How Asian financial crisis has affected rural families

How Asian financial crisis has affected rural families

By John Madeley

ROME: In a village on the Indonesia island of Lombok, 45-year
old Inak Muli starts work at 6 a.m., making earthen pots. One of
a small group of women, her day ends at 1 p.m. the following day.
The money that Inak used to make was hardly enough to provide her
with decent diet. But then, in late 1997, the Asian financial
crisis erupted.

"Since the krismon (the monetary crisis), our situation has
become even worse," says Inak, "with the high price of rice and
cooking oil and reduced demand for our pots, we eat only one meal
a day."

Inak's story is told in a report, The Asian Financial Crisis
and the Rural Poor, published by the Rome-based International
Fund for Agricultural Development (IFAD), a UN agency that funds
projects to help the rural poor.

Inak Muli is not alone. The Asian crisis has been a
catastrophe for millions of poor in rural areas -- many of whom
had just begun to lift themselves out of poverty.

An IFAD team last year visited some of the projects the agency
had funded in Indonesia and Thailand "to learn from the rural
poor themselves about the effects of the financial crisis on
them".

It found the achievements of these countries in overcoming
poverty were in danger of being wiped out. They have been
impressive. In Indonesia, the percentage of people living below
the poverty line declined from 60 percent in 1970 to 11 per cent
in 1996; in Thailand from 57 percent to 13 percent, says the IFAD
report.

The crisis is bringing an alarming return to the poverty so
recently overcome, it says. In Indonesia, 10 million people have
lost their jobs, and poverty increased six-fold between 1996 and
the end of 1998.

"So far the most publicized victims of the crisis have been
the financial institutions," said Klemens van de Sand, assistant
president of IFAD, "while the worst hit are those households who
have always been at the margins of society."

There is now less money for health-care budgets, less
possibility to treat illnesses, less money for vaccination.
Twenty percent of schoolchildren in Indonesia have dropped out of
school, and "prices of basic commodities have soared since the
crisis intensified," says the report.

In both Indonesia and Thailand, the IFAD team found small-
scale farmers, who don't produce all the food their families
need, to be among the hardest hit. Prices of agricultural inputs
such as seeds have soared, but so also have prices of the basic
foodstuffs people buy.

Small-scale artisans, weavers, pot-makers have all suffered
because of the drastic decline in demand for their products. "The
income of traditional weavers in Indonesia declined by as much as
76 percent," says the report, "and many of them now prefer to
work as landless laborers."

Rural families who relied on remittances from relatives
working in towns have been badly hit. These remittances accounted
for 10 to 15 percent of rural income in Thailand. For many
families, such income is a thing of the past.

People who used to have jobs in town are now back in the rural
areas. With more mouths to feed, families are now under
additional strain. "Women have had to bear the brunt of events,"
says the report.

There have been some gainers, it points out -- rice farmers,
for example, who produce a surplus for the market, have profited
from increased prices.

"The Asian financial crisis clearly shows that unless you have
solid development in the rural areas, you are going to have
problems," said Klemens van de Sand. "Unless you solve long-
standing problems of rural poverty, you won't have stability."

Investment in the rural areas is now vital, he believes, "to
give people a more secure base for their livelihoods".

-- Observer News Service