(Corrects paragraph 4 to show that soybean imports could increase by about 40,000 tonnes per yr over the next 5 yrs, not 200,000 tonnes per yr)

* Sources say president wants more realistic soy output targets

* Industry wants to switch land to corn from soy

* Change would dent food security goals, boost soy imports

By Michael Taylor

JAKARTA, Nov 13 (Reuters) - Cracks are widening in Indonesia's policy to become self-sufficient in staple foods after the president signalled it made little commercial sense to grow all the country's needs in soybeans.

Such a shift would boost imports of the meat substitute and deal another blow to Indonesia's goal, set after global food prices surged five years ago, to be able to feed itself in soy, beef, corn, rice and white sugar by 2014.

The Southeast Asian nation, with the world's fourth largest population, has already curbed sugar output targets due to competition for land and has relaxed rules on live cattle imports.

The latest softening in policy acknowledges that self-sufficiency in soy remained a long way off, with industry estimates showing the move could boost imports by about 40,000 tonnes per year over the next five years, from 2.1 million tonnes in 2013/14. That would bolster global prices that hit a seven week-high on Tuesday.

Two people present at a closed door cabinet meeting last week told Reuters that President Susilo Bambang Yudhoyono had instructed his chief economic minister to work on more realistic targets for meeting soybean and corn demand with an influential industry group that has pressed for changes.

"We had input from all players, like the farmers, and they feel that economically and commercially it is more attractive to plant corn," said Suryo Sulisto, chairman of the Indonesian Chamber of Commerce and Industry (KADIN), who presented arguments for change to the president at the Nov. 4 meeting.

"Soybeans grow better in a different climate and conditions than in Indonesia," he added. "We cannot forget soybeans, but we should be realistic on production."

The presidential spokesman for domestic affairs could not be reached for comment.

The sources at the cabinet meeting said the president and his ministers were urged to adopt food policies more in line with China, which was self-sufficient in all major grains and oil seeds but dropped the 95 percent target for soybeans early last decade, driving up soybean imports.

The president also acknowledged that many government food production estimates may be wrong, one of the sources said, without giving further details. Industry players often criticise government food forecasts for being too optimistic.