Tue, 30 May 2000

Corporate farming concept not feasible

Minister of Agriculture M. Prakosa is designing a corporate farming concept, under which small farm areas will be consolidated into corporate farming units. H.S. Dillon, director of the Institute for Agricultural Policy Studies, thinks the plan will not work.

Question: Do you think the government's plan for corporate farming is feasible for Indonesia?

Dillon: No. Prakosa's concept is not based on the thorough knowledge of the reality of our people and their aspiration of value systems. The reality is that about 11 million of our farmers have no land and that about 80 percent to 85 percent of people living in rural areas have attended schools for only up to six years. Furthermore, such an idea, which was implemented in Europe after World War II, has been left behind by two generations. He must have read outdated textbooks and his way of thinking is too focused on farming organization.

If implemented next year as planned, what consequences may result from the concept?

It may cause farm labor layoffs and concentrated urbanization. Yes, urbanization is an unavoidable process and we cannot fight it, but what we want is dispersed urbanization which can be obtained by providing economic incentives, creating adequate infrastructures and decentralizing power through the strengthening of a civil society in the regions.

The concept is likely to create projects in which farmers will have to take part. Do you think its implementation will encourage abuse?

Such a project-oriented concept is contradictory to the nation's current paradigm shift, under which we want to have less government involvement, while activities must be determined by the civil society.

How could a minister make such an unrealistic plan?

Because he does not know how to frame questions. If he cannot frame a question (on agricultural development), he will get the wrong answer.

That is the fault of Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie and Vice President Megawati Soekarnoputri, who promoted him to become a minister. But the fact that President Abdurrahman Wahid approved the promotion indicates that they are all not well-informed.

What is the right question then?

The right question is how can we build a sustainable future for our country. Because the majority of our people are still dependent on agriculture, we must enhance our agricultural productivity, but not agricultural productivity per se.

Through our history of agriculture, we have increased productivity, but its benefits have been seized by consumers because the real prices of food have steadily decreased for decades.

Any proposed increase in agricultural productivity, therefore, must be closely related to increases in farmers' income and payments for farm laborers. The technology to be adopted, for example, must have linkages with employment. So our focus of attention in developing agriculture is not on agriculture itself but the farmers.

Then how do you prescribe your own proposal?

What is the most strategic is that we must create incentives, so that everyone in rural areas feels invigorated to continue increasing his/her productivity. We must give him/her opportunities to improve his/her own ability.

Can you give us examples of your proposed incentives?

We must provide adequate physical infrastructures, such as roads, bridges and electricity for villages, not only on Java but also on other islands in the country. We can also establish a working rural capital market as an institution to mobilize funds for agricultural development. Everyone in rural areas who needs capital to enhance himself/herself, must be given access to obtain credit from it. Such credit should no longer be tied to any certain scheme or commodity development. State Bank Rakyat Indonesia, which has offices in rural areas, has thus far mobilized funds from villages but the investments are mostly not for rural development. So the bank is actually extracting capital from rural areas.

We must also take measures to enhance the quality of rural education. We, for instance, can establish universities on coastal areas, highlands and lowlands with locally specific curricula, giving adequate recognition to differences of agricultural-economic circumstance.

What makes it possible for the government to introduce such incentives?

The government must have a solid economic team whose members will respect each other. The Ministry of Agriculture, the Ministry of Forestry and Plantations, the State Logistics Agency (Bulog) and the organization responsible for the development of the agro-industry must be merged into one simple, leaner, more effective and more accountable institution under the management of one minister. We cannot start seriously enhancing agricultural productivity and providing food security for our people unless we have coherent policies related to agriculture, forestry, agro- industry and foodstuff logistics.

If that is the case, should we wait for another four years when the current government ends its term?

Not necessary. We hope Abdurrahman will reshuffle his Cabinet in August and will recruit some members of the National Economic Council (DEN -- to which Dillon also belongs). (Rikza Abdullah)