Seeking the renaissance of agricultural values

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.