Better policy urged to help rice farmers

JAKARTA (JP): Agricultural experts have urged the government to adopt a new rice policy to protect distressed rice farmers from unruly price fluctuations.

Agricultural experts H.S. Dillon and Bungaran Saragih said over the weekend that the government needed to reconsider a new rice policy in a such way that the rice farmers would no longer be the victims of its inconsistency.

Dillon, who is chairman of the Center for Agricultural Policy Studies said the government's new policy must guarantee a fair rice price for the farmers, who make up the largest sector of the country's population.

"Farmers need an incentive that can empower their productivity," Dillon told The Jakarta Post.

He said raising the floor producer price for the government's rice stabilization program should be a priority before introducing a new policy, which would guarantee lasting price stability.

The price of unhusked rice in several Indonesian provinces has reportedly dropped to below Rp 1,000 (US$0.13) per kilogram, far lower than the floor price of Rp 1,400 as set under the government's rice stabilization program.

Newspaper reports have said that with such a price level, the farmers's earnings were only enough to pay for farm costs and fertilizer. But in reality, the situation is worse than that because the farmers, who mostly rent land for their rice cultivation, have to surrender at least 50 percent of their harvest to the owners of the fields.

The farmers have never enjoyed good earnings from their rice farming despite the fact that local production is still not enough to meet the national demand.

The government has changed its rice policies several times to protect both farmers and consumers but the farmers have always been on the losing side.

The analysts said that the recent influx of cheap imported rice to the local market indicated the weakness of the government's policy in protecting the farmers.

The State Logistic Agency (Bulog) said it would spend about Rp 6 trillion this year for procuring unhusked rice from local farmers and has thus far disbursed Rp 200 billion for this year's harvest. But the program has not worked and the price remains low.

Dillon said the current floor price level did not even reflect the present market condition as it was made in 1999 during the previous administration of former president B.J. Habibie.

He said the government should have calculated the floor rice price before the rice planting seasons, and that price should have factored in the estimated costs of fertilizers and pesticides.

Lack of coordination

Dillon said the present condition of the rice industry was another evidence of an extreme lack of coordination between ministries in pursuing effective policies.

He, therefore, suggested that the government combine the Ministry of Agriculture with the Ministry of Forestry and Plantations as well as Bulog.

"The integration of these institutions would better ensure that the government make solid policies," he said.

Furthermore, he said, to protect farmers during the harvest seasons -- when rice supply is abundant -- the government should temporally stop rice imports.

Last year, total rice imports by Bulog and private importers reached over 3.5 million metric tons, or about 10 percent of the estimated annual demand.

Bungaran of the Bogor Institute of Agriculture (IPB) said farmers should be assisted to be able to hold on to their rice stocks in order to prevent steep price fall during the harvest season.

"In the long term, farmers should be able to immediately stock their rice after the harvest," Bungaran told reporters on the sidelines of a seminar on the economy held by the Indonesian Democratic Party of Struggle (PDI Perjuangan).

Bungaran said the storage of rice throughout Indonesia had diminished sharply and farmers mostly sold their rice to local traders or cooperatives straight after the harvest.

But most importantly, the government must take immediate action to lift the current price of rice, he added.

"Right now, there is no other way for the government but to revise upward the floor price and buy up farmers' output on that price level," Bungaran said.

However, other analysts argued that although the storage of rice could theoretically help stabilize rice prices, the idea looked somewhat unrealistic because most farmers were often forced to immediately sell their rice to pay their debts and to purchase items for their daily needs.

Bungaran questioned the government's inability to allocate more funds for the rice stabilization program while it had poured hundreds of trillions rupiah in taxpayers' money to bailing out ailing banks.

"Whom does the government prioritize?", he questioned.

Bulog's spending power was tightened after it lost most its monopoly privileges over several basic commodities in a 1998 agreement between the International Monetary Fund (IMF) and Indonesia.

The agreement also allows private companies to import rice, thereby causing the influx of cheaper rice from neighboring countries like Vietnam and Thailand.

But starting this year rice is subject to an import duty of 30 percent. (bkm)