Price hikes make farmers unhappy

Price hikes make farmers unhappy

By Subagiyo

JAKARTA (Antara): The governments's decision to increase the
price of unhusked rice at the beginning of this month allowed
farmers breathing space from their economic woes.

But the joy disappeared in less than a fortnight when the
price of fertilizers was increased.

The basic price of unhusked rice was increased from Rp 600 to
Rp 700 a kilogram on April 1. The benefits of this were
effectively negated on April 13, when the price of three commonly
used fertilizers increased by 12.5 percent.

Minister of Agriculture Justika Sjarifudin Baharsjah announced
the increases in prices of urea fertilizer, to Rp 450 from Rp 400
per kilogram, zinc ammonia fertilizer to Rp 506.25 from Rp 450
per kg and superphospate-36 (SP-36) to Rp 675 from Rp 600 per kg.

Before the increase, the fertilizer requirement per hectare
was Rp 220,000. The increase entails an additional cost of Rp
27,500 per hectare.

Rice harvests average 5.5 tons per hectare.

Prof. Tuhpawana P. Senjaya of the School of Agriculture of
Pajajaran University in Bandung said farmers were now haunted by
increasing operating costs.

He added that the increase in fertilizer prices should be
accompanied by better control of the distribution of fertilizers
to the farmers. It is often the case that the highest retail
price fixed by the government is different in practice.

Yanto, a member of the House of Representatives, said:
"Although the increase in the unhusked rice price is 14.29
percent compared to 12.5 percent in fertilizer prices, the
increase in fertilizer prices occurs toward planting time, to a
large extent affecting the increase in the price of unhusked
paddy, (benefits of which) the farmers have not enjoyed."

Iman Churmen, another legislator, said improvement of the
farmers' welfare would supplement their capacity to ensure their
production toward self-reliance of rice.

"The increase of Rp 100 of unhulled paddy is in reality only
Rp 20 a kilogram due to the increase in fertilizer prices, so the
intention to improve the farmers' welfare has come way off the
target," he said.

Moreover, said Imam, experience showed that the price of
fertilizers for farmers was usually above the official price.
This is caused by the extended distribution chain making
transportation of the commodity more expensive.

For farmers whose location is not accessible for four-wheel
vehicles, the cost is even higher, he added.

"Therefore, the government's decision to increase fertilizer
prices at a time when farmers are about to start planting is not
right," he said.

Iman said it would be better for the government to give the
opportunity to farmers to enjoy the yield of their work first
from the increase in the price of unhusked paddy, if their intent
was indeed to improve the farmers' lot.

Agriculture observer Bunasor Sanim of the Bogor Institute of
Agriculture said he understood the reasons for the increase of
fertilizer prices, but added that incentives should be given to
the farmers in order to increase their production.

"The farmers need to be given compensation, such as
facilitating marketing of their products or the extension of soft
loans," he said.

Bunasor said the cost component of fertilizers in rice farming
was not significant. Research has shown it was in the range of 10
percent to 15 percent; the increase in fertilizer prices of 12.5
percent was not too big.

"The problem is now that although the increase in fertilizer
prices is not too steep, the present economic situation makes the
increase a noticeable burden for farmers," he says.

The government is now experiencing difficulties, he added, so
the increase was in that sense understandable. But the farmers
need to be given compensation so the increase in fertilizer
prices does not burden them, he said.

But he said the bailout agreement between Indonesia and the
International Monetary Fund there included an offer of cheap
loans against an interest rate of 12 percent to 18 percent, or
loans according to an existing pattern, like the small enterprise
credits (KUK).

He said the compensation was important because it would give a
stimulus to farmers. "Besides, self-sufficiency in food is
currently a strategic matter."

Generally, farmers hope the fertilizer price hike will be
postponed because harvests are not sufficient to meet the
farmers' daily needs.

Achmad, a farmer, said that the government's announcement on
the increase of fertilizer prices would push other fertilizer
prices upward, even though these had increased previously. Prices
of pesticides have also increased three-fold, he said.

"Furthermore, we have to cope with wereng (rice pest) attacks.
There is hardly any hope for us to make a profit from the sale of
unhusked paddy," Achmad said.

He said that the selling price of unhusked rice at Rp 550 a
kilogram was unlikely to cover the production cost of Rp 400,000
for one hectare of rice field.

The unhusked paddy yields about Rp 100,000, while the cost is
a minimum of Rp 150,000.

Other farmers complain the increase in fertilizer prices
caused an increase in operating costs. Tractor hire has
increased from Rp 60,000 to Rp 75,000 per bahu (about 7,000
square meters) and daily labor wages now cost Rp 6,000 instead of
Rp 5,000.