Fertilizer prices and farmers' woes

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.