When agribusiness benefit farmers?

When agribusiness benefit farmers?

Agribusiness has yet to benefit the Indonesian farmers even
though it has been cited as one of the main agendas of
agricultural development. The issue was the central theme of this
year's Agricultural Day over the weekend. H.S. Dillon, an
agricultural policy analyst and international commodity
negotiator based in Jakarta, examines the issue.

JAKARTA (JP): In the past five years Indonesia has been
mesmerized by the magic of agribusiness. Several academics have
touted it a "paradigm shift", with agricultural bureaucrats
falling over each other to jump on the bandwagon. They have
joined academics in chanting the agribusiness mantra, and
attributing it to the power to cure all rural ills. In short,
they regard agribusiness as a panacea. But how far off the mark
are these people?

What is being termed a paradigm shift is actually more a
reflection of myopia on the part of bureaucrats and academics.
The farmer or owner of a farming business has always had to adopt
a systems approach -- he or she has to secure inputs, manage the
production process, and market the produce. Only academics and
bureaucrats have been wearing blinders, due either to narrow
discipline, overspecialization or to the compartmentalization and
protection of turf.

What is the logic of traditional Indonesian agriculture? With
a proliferation of small farms -- despite the existence of
markets, the distribution chain is controlled by middlemen and
small-scale processors. With low productivity in most of the
commodities, few forward or backward linkages to other rural or
urban enterprises exist.

Juxtapose this to the first form of agribusiness introduced to
Indonesia -- the plantation. This was, and continues to be, a
single enterprise performing a sequence of activities, from
primary production to marketing. Plantations, either private or
government-owned, have been virtual enclaves, with relatively few
growth linkages to the small farm sector. The employment they
have generated is more akin to indentured labor, filled mostly
from outside the local communities. They have not transferred any
notable skills and technology to small farmers in their
surroundings.

What drives modern day agribusiness? First and foremost, the
corporations are in business to garner returns and not for
charity -- profit is the survival rule. Second, their overriding
mission is to provide safe, high quality food at competitive
prices. Of course, many of them specialize in providing inputs
such as machinery and support services somewhere along the food
chain.

Third, they will source globally, not only for commodities,
but also for inputs and services such as finance, technology, and
human resources. Finally, Indonesian agribusiness is geared more
toward meeting the demand of middle-class consumers than to
enhancing the productive capacity of small farmers. Indonesian
agribusiness has continued to rely upon imports to meet the
strong surge in demand for quality food during the last four
years. In other words, Indonesian agribusiness is passing the
small farmer by.

But before the Indonesian farmer benefits from a market-driven
agricultural system, the constraints on the small farmer have to
be broken. The farmer's produce has to meet the specifications,
timeliness, and the volumes demanded by agribusiness. This
requires access to credit, inputs, and technical advice --
resources which should be provided by the government, not by
agribusiness. Therefore, the Indonesian farmer will only begin to
benefit from agribusiness when the agricultural bureaucracy will
be able to:

a) meet the farmers' demand for more sophisticated technology,
not just for rice, but for livestock, fisheries and tree
plantations, and for the effective delivery of such technologies,
and,

(b) fulfill the farmers' expectations that agricultural credit
markets will work reasonably, that their land will be properly
tilted, that agro-inputs will be available at kiosks, that rural
roads will be built, irrigation systems maintained and that
government oversight will ensure that their produce manages to
reach the consumer's table efficiently.

When will all of this come about? Not until leadership of the
agricultural bureaucracy -- given to rhetoric, and pontificating
in meetings, seminars, and conferences than working with the
farmers -- starts treating the Indonesian farmer as an equal
partner rather than a subordinate, and champions the cause of the
small farmer against all vested interests.

The fact the agricultural bureaucratic leadership has not
managed to get its act together to formulate and implement bylaws
protecting the Indonesian farmer based on the Bill on Crop
Cultivation Systems passed five years ago, is nothing short of
scandalous. In other words, not before this agricultural
bureaucracy leadership transforms itself from being part of the
problem to becoming part of the solution.