RI seeking food security

Aileen Kwa, Focus on the Global South, Geneva

Indonesia refused to sign on to a Cairns Group position paper calling for drastic tariff cuts submitted on Sept. 6, during the agriculture negotiations at the World Trade Organization in Geneva.

The Cairns Group led by Australia, is a group of 18 exporting developed and developing countries pushing for an ambitious trade liberalization agenda. Indonesia is currently a member of the grouping. The Cairns Group paper calls for deep cuts in bound tariffs for both developed and developing countries in the current round of negotiations, slated to be completed by end 2004. They want developing countries with tariffs in agriculture between zero to 50 percent to be cut to a maximum of 25 percent and tariffs between 50 percent and 250 percent to be reduced by 50 percent. Such huge tariff reductions, will further decimate the livelihoods of small farmers in Indonesia.

In negotiations, Indonesia said that they could consider the Cairns Group proposal, but only if four staple crops are excluded from any further bound tariff reduction commitments -- rice, sugar, soya and corn. This was rejected by the Group.

The average bound tariff rate in agricultural products for Indonesia is already low, at 47 percent, with the exception of several staple crops.

When Indonesia indicated that it would not go along with the Cairns Group proposal, various forms of pressures were put on officials in Jakarta and in Geneva, by the leading developed countries of the Cairns Group. These countries did not want Indonesia to distance itself from the grouping. In Jakarta, their ambassadors have been visiting their Indonesian counterparts and also various ministers. Lower level officials have likewise been lobbying Indonesian bureaucrats.

Why does Australia and New Zealand want Indonesia to stay in the group?

Australia and New Zealand do not want Indonesia to distance itself from the Cairns Group primarily because Indonesia is an important market for the two big agricultural exporters since the country in their neighborhood.

There are bilateral agreements between Australia and Indonesia, such as various forms of investments, aid and technical assistance provided by Australia. Such forms of bilateral assistance has the effect of influencing recipient countries into accepting the demands of the country providing such assistance.

There is little compassion in the world of WTO negotiations. It is riddled with political games, and pressures by the big countries representing their corporations to gain markets in other countries. For countries like Indonesia, pressures by the bigger countries are not easy to stand up to given their vulnerabilities (e.g. IMF loans etc), unless they are counterbalanced by pressures from the ground at home.

There are already many signs of disquiet in the country. This is not surprising given the silent crisis of hunger. Seventy percent of Indonesian children under five are categorized as malnourished in a country where at least 32 million out of a population of 210 million were categorized by the UN as living below the poverty line last year.

Indonesia's recent years of agricultural liberalization has led to the explosion of food imports in staple crops. Indonesia is now one of the largest rice importers in the world, importing at least 10 percent of its rice. Between 1995 to 2001, sugar imports have increased by 45 percent and soya imports by 40 percent.

Overnight, the livelihoods of farmers provided by the agricultural sector have been destroyed. This is serious, in a country where over 100 million people live in the rural areas, and the majority on subsistence farming. Indonesian officials are fearful that policies which further aggravate the crisis will plunge the country into political instability.

In the first place, why should Indonesia liberalize, when the biggest exporting countries are slapping increasing amounts of protectionist subsidies on their farmers, and selling their products at below the cost of production in Indonesia?

The U.S. and the European Union are the prime perpetrators of protectionism. The U.S. exports corn at prices 20 percent lower than the cost of production, and wheat at 46 percent below cost. Supports for soya in 1998-2000 total 20 percent the value of production. In May this year, the Bush Administration adopted a Farm Bill promising to raise spending by an additional US$73.5 billion over the next decade, in addition to the existing supports.

Importantly, three of the four crops that Indonesia has asked for exemptions in tariff reductions are targeted to be given additional subsidies through the U.S. Farm Bill -- rice, soya and corn. As if this is not enough of a slap in the face to its trading partners like Indonesia, the U.S. Senate on Sept. 10 voted for an additional $6 billion in aid for corn and wheat farmers hurt by drought.

The EU also subsidizes its farmers heavily, with subsidies hitting 45 billion Euros a year, nearly half of its 98 billion Euro budget. The EU is a net exporter of sugar, yet subsidizes sugar to the tune of over 50 percent of the value of production. With enlargement creeping up upon them by 2004, total spending on agriculture will no doubt significantly increase.

The Indonesian government position -- calling for the protection of rice, corn, sugar and soya -- does not meet up with the demands of farmers' groups within Indonesia. Food security cannot be narrowed down to four crops if small subsistence farmers' livelihoods based on biodiversity are to be protected. Small farmers in Indonesia and in the world community are calling for the total exclusion of WTO rules from agriculture. Indonesian NGOs are also calling for Jakarta to get out of the Cairns Group.

Whether or not life improves for the malnourished Indonesian children, depends eventually on whether Jakarta heeds the food sovereignty position taken by those it purports to represent. Nevertheless, Jakarta's brave attempt to stand up to the big bullies in the negotiations must be supported as one step in the right direction.