More Indonesian Firms Are Joining the Corn Seed Industry
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Corn is a secondary crop after paddy for Indonesian farmers. Indonesia’s main Corn-producing areas are Java, which accounts for 40 percent of national Corn production, followed by Sulawesi (24 percent), Sumatera (24 percent), and Nusa Tenggara (10 percent). Indonesia typically experiences a dry season from April to October and a rainy season from October to April. Depending on the relative distance to water reservoirs, rivers, and other water sources, some areas may have two or three planting periods per year. Areas closer to water sources will have an opportunity to have three plantings annually.
Across much of Indonesia, the first Corn season usually takes place from October to February (49 percent), the second from March to June (37 percent), and the third from July to September (14 percent). At the same time as the onset of the rainy season 2022/23, most farmers started the first planting season on time from October to November 2022. The predicted early onset of the dry season and the possibility of El Nino during the last term of 2023 will reduce water availability for farmers in lowland areas whose fields are not close to water reservoirs. Therefore, farmers in this area will likely switch to growing more Corn over paddy.
Other than adequate water, high Corn prices continue to be the main driver for farmers to grow more Corn over other secondary crops such as soybeans, mung beans, and peanuts during the second and third crop cycles of 2022/23. Field observations showed that farmers in upland, rainfed areas have already started to grow their second cycle of Corn to take advantage of higher prices around July 2023 between the first and second main harvests.
To incentivize farmers to grow Corn and increase national Corn production, the Ministry of Agriculture (MOA) provides farmers with subsidized Corn seed. However, the total allocation of subsidized seeds continues to decline every year. The decreasing availability of subsidized seed is counterintuitively leading to an increase in overall Corn production as farmers increasingly choose seeds with higher yields from the commercial market as the less-productive, subsidized seed became scarcer.
In the 2023 State Budget, the GOI aims to increase farmer’s terms of trade (NTP, Nilai Tukar Petani) to 105-107. BPS has reported NTP, in general, tended to increase from 2021 to February 2023. In February 2023, NTP reached 105.09 or increased by 1.27 percent from January 2023.
NTP compares the price index received by farmers to the price index paid by farmers. The NTP is used as an indicator to assess the purchasing power of farmers in rural areas. It also shows the terms of trade of agricultural products with goods and services consumed and for production costs. With higher purchasing power, hybrid Corn seed producers reported more sales of higher-quality seeds. Following two years of wet and dry seasons, an early and prolonged dry season will optimize the quality and quantity of Corn seed production.
Corn Seeds and Imports in Indonesia
Other than the four major multinational seed companies long existing in the country, more local companies are joining the Corn seed industry. Combined with farmers’ interest in growing more Corn, the seed industry reported that hybrid seed sales in 2023 reached a total of 65,000 to 70,000 MT compared to 60,000 MT in 2021.
Industry estimates that Corn prices will remain high in 2023 and will continue to motivate farmers to grow more Corn in 2022/23. Hybrid Corn area accounts for 75 percent of the total Corn area. According to AgFlow data, Indonesia imported 123,235 tons of Corn from Argentina in Jan-May 2023, followed by Brazil (83,578 tons) and the United States (759 tons).
Other sources: USDA
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