The agribusiness system approach<\/p>\n
Pantjar Simatupang, Director, Center for Agro Socio Economic
\nResearch and Development, Bogor<\/p>\n
The egalitarian Agrarian Law of 1960 is not easy to enforce.
\nTo my knowledge, there has been no egalitarian land reform
\nsuccessfully implemented in developing countries. Besides
\ndifficulty in gaining political support, its enforcement is
\nsocially sensitive and expensive.<\/p>\n
Even if all the available productive land is redistributed
\nequally among more than 20 million farmers, the average plot
\nwould be less than 0.3 hectares. Land reform will not
\nsignificantly reduce poverty and may even increase the absolute
\nnumber of the poor.<\/p>\n
The simple reason is that the presently large number of
\nhouseholds just hovering slightly above the poverty line and with
\nland holdings around the average size (0.3 hectares), they would
\ndip into real poverty because after the land redistribution the
\namount of land for each would decrease, while most of the poor
\nhouseholds with below the average size of land holding would
\nstill remain poor because the gains from the land redistribution
\nwould still not be enough.<\/p>\n
With present land availability, access to sufficient size of
\nproductive land for all farm households cannot be achieved
\nthrough land reform.<\/p>\n
There are two alternatives to increase the average size of
\nland holding: Area expansion through new land development, and a
\nreduction in the number of farmers through job provision in off-
\nfarm sectors. The latter can be achieved through rural
\nagroindustrialization and the appropriate strategies, in short,
\nthe agribusiness system approach.<\/p>\n
Third, the agribusiness system approach is a logical framework
\nof agricultural sector policy formulation. It has nothing to do
\nwith ideology such as neoclassical liberalism or capitalism. It
\nis a positive rather than normative prescription. It should be
\njudged based on positive, scientific reasoning rather than on
\nsubjective political or ideological orientation.<\/p>\n
Fourth, the agribusiness system approach is farm scale
\nneutral. It does not discriminate against the small family farms
\nin favor of the large corporations. It is a policy framework
\nrather then a policy itself, and hence is intrinsically neutral.<\/p>\n
Fifth, the agribusiness system approach suits developing
\ncountries where small family farms are prevalent. Small family
\nfarms are mostly single enterprise (farming only) and hence are
\nhighly dependent on the other components in its commodity chain.<\/p>\n
Commodity system coordination through the government's helping
\nhand is vital for small family farms. Large corporations are
\nvertically integrated or are themselves the commodity chain
\ncoordinator. They generally can manage themselves.<\/p>\n
The agribusiness system approach views that small farming of a
\nparticular commodity in a particular area can get moving only if
\nthey are consolidated, and connected with all actors in the
\ncommodity chain, and well supported by public infrastructures.
\nThis can be said to be an industrial agribusiness unit, where all
\nactors in the commodity chain are unified just like an integrated
\nindustrial enterprise.<\/p>\n
A real example of an industrial agribusiness unit is the
\npoultry business partnership coordinated by Herry Santoso in
\nSukamulya Village, Ciamis (Kompas, April 4). Pak Herry gains a
\ncaptive market order from McDonald's food chain group in Jakarta
\nand Bandung which requires a supply of chicken parts with total
\nquality assurance. He then cooperates with pesantren or Islamic
\nboarding schools to arrange a convenient and fair business
\npartnership with some groups of small poultry farmers.<\/p>\n
Pak Herry provides all supplies such as feed and medicines,
\nand hence working capital, as well as market assurance. The
\nfarmers only provide barns and labor for the daily care of their
\nrespective farms. Pak Herry links up with factories of the farm
\nsupplies and hence the chicken production costs are minimized. He
\nalso has a slaughterhouse, and thus the whole chain of the
\npoultry commodity chain is completely under his coordination.
\nWithout such a coordinated agribusiness system, those small
\npoultry farmers may not have access to the lucrative McDonald's
\nmarket, whereas the McDonald's group, a multinational
\ncorporation, fails to benefit the rural poor population.<\/p>\n
A down-to-earth implementation of the agribusiness system
\nparadigm is the development of local specific industrial
\nagribusiness units for all prospective agricultural commodities.
\nThis is basically an institutional development of the
\nagribusiness system.<\/p>",
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