The Office of the Coordinating Economic Minister has initiated the establishment of Cavendish banana plantations for exports in Blitar, East Java, to help curb the nation’s trade deficit and spur local economic growth.
According to ministry secretary Susiwijono, the government is working on a 4-hectare demonstration plot with farmers and agro-industrial firm Great Giant Pineapple (GGP) as a standby buyer for the products. The ministry’s farmers empowerment program will cover matters related to production and marketing, he added.
Cavendish bananas were chosen because of their high economic value and wide market potential, Susiwijono said.
Indonesia currently exports Cavendish bananas to China, Japan, Korea and the Middle East. However, demand from these countries has not been fulfilled because of limited production land.
“This quick wins program is aimed at narrowing the national trade deficit,” Susiwijono said as quoted from a press statement released on Tuesday.
“It will greatly contribute to solving the main problems of our economy related to the trade balance deficit.”
He pointed out that the agriculture sector is also the third-largest contributor to the nation’s GDP, after the industrial and trade sectors.
However, Statistics Indonesia (BPS) data recently revealed that fruit imports totaled US$1.24 billion from January to November last year, up 9.61 percent from $1.13 billion in the same period in 2018. Fruit imports contributed to the nation’s trade deficit widening to $3.11 billion as of November 2019.
“The rise of imported fruits is because Indonesian households buy more Chinese apples and oranges ahead of the holidays compared to last year,” BPS chairman Suhariyanto said in December.
The top three fruit importers into Indonesia were China, Japan and Thailand. Fruit imports from China have more than doubled to $134.42 million in November 2019 from $64.17 million in the same period in 2018.
Indonesia's trade balance fell to a $1.33 billion deficit in November 2019, standing in stark contrast to the $161.3 million surplus recorded in October and marking the largest deficit since April 2019.
Susiwijono said the development of export-oriented horticultural commodities would continue in various regions, such as Bener Meriah regency in Aceh and Bondowoso regency in East Java, among other areas.
He went on to say that the program would also boost exports, investments and economic equality through partnerships between the government, private sector and farmers.
"We start with 4-hectare demonstration plots in several locations,” he said. “Farmers will be assisted from the production process to marketing.”
Susiwijono added that he hoped similar programs could be rolled out at the national level, starting with selling the bananas at local markets while gradually developing logistics for exports.
The ministry established a similar plantation in Jembrana regency, Bali, in December 2019.