Rice: To protect or not to protect

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.