The report on the country's food crisis, by respected agriculture and food policy analysts, warns that without ongoing government subsidies of basic foods, Indonesia will face mass starvation. The World Bank last month predicted Indonesia's unemployment would quadruple to 20 million this year, not counting more than 50 million underemployed.
The bleak analysis coincides with the release of official figures showing millions more Indonesians have plunged below the poverty line. Figures from the Central Bureau of Statistics show 79.4 million of the country's 202 million people live in poverty.
The number in poverty compares with just 22.5 million two years ago and takes Indonesia back to a level of poverty last experienced in 1976 when 40 per cent of the population were classed as poor. The official measure of poverty in urban areas is daily food consumption below 2100 calories and a monthly income of 52,470 rupiah ($5.20) per person.
Ballooning poverty is fuelling fears over the potential for another outbreak of rioting and an upsurge in crime. Scrambling to deal with the impact, the Government is preparing to increase rice subsidies even further for an estimated seven million families. Poor families will be able to buy up to 10kg of rice a month at a third of the market price – about Rp1000 – by showing identity cards.
But heavy food and fuel subsidies are driving a blow-out in the budget deficit of 8.5 per cent of GDP or about $8 billion – a magnitude described by the International Monetary Fund as "not sustainable".
Indonesia is looking to the international community to give further assistance to fund the drain on public expenditure when the World Bank convenes an annual meeting of donors in Paris at the end of the month. Bank officials have expressed optimism over the prospects of winning pledges of $US6 billion ($9.7 billion).
In the most severe economic crisis in 30 years, inflation of more than 50 percent so far this year has eaten away at the purchasing power of millions of Indonesians. While the World Bank warned last month that a quarter of the country's 200 million people face acute poverty, on Wednesday Indonesia's food minister raised the number to 40 percent.
The latest food security analysis, released by the State Logistics Agency, Bulog, has warned that food subsidies, although economically regressive, will need to be maintained until a significant economic recovery is under way. The three analysts employed by Bulog concluded "the economy faces the choice of extensive government intervention or a market-inspired famine".
Arguing the removal of subsidies and controls would force medium quality
rice to Rp4000 a kilogram, they estimated the average family would need
a monthly income of Rp200,000 to meet basic food needs.
"With approximately 40 per cent of the urban population earning less than this amount, it is hard to escape the conclusion that, under free trade conditions, mass starvation would result," the report says.
The authors express doubts the stockholdings of rice by the agency will
be sufficient to meet demand later this year and early next year