Fertilizer prices and farmers' woes

Prijono Tjiptoherijanto, Jakarta

Mubyarto's article (Kompas, Jan. 12) again reminds us of a basic farming problem yet to be resolved. The agronomics professor of Gadjah Mada University invites Indonesian economists to examine and review the idea of granting a form of subsidy to farmers for fertilizers.

Beginning his analysis by criticizing economists of the conventional free-market school, Mubyarto again presents his very fundamental view, which is frequently overlooked as various issues are mostly approached in a superficial way.

Fertilizer is indeed a life-and-death issue to families and those who we could call "true farmers" who really work on the land -- not the white-collar or "windfall" farmers who often act as leaders of agricultural organizations or attend overseas conferences to discuss farming matters and farmers' living conditions. To these true farmers, fertilizer prices have become a headache they are unable to overcome -- rather they have to rely on the government's policies and its attitude toward farmers.

The government's reaction shows whether it is really interested in protecting the livelihoods and welfare of farmers or is content just to talk about the problem.

For a long time, especially after the 1997 economic and financial crisis, many farm workers and small farmers have served as laborers or cultivated their own small plots of farmland while raising cattle as a side job. The main problem facing cow breeders is the availability of grass as cattle feed. If properly raised, in three or four months their cows will turn profits from 50 percent to 100 percent of their purchase prices. The earnings of about one to one and a-half million rupiah per head of cattle is significant to these poor farmers. However, it is increasingly difficult for these farmers to find grass to feed their cattle, or if there is any grass, the quality is not good.

To these small farmers fertilizer prices continue to be a headache.

Meanwhile, rice prices have dropped as rice imports enter the market and sales are not enough to even cover production costs, let alone the need to set aside rice in the husk for seed. Therefore the ever-rising fertilizer prices make rice farmers' lives harder too. The problem is compounded because the use of manure in domestic production is not extensive.

The problem of Indonesian farmers is difficult to solve by means of a conventional economic approach. Though James Roumaset, a U.S. researcher from Hawaii University, once concluded that farmers in Asia are risk-neutral, meaning that they will use new technology products including fertilizers and high-yielding varieties if their welfare is improved, what can they do if fertilizer prices keep soaring?

They have been bound by and are dependent on pesticides and modern technology since the "Green Revolution" in the 1970s and their condition should be balanced by government policymaking that will directly benefit them.

Under critical and less-normal circumstances, measures and ideas that are not restricted by conventional rules and axioms are frequently needed. In the business sense, we should be able to get away from the "thinking box" usually limited by theories and assumptions for normal circumstances only.

However, this attempt to "abandon normalcy" does not mean we rule out standard principles of economics.

Basically economic policy is like a surgical knife in the hands of a physician. Its use depends on the ability and skill of the surgeon but it also depends on the patient's condition. Any mistake in diagnosis and in treatment is highly likely to produce a detrimental effect. And doing nothing can also be fatal.

The writer, an economist, is a former secretary to the Vice President.