Together again at last

I am back in Makassar and have been reunited with my laptop, which I have hardly seen over the last three months (hence, partly, the lack of photos on the blog recently). I'll be staying in and watching a DVD - Spiderman 3, perhaps. Joy.

The main preoccupation, as it has been for the last month, is whether I can escape from Indonesia before the visa expires. I could not buy an international air ticket in Ambon (where the airport optimistically calls itself Pattimura International) and in Makassar the travel agents are closed tonight. The visa expires the day after tomorrow.

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I spent the last week or so in Ambon, which is in the rain shadow of the island of Seram. A few days ago in Seram a Christian teacher said something to a Muslim pupil that, when later reported at home, caused outrage. A church and a village were reportedly burned. So the religious violence in the Moluccas continues to simmer at a low level, it seems.

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In Manado, dog is on the menu. There it is called 'rw', the initials for 'soft fur' in Indonesian. The Minahasans eat dog, as do the Bataks of Sumatra and the Torajans. The Torajans, at least, reckon it keeps their peckers up. But I was not able to try any, as I was not really capable of eating solids at the time.

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Inevitably, I spent a lot of time in Manado at the Mega Mall. On sale on the ground floor of the mall were three dozen shiny new German grandfather clocks. Nasty kitsch things, they were retailing at about $1,000 apiece.

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Not only is there rabies in Indonesia, there is bird flu. On one day last month, 17 patients were admitted to hospital here in Makassar with suspected bird flu. Their chickens and their neighbours' chickens had all died of it. The week before, a man died from bird flu in Semarang, Central Java. The province of Central Java has had 11 human deaths from bird flu since 2003.

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In my post on the Kinabatangan I mentioned that Indonesia plans to increase production of palm oil significantly. That policy is now in reverse, because palm oil prices have plummeted recently, along with other commodities.

The average monthly spot price per ton on the Malaysia Derivatives Exchange was RM 3,857 in March 2008, RM 2,406 in September, and RM 1,505 last month. It has recovered slightly to RM 1,633 at Friday close. Similarly, rubber has fallen by more than a half, robusta coffee by nearly a half, and cocoa likewise. As with many commodities, demand and supply elasticities are low in the short term, so the price is volatile.

In the medium term, supply is elastic. Oil palms take only 3-4 years to produce fruit and are at their best at 6 to 7. They produce for 30 years or so.

Palm oil has well-known uses in food, but it is also used to make biofuel. One reason for the extraordinary growth in production of palm oil in the last few years - with massive resulting habitat loss for forest-dwelling species - is the crazy, irresponsible and damaging subsidies paid by rich-world governments for biofuels. Not only by rich world government, though: in Indonesia it is mandatory to add biofuel to diesel and petrol mixes. In transportation diesel, for example, at least 10% of the mix must be biodiesel.

The top importers of palm oil are China, India and the EU. The top producers and exporters are Malaysia and Indonesia. They share 90% of global production. This year Indonesia is likely to produce 18.6m tons of palm oil and Malaysia 17.5 m tons. Like OPEC, the two countries coordinate inventory policies. They have agreed to reduce supply growth sharply next year. Indonesia is to replant 50,000 hectares, Malaysia 200,000.

Palm oil accounts for about 15% of Indonesia's exports. Indonesia mainly exports crude palm oil; Malaysia exports processed product and gets twice the export revenue.

The top producers of natural rubber are Thailand, Indonesia and Malaysia, which share 70% of global production. Last month they agreed to cut production by 210,000 tons by replacing trees. Indonesia is the fourth largest producer of coffee after Vietnam, Colombia and Brazil: it grows 450,000 tons a year, of which 250,000 tons are exported.

So its economy is heavily dependent on commodity prices, and the rupiah has fallen sharply against the US dollar recently. This would be good news but for the fact that traders have also decided that the UK is a banana republic. Despite growth averaging over 6% a year, Indonesian government debt is rated BB- by S&P: junk. This is probably because the tax base is narrow and the government's autonomy is constrained by an established and costly system of subsidies.

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And that reminds me. As I mentioned before, I had been wondering what the seaweed farms in Lembata were for. It turns out that the main purpose of seaweed farming in Indonesia is to extract polysaccharides called carrageenans, which are widely used as a thickening agent in food, especially in desserts and ice cream. The source I found, which could be out of date, stated that the seaweed is exported raw to Holland, where it is processed.