Better policy urged to help rice farmers

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)