The Agriculture Ministry is proposing an additional Rp 10 trillion (US$693.3 million) in next year's state budget to finance its planned policies aimed at speeding up economic recovery, particularly in the agriculture sector.
The government has allocated Rp 18.4 trillion to the ministry’s 2021 budget. Around half of the budget is allocated to programs to ensure the availability and accessibility of quality food.
However, Agriculture Minister Syahrul Yasin Limpo said Tuesday the allocation would not be enough to finance policies to ramp up food production, diversify staple foods, strengthen buffer stock and food logistics, as well as modernize the country’s agriculture sector, which employed the majority of the national workforce.
“The Rp 18.4 trillion budget allocated to the ministry in 2021 appears far from sufficient for the economy to recover after the COVID-19 pandemic in villages that heavily rely on the agriculture sector, and to meet the food production target set in the government’s working plan,” Syahrul said in a hearing with the House of Representatives on Tuesday.
The minister proposed the additional budgetary funds as Indonesia was facing looming drought that might affect the country’s agricultural output.
In 2019, prolonged drought led to Indonesia’s declining rice production, which was down 13.2 percent year-on-year to 16.1 million tons in the first half of 2020, according to the World Food Programme’s (WFP) Indonesia office.
The Agriculture Ministry has set a rice production target of 62.5 million tons in 2021, 5 percent higher than this year’s target.
The ministry is also seeking to raise farmers' terms of trade to 103, which indicates an improvement in farmers’ welfare. The terms of trade stood at 99.6 in June, slightly below the key threshold of 100, which means that farmers’ expenses still exceed their income.
As the COVID-19 pandemic disrupted food logistics, Syahrul reported to the lawmakers that the ministry had spent 40.48 percent of the Rp 1.46 trillion budget allocated this year to programs to secure supplies as of June amid social restrictions.
The ministry also disbursed almost 46 percent of the Rp 1.15 trillion allocated to social assistance to help workers in the agriculture sector stay afloat as the pandemic hit the economy during the period.
“We will keep pushing forward the spending in the next six months,” said the minister, a NasDem party politician.
Out of this year’s budget of Rp 14 trillion in total, the ministry had spent 44 percent as of July 3.
The slow budget disbursement, especially funds allocated to the pandemic response, has irked President Joko "Jokowi" Widodo, who in a video posted by his office recently told his ministers to expedite the healthcare and social aid budget in an uncharacteristically angry speech.
Finance Minister Sri Mulyani Indrawati admitted separately that administrative issues had hampered the disbursement, while urging ministries and government institutions to accelerate spending to help push economic activity.
“The stimulus is currently in the early stage and we will improve [disbursement] to speed up spending,” she said on June 29.