Government should give incentives to farmers

Government should give incentives to farmers

The food situation appears to be deteriorating even further,
with increasing reports of farmers invading plantations and golf
courses all over Java to grow their own food. At the same time,
the number of poor has increased manifold. In an interview with
The Jakarta Post, H.S. Dillon, a Cornell-trained agricultural
economist and executive director of the Center for Agricultural
Policy Analysis, provides an insight into the forces shaping
these events.

Question: Why have farmers staked out land belonging to
plantations and golf courses, and why are they force-harvesting
coffee plantations?

Dillon: This is a national tragedy, that so many law-abiding
citizens are being forced into doing such things. Many factors
are at play, but one thing is sure: they are doing this out of
sheer desperation.

In many instances, they were forcibly evicted off these lands.
In other cases, such as throngs walking away with shrimp
harvests, they feel the rich are not sharing their wealth with
those in dire need.

The recent riots, where the government appeared to allow gangs
of marauders, rapists and arsonists a free hand, have not done
much to reinforce respect for law and order among the general
public.

Reverse migration has also seen a great number of landless
return to the countryside. They seem to have exhausted their
meager savings and are now forced to eke out a living one way or
another. It would be irresponsible for us to condemn them,
without providing viable alternatives.

Q: Does this mean that you condone these illegal actions?

D: I do not condone them, I deeply regret them. However, this
crisis is exposing all the faults of the Soeharto regime, and it
would serve us well to properly identify the underlying causes
before offering any prescriptions.

People see plantation managers living ostentatiously, while
farmers -- and plantation laborers -- work hard just to survive.
No wonder plantation laborers have also reportedly joined farmers
staking out plantations.

They have seen government officials -- the district heads,
heads of local agrarian offices, and the like -- backed by
security personnel, dispossess their neighbors. Such officials
have invariably lined up with corporate interests.

We should not be surprised that such pent-up frustrations, a
sense of sheer helplessness in the face of gross injustice, gave
vent to these actions. Especially now that the farmers have
learned that the state minister of the empowerment of state
enterprises plans to sell off the state plantations.

Q: What would you suggest the government do?

D: It should recognize that bad policies have led to this. The
government, and also our development experts, should carefully
study the agriculture development/poverty alleviation/economic
growth nexus.

In the short term, every incentive should be provided to
farmers. For a start, the government should abandon all planned
sales of plantations. Instead, it should parcel out 60 percent of
all plantation land and distribute it to the plantation laborers.

The laborers would not be getting all that land for free
though -- they could definitely pay the rates at which former
minister of agriculture Sjarifuddin Baharsjah handed out
plantation land for real-estate speculation to his cronies during
his five-year term.

We have seen former plantation laborers in Labuhan Batu, North
Sumatra, pay off their World Bank loans ahead of schedule. Such a
move would quickly increase food supply on Java, and provide a
livelihood for hundreds of thousands.

Q: What do you think of the massive food subsidies?

D: Provision of rice to those facing food insecurities is a must.
They have been reduced to such straits by corrupt government
officials and rapacious businessmen who continue to enjoy their
spoils unperturbed.

Now that the official figure for those living beneath the
poverty line has reached 80 million, subsidies are required to
stave off the threat of extreme deprivation and food riots.

However, price subsidies should be replaced by effective
targeting as soon as possible. Furthermore, not all essential
commodities need to be subsidized. What is most fundamental is
creating an environment conducive to reinvestment.

It is high time that emphasis be placed on kick-starting the
recovery process. During economic crises, real prices of
nontradables rise the slowest. The major nontradables are land
and labor, thus, it follows that the most reasonable area of
expansion would be that which employed abundant land and labor.
This again points to agriculture, even with very high real
interest rates.

Q: Could you elaborate further?

D: Certainly. This is a theme I have been harping on about for a
long time. The rupiah's depreciation presents an opportunity to
increase our share in international markets, but a number of
nonmarket factors constrain our ability to capitalize on this
opportunity. These factors which continue to impinge upon
Indonesian agroindustrial growth range from the very basic
availability of planting material all the way to export
regulations.

They are poor infrastructure, inefficient land markets,
underdeveloped supporting institutions, protection, scarcity of
middle-level managers, and a general lack of policy focus and
poor coordination among many different agencies and arms of
government.

It would serve the current administration well to focus on
rectifying these shortcomings. I am confident that with greater
access to market information, commercial credit, and appropriate
technology, more than a million small agroindustries will take
off.

You must surely have seen reports of the windfall being
enjoyed by our cocoa farmers, and those cultivating coffee and
spices, mostly off-Java. Government policy under the previous
regime discriminated against these farmers.

Their superior performance can be summed up as a market-led
response by an unfettered private sector. This episode confirms
my suspicion that if government was to get out of their hair, the
farmers would be able to launch a very strong response by
increasing their productivity.

Q: What do you think of the moves undertaken by the current
Minister of Agriculture Soleh Solahuddin?

D: He has done well compared to his predecessors, but he still
has a long way to go. He has told his bureaucrats to come clean,
and provide him with correct data. But he still has hosts of
sycophants around, the self-same officials who encouraged
Sjarifuddin Baharsjah to enrich himself and his cronies from
sales of plantations and crude palm oil.

They are those responsible, at least in part, for Baharsjah's
claims to have been generating an annual rice surplus, while we
have actually been relying on imports to feed ourselves.

These officials are still up to their old ways: they are
pushing him to fight to retain control over the Directorate
General of Plantations. Not because they have any plans to
increase smallholder productivity, but more to be able to serve
on the boards of government plantations and continue to garner
rents.

Q: What advice would you render the Minister now?

D: To continue pushing his plans to increase production and
productivity of rice, maize, and soybeans. He should inculcate
meritocracy into the system, and dispense with the corrupt and
inefficient officials around.

He should also keep an arm's length away from agribusiness
interests touting specific fertilizers and pesticides. In brief,
he should not fall into the same traps which ensnared those who
served as agriculture minister before him.