Agribusiness problems hamper fair competition

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.