : 28.3 million (11,3%)

Root Causes for Imbalance Food Availability and Consumption (3)

2. Weak distribution and logistic systems• Imbalance food production and needs among regions

=North America+Europe vs Asia + Africa

=Java + Sumatera vs Eastern Indonesia

• High distribution/tranportation costs

• Food products are bulky and ferishable

• In developng countries logistic system has not been properly in place.

Root Causes for Imbalance Food Availability and Consumption (4)

3. Food losses and waste (S.Fan, 2014):o In the world: 1/3 of global food productiono In Industrial Asia: 236 kg/cap/yr (33% of production)o In South and Southeast Asia: 126 kg/cap/yr (28%)In developing countries food losses and waste due to: Poor post harvest handling practices Insufficient infrastructure: storage, transportation, cold chains Infestation by insects, micro-organisms, etc. Food buying habits (buying more than needed) Food consumption habits (putting food in a plate more than

ability to consume)

Root Causes for Imbalance Food Availability and Consumption (5)

4. Limited market access for small farmers On-farm condition: small size, disperse with variety

of crops grown, low productivity, limited technology application,

Product characteristics: problem with consistency, seasonality, quality requirements/standard

Off-farm condition: buyer market, bad transportation, no link with value chains. AS A RESULT, COMMODITY PRICES RECEIVED BY FARMERS WERE

LOW (AT SOME POINT EVEN LESS THAN PRODUCTION COSTS)

Transformation of Asia’s Agrifood System (1)

1) Labor force: high urbanisation rate & ↑ women participation ↑ role of urban area in food economy

↑ food consumption outside home

↑ demand for prepared food

2) Diet change: ↑ household income & knowledge in food and nutrition

↓ demand for staple food (cereal), ↑ demand for animal, fish, and horticultural products

↑ demand for quality food: safety, healthy, and halal

Transformation of Asia’s Agrifood System (2)

3) Agriculture and rural economy: ↑non-farmactivities in rural ↑ land price/rent, labor wage

↓ youth in labor force

More diverse food demand, local trade increase

4) Food market: modernization Emergence of supermarket

Franchise modern/ “mini” market spread all over the country, including villages in rural areas.

Opportunity for linking small farmers & SME’s into national/ global markets through food value chain

Ensuring Sustainable Food Security: Role of Goverenment (1)

DISTRIBUTION OF SUBSIDIZED RICE PROGRAM: Indonesia Case

Goverment of Indonesia (GOI) is obliged to provide enough food for the poor (based on Constitution and Food Law)

Since 1998 (year of food crisis) GOI has implemented a program called Raskin (Disribution of Subsidized Rice for the Poor)

In 2015: the Raskin Program target beneficiaries:

o 15,530,897 poor households, 15 kg/month

o 82,235 villages all over Indonesia

o 2,795,561 tons subsidized rice to be distributed (household pays only around 20% market price).

Ensuring Sustainable Food Security: Role of Government (2)

THE SUBSIDIZED RICE PROGRAM FOR THE POOR

• Implementing agency: BULOG (Indonesian Logistic Agency) with logistic facilities:

o 463 storages all over the counry with total capacity 4 million tons of padi/rice

o 26 regional divisions and 101 sub-regional divisions

• Implementatioan and Reponsibility

o Coordinating Ministry for People’s Walfare

determines target beneficiaries of this program.

Ensuring Sustainable Food Security: Role of Government (3)

THE SUBSIDIZED RICE PROGRAM FOR THE POOR

• Implementatioan and Reponsibility (cont....)

o Bulog is tasked as implementing agency for this program.

o Bulog has responsibility ton distribute rice up to Distribution Points (DPs) in villages.

o Local governments have responsibility to distribute rice from DPs to Hanover Points (HPs) in sub-villages.

o Village officers or community representatives collect and pay at subsidized price at HPs and distribute the rice to targetted households,

Ensuring Sustainable Food Security: BULOG Rice Logistic Management

PROCUREMENT• Domestic at govt. procurement price.• Imports, if necessary.

STORAGE• To ensure adequate volumes• Spread all over places and time

STOCK HANDLINGTo ensure qualityand quantity

Monitoring and control system using IT, Online Real Time.Coverage the entire warehouses

BALANCING STOCK PERIODICALLY-Among regions and time. -Distribution by land, sea, and air transportations.

DISTRIBUTION

• Food security for the poorand emergency situation.• Food price stability

FARMERSI

THE POOR EMERGECYMARKETS

Ensuring Sustainable Food Security: Distribution Mechanism of The Raskin Program

D from LGBULOG

REGIONAL OFFICES

DO

STORAGESDISTRIBUTION

POINTSHANDOVER

POINTS

Order for allocated

subsidized rice from local

goverments

Role and Responsibility of Local Governments

Role and Responsibility of

BULOG

HH

HH

HH

Ensuring Sustainable Food Security: Public Private Partnership (PPP)

Facts

65% poor people (18 million) lived in rural, mostly farmers

90% were smallholder farmers with average size 0,87 hectares

Smallholder farmers have limitted market access.

