Agribusiness problems hamper fair competition
M. Taufiqurrahman, The Jakarta Post, Jakarta
A small scale businessman from Brastagi, North Sumatra, who sells agricultural produce in Jakarta, complained about extortion by both officials and thugs.
"Business these days is very hard," said Edi Purba, 42. "For delivering a truck of sweet potatoes, for example, I have to pay up to 20 unauthorized fees to officials and thugs between Medan and Kramat Jati market in Jakarta."
He said, at a seminar on building networks for small- and medium-scale enterprises (SMEs) earlier this week, that in Kramat Jati market, where he unloaded his goods to a middleman, he had to pay around Rp 20,000 (US$2) to thugs in "security" fees.
Edi said that such illegal payments made to both officials and thugs were one of among many problems that now had to be faced by SMEs.
This was not the only problem that had prevented SMEs from developing, he said.
"We also have problems in obtaining loans from the commercial banks, because the requirements for SMEs to get loans are the same as those for large-scale entities," he said.
He also cited, as an example, how the quality of his produce now was starting to deteriorate.
"The sweet potatoes I grow on my farm are becoming smaller, and I don't know what has caused it," he said in dismay.
An expert from Bogor Institute for Agriculture (IPB), Endang Gumira Said, told the seminar that extortion, low quality and difficulties in obtaining loans had now caused Indonesian farmers to lose their ability to compete with farmers from other countries.
"The existence of unauthorized fees is one among many problems afflicting agribusiness in the country," he said.
Endang said that Indonesian agricultural produce also had problems in penetrating the markets of some developed countries, such as Japan and the United States.
"Countries such as Japan and the U.S. demand high-quality agricultural produce from other countries, something that can no longer be fulfilled by most of Indonesian farmers," he said.
He added that Indonesia now lagged behind countries such as Malaysia, China and Thailand in penetrating the world market of agricultural produce.
"Currently, China can produce around 120 million tons of sweet potatoes per year, making it the largest producer in the world. Indonesia can produce only two million tons," he said, adding that Indonesia now stood as the second-largest producer of sweet potatoes.
He also said that Indonesian efforts to develop a strong agriculture industry were now tainted by those who committed fraud under the name of enterprise for agricultural business.
"The fraud committed by Qisar and Adfarm is but one example of how agricultural business can turn into serious crime," Endang said, referring to cases of the misuse of investors' funds by two agricultural companies collaborating with government officials.
He said that unless serious efforts were made to boost agribusiness, it might plunge into a deeper crisis.
"Right now, of around 60 tuna-processing companies, 20 have survived the competition in the world market," he said, adding that the 20 still had to import 30 percent of their raw materials from the Philippines.
He said that SMEs should rely on themselves rather than the government as it was already afflicted by serious problems, including corruption.
"Agribusiness should build its own network based on trust, something that is very lacking in our society," he said.