Seeking the renaissance of agricultural values

Agus Pakpahan, Jakarta

Why is agriculture good for civilization but not for farmers? In aggregate terms, the price index of agricultural primary commodities declined from 208 in 1960 to 87 in 2000 -- the index value of 1990 was 100.

The above problems have been acknowledged. Developed countries choose subsidy policy to compensate farmers' income hand-in-hand with other indirect policies benefiting agriculture. For example, government support for farmers in Organization for Economic Cooperation and Development (OECD) countries reached US$24.8 billion between 1999 and 2001 with the European Union (US$ 97.1 billion), Japan ($ 64.4 billion) and the United States ($ 41.8 billion) providing the most support for their farmers.

On the contrary, developing countries reduced or even eliminated agricultural subsidies. In fact, government support for agriculture has declined steadily. The disorganization of markets, agricultural inputs and farmers has caused the dissipation of energy for growth and the development of agriculture.

The results are the weakening of agriculture in the broadest sense, which has made developing countries' agricultural industry unable to produce enough food and other products for their people. In Indonesia, such weakening agriculture was explicitly shown by the negative total factor productivity (TFP) growth of agriculture (TFP = 0.1) between 1993 and 2000.

If we make a list of inputs that we have made available to support agriculture, we will have a long list of items. So, we have an interesting question: Why, if support is satisfactory, is output unsatisfactory? The only answer is that the available resources are not efficiently and effectively used. And, then we come to the most important question: What governs the transformation process in agriculture?

Agriculture products are the products of millions of people. What we rarely see are values and institutions that control or govern human interdependencies. Command and control methods of agricultural transformation, such as applied in the past, have treated farmers simply as land or fertilizer. They are only the object of developmental inputs. What is right or what is good is determined by the government. The most dangerous results of command and control methods are causing farmers to lose creativity and become dependent on the institutions above them, such as the government.

Can we rely on farmers creativity and initiatives in spurring agricultural transformation? Let us examine our agriculture data. Almost all agricultural production is the work of farmers, except oil palm. This proves that farmers are full of initiatives and creativity. Why can they not reach a higher level of productivity and welfare?

Why do developed countries support farmers and rural communities even though they are already industrialized states? The answer to this question is not economic but more to do with sustainability. For example, a survey conducted by J. Kola, T. Yrjvld in the International Food and Agribusiness Management Review Volume 7, Issue 1, 2004 elicited Finland's view on agriculture.

The Finnish saw that the most important function of agriculture was maintaining the viability of rural areas (28 percent), producing high quality food (27 percent) and self- sufficiency in food production (23 percent). A reflection of the above values is willingness to pay (WTP) to maintain the functions of agriculture.

The Finnish are willing to pay 100 euro, using the mode of WTP, which would yield an aggregate annual WTP of 377 million euro -- population size at the end of 2002 was 3.8 million people. This situation of value matches with the EU's agricultural supports.

For a large country like Indonesia, economic transformation cannot take place without a strong and wealthy agricultural industry. The paradox is that developed countries care for agriculture even though they are already industrialized countries but we, an agrarian country exploit our agriculture. These two cultures produce opposing results: Strong agriculture and industry in developed nations and weak agriculture and industry in developing countries.

We cannot ignore values and institutions in our agricultural transformation through a revitalization program launched by the government. In fact, we have to rebuild our culture, a new culture of agriculture that supports farmers and the rest of our agricultural communities. We need an agricultural values renaissance.

The writer is an economist and chairman of The Union of Indonesian Estate Crop Growers' Associations.