Rice: To protect or not to protect

Sari P. Setiogi, The Jakarta Post, Bogor, West Java

The government's move to protect rice farmers against the threat imposed by the importation of cheap rice is a politically tempting solution to increase farmers income, but may end up hurting poor farmers and the overall economy, according to experts at a recent seminar.

"It (the protection policy) would end up hurting poor consumers and increasing poverty," Scott Pearson, a researcher from the U.S. Stamford University, told The Jakarta Post on the sidelines of a seminar on agricultural policy held by Development Alternatives Inc. last week.

Many of the country's rice farmers are actually also net rice consumers, according to various studies.

Pearson added that the protection policy, which raises the price of rice, would also create a high-cost economy.

"(It would result in) higher marketing costs and higher labor costs in manufacturing all the things that you really need... garments, shoes, computers and so forth."

"That's why using protection as a means of raising farmers' incomes is not a good policy in my judgment," said Pearson.

"What should be done is to redouble efforts to try to find higher income-earning activities for rice farmers. Some of them would shift to other crops," Pearson said.

The Ministry of Trade and Industry has recently imposed a temporary ban on the importation of rice to protect farmers during the current harvest season. Prior to the ban, the government imposed a 30 percent import tariff on rice.

But Bustanul Arifin from the Institute for Development of Economic Finance (INDEF) said the policy was prone to corruption by government officials.

He suggested that the government provide direct incentives for farmers to boost productivity, although he provided no further explanation.

The importation of rice has been a controversial issue in Indonesia. Some say that the protection policy should be maintained, even intensified, as the country's rice farmers can no longer compete with cheaper imported rice.

Proponents of the policy have suggested the import tariff be increased, as well as the provision of incentives for farmers to boost domestic rice production and end the country's dependency on imported rice. They say that self sufficiency in rice production is very important for the country, as rice is the main staple here and dependency on imported rice could pose a threat to national security.

"Compared to the world rice trade volume we import way too much rice. With about two million tons (a year), we import 15 percent of the world rice trade volume," deputy minister on natural resources and the environment of the National Development Planning Board (Bappenas), Dedy M. Masykur Riyadi, said.

"Rice, as our staple food, should be produced domestically. The problem is how to make it attractive to farmers to plant more rice," he said, adding that the country ideally should produce 90 percent of domestic consumption.

Indonesia achieved self sufficiency in rice production during the mid 1980s. The Food and Agricultural Organization (FAO) awarded former-president Soeharto in 1985 for his success in turning Indonesia from the world's biggest food importer to a country self sufficient in rice.

Minister of Agriculture Bungaran Saragih said in his keynote speech at the seminar that Indonesia would stand with its political will to minimize its dependency on imports.

"The government has decided to promote agribusiness development with protection and promotion as the main strategy in agriculture and rural development," he said.

"Protection from unfair international trade -- using tariff and non-tariff regulations -- is intended to maintain domestic food prices, to enable our domestic producers to run their businesses at a profit," said the minister.