Problems

Price recieved by farmers were low, can be less than production costs → farmers’ income remains low, food insecurity persist

Can agriculture and food products from rural areas link to regional, national, and/or export markets through PPP on food value chain with mutually beneficial principle?

Ensuring Sustainable Food Security: PPP, Government Initiative (1)

SOLID (Smallholder Livelihood Development) Project • Started in 2012,

• Financed by loan from IFAD

• Coverages: community in 2 provinces in Maluku (Moluccas) eastern Indonesia, 11 districts, 330 villages, 49,500 poor households

• Focus activitieso Community empowerment (farmers and SMEs).

o On-farm and post harvest handling improvement

o Value chain and marketing development

Ensuring Sustainable Food Security: PPP, Govenment Initiative (2)

Examples: COCONUT VALUE CHAIN DEVELOPMENTGoal: Increase household income and improve community

food security

Initial Condition of Smallholder Coconut Farming

o Average productive land holding size 0.92 hectare.

o Productivity 1,240 kg/ha (low),

o Less new technology application (subsisten farming)

o No product development from coconut by products (water, shell, fiber, wood)

o No vertical/horizontal link between farmers and actors in food supply chain.

Ensuring Sustainable Food Security: PPP, Goverment Initiatives (3)

Activities

o Assessing economic potential and prospects at village level based on commodity comparative and competitive advantages,

o Enchancing capacity of farmers’ group organization management,

o Empowering smallholders in increasing coconut yield and production,

Ensuring Sustainable Food Security: PPP, Government Initiative (4)

Activities (cont......)

o Fasilitating and fostering SMEs in food processing and home industry based on coconut products,

o Facilitating partnership beetwen farmers & SMEs and traders/privates,

o Linking coconut farmers’ groups and SMEs to local/regional/ export markets through value chain and marketing management

Ensuring Sustainable Food Security: PPP, Private Partnership (1)

PISAgro (Partnership for Indonesia’s Sustainable Agriculture)

Created in 2011 at WEF on East Asia in Jakarta

Vision 20-20-20: aims to increas farm yield by 20%, reduce poverty by 20%, reduce greenhouse gas emission by 20%

Working with smallholder farmers to achieve sustainable food security

Ensuring Sustainable Food Security: PPP, Prvate Partnership (2)

PISAgro (cont....) Has reached 300.000 smallholders, covering

220.000 hectares, with investment more than US$ 6 million from the private and public sector.

Has developed 10 agriculture value chains: -cocoa, coffe, corn, palm oil, -corn, -potatoes, horticulture,-dairy,-rubber.

Ensuring Sustainable Food Security: PPP, Prvate Partnership (3)

PISAgro Partnering Organizations

Government of Indonesia: -Ministry of Agriculture, Trade, Industry, Finance, -Local governments

Companies:-Bank Mandiri, BASF Indonesia, Bayer Indonesia,-BT Cocoa, Cargill Indonesia, DuPont, -Gunng Sewu Group, Indofood, Kirana Megatara,

Ensuring Sustainable Food Security: PPP, Prvate Partnership (4)

PISAgro Partnering OrganizationsCompanies (cont....):

-Louis Dreyfus C. Indonesia, McKinsey&Co. Indonesia,-Monsanto Indonesia, Nestle Indonesia, -Rabobank Indonesia, Sinar Mas, Syngenta Indonesia, -Tiga Pilar Sejahtera, Unilever Indonesia

Donors, Int. Organizations, NGO:-Australian DFAT, IFC, Mercy Corp,-Sustinable Trade Initiative, Swisscontact

Ensuring Sustainable Food Security: PPP, Prvate Partnership (5)

Example: Partnership in Coffee

Target by 2020:

o To distribute 2.8 million better coffee clones

o Work together with 30,000 farmers to increse productivity by 62 %, income by 48%,

Activities:

o Raising farmers’ awareness on the need for systematic replanting of coffee trees,

o Launch a program to upgrade farmers’ practice to comply with International Coffee Standard of 4C (Common Code for Coffe Community) through field school

Ensuring Sustainable Food Security: PPP, Prvate Partnership (6)

Example: Partnership in Coffee (cont.....)

Results (up to date)

o 13,000 farmers validated as 4C farmers, having productivity 60% above national average,

o 1,200,000 ‘elite clones’ distributed and 27,800 m2 of nurseries to support Replanting Program,

o 3,000 farmers trained on seedling, 16,00 farmers at field schools,

o 1 Experimental and Demonstration Farm to show case GAP.

Ensuring Sustainable Food Security: PPP, Prvate Partnership (7)

Example: Partnership in Coffe (cont....)

Area of Work:

Tanggamus District, Lampung Province.

Partners:

o Nestle Indonesia, Syngenta Indonesia, Rainforest Alliance

o Indoesian Coffee and Cocoa Research Institute (ICCRI), Government of Tanggamus.

THE ROLES OF GOVERNMENT AND PRIVATES IN ENSURING FOOD SECURITY

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