Farmer's need should take center stage

Benyamin Lakitan, Jakarta

Up until now, evaluation of agricultural programs has mostly been based on -- or limited to -- agronomic parameters, such as annual production, land productivity, total harvested area and harvest index, etc.

Success is claimed if there is an increase in crop production, land productivity, harvested land acreage and cropping intensity of agricultural commodities. This version of success has been touted almost every year at the national, provincial and regency level. However, on the other hand, nobody can deny that farmers have not enjoyed the fruits of such a fairy tale of success. Their quality of life has not improved much since our independence.

Increase in production does not benefit the farmers unless price stability can be managed. Almost every day we read in the newspapers that farmers suffer losses due to the sharp price fluctuation of agricultural commodities. Recently, the price of vanilla in South Sulawesi dropped sharply from Rp 300,000 (US$35) to Rp 20,000 per kilogram. The price of pepper in Bangka Island dropped to less than Rp 20,000 per kg.

However, it seems that this basic problem has not been seriously handled. Furthermore, it is not clear whose responsibility it is. Government agencies dealing with the agricultural sector seem to react as if this is not one of their responsibilities. They do monitor the prices but do not make enough effort to manage the prices.

A new paradigm of agricultural development should place farmers' prosperity as a major indicator of the success of every program implemented. Any progress should be indicated by an increase in farmers income. Of course, one might argue that there are many factors that influence farmers income. However, a simple formula is still valid, i.e., income equals the price of their farm produce after production costs are deducted. Since production costs will not change much, therefore, the farmers income will very much depend on stability of price at a profitable level.

Food processing companies should be designed as a reliable "market" for local farmers who produce raw materials for the industries. An integrated program should be developed, not only to produce fresh agricultural commodities, but also to handle the products after harvesting, including to encourage the private sector to invest in agricultural companies for processing perishable crops into less perishable processed food products.

An agriculture-based processing industry may play a significant role in buffering price fluctuation since it will absorb excess production which cannot be taken up by markets as fresh produce.

The Food and Agriculture Organization (FAO) of the United Nations has estimated that the price that growers receive typically represents a small fraction of the retail price for their commodities after being processed into finished products, ranging from as low as 4 percent for raw cotton to 28 percent for cacao.

If we are committed to improving farmer's quality of life, the ratio of revenue sharing between farmers and processors should not be too widely different.

Start from the market and finish at the market. Every agricultural program should be developed based on market demand and cover all stages until farm produce reaches the market. A partial and segmented program will not contribute significantly in our efforts to improve farmers prosperity.

Government agencies dealing with the trade and manufacturing industry should work closely with those responsible for production of agricultural commodities by providing updated, accurate and comprehensive information on market demand. Trade agencies should also provide information on market opportunities prior to and at the time an agricultural commodity is harvested.

Some constraints in developing the food processing industry in developing countries, including Indonesia, have been recognized. Besides technological and capital constraints, there is also a significant constraint in exporting processed food to developed countries due to the tariff escalation policy in those countries. Processed foods face much stiffer import duty than unprocessed raw commodities.

Let's not ignore the Indonesian market of more than 238 million people. Efforts to overcome food trade deficits should be approached from both ends: to increase the value of food exports and to limit dependency on imported food items.

Shifting from raw commodities to processed food will certainly increase the export value of food products. To achieve this, appropriate technologies have to be developed based on local raw materials and very limited technological dependency from foreign resources.

Diets and preferences of consumers in Indonesia have been influenced by changes in the average income, urban lifestyle, and invasion of fast-food franchises. These irreversible changes in consumer behavior should be treated as a market opportunity for food processing industries in Indonesia.

The perception that imported food is better than locally- processed food should be eradicated by proving that domestic food processing industries also implement food safety standards and quality assurance for each and every food produced. Of course, changing perceptions will take time, but it can be accelerated with consistent and persistent efforts.

If the food processing industry has been well established, the domestic market fully captured, some success in penetrating global markets has been recorded, and farmers (growers) already play a significant role in producing raw materials for industries and receive a reasonable share of profit from these integrated activities, then, and only then, can we claim that we have achieved success in our agricultural development program.

However, for a start, let's place the farmer on the center stage of any agricultural development plan that we implement.

The writer is an expert staff on food issues at the Office of the State Minister for Science and Technology, and a professor in agricultural science at Sriwijaya University. He can be reached at blakitan@yahoo.com.sg.