Indonesia: 140 million farmers and not enough rice



By Kanis Dursin

1^st August, 2001.

BEKASI, Indonesia - Indonesia is the biggest rice importer in Asia. This is sadly ironic, because almost 70 percent of the country's 213 million people are farmers.

There is a long list of reasons, or excuses, for the sorry state of affairs, with the biggest one being that the domestic prices, set by the government, are simply too low to encourage rice farming on any kind of a large scale.

"Growing rice is no longer profitable for Indonesian farmers because the prices of locally produced rice are too low," says Riza Tjahjadi, coordinator of Pesticide Action Network (PAN) Indonesia. "The farmers, especially those on [the main island of] Java, have no incentives to produce more rice," says Hideo Imai, Food and Agriculture Organization (FAO) representative in Jakarta.

There are, of course, many other factors involved, and a multitude of looming problems the new government of President Megawati Sukarnoputri will have to tackle.

The government sets the floor prices of rice, taking into account the prices of fertilizer, seeds, labor and profits for farmers. To ensure that the commodity is not sold below the floor prices, the government sets aside funds for the National Bureau of Logistics (BULOG) to buy rice from farmers at floor prices. But very often, BULOG buys rice long before the harvest season because it fears that farmers will not be able to harvest enough rice. Often, by the time harvest season comes, the agency no longer has money to buy rice from farmers - or its stocks are full.

For their part, farmers, who habitually borrow working capital from usurers are often in a hurry to sell their produce to middlemen, albeit at much cheaper prices.

Last year, for example, the government set the floor prices of unhusked rice at 1,020 rupiah (9 US cents) per kilogram, but many farmers in rice-producing regions such as Central Java and East Java provinces sold their rice between 700 and 800 rupiah per kilogram as BULOG could no longer absorb their rice.

The government has earmarked 6.6 trillion rupiah to buy up to 2.5 million tons of unhusked rice from farmers this year in order to prop up rice prices to 1,500 rupiah per kilogram, but the market prices of unhusked rice now hover between 800 rupiah and 900 rupiah per kilogram.

The prices of domestic rice have also been dampened by the liberalization of the rice trade, introduced in 1998 as part of economic reforms carried out in order to receive massive financial bailouts from the International Monetary Fund (IMF). Over the years, the poor stimulus for rice production has eaten into Indonesia's earlier achievement of self-sufficiency in rice.

Like most Asian countries, rice is Indonesia's staple food. Indonesia has around 7-8 million hectares of rice fields, but most of them are small scale, cultivated in traditional ways and use low-yield rice varieties. Only 30 percent of farmers are known to use high-yield rice varieties. Likewise, because the prices of rice are very low, most farmers produce only enough to get by on.

"All is for family consumption," says Syamsuddin, a 62-year-old migrant farmer who tills a hectare of rice field he borrowed from a respected Muslim religious leader. Much as he wants to, Syamsuddin, a father of 18 children from four wives, cannot afford to plant rice twice a year because he does not have enough money to buy fertilizer, seeds and hire workers.

The government provides fertilizer at subsidized prices and low-interest loans for farmers, but complicated bureaucracy and corruption have effectively prevented farmers from having access to and benefitting from those schemes. "I have been trying to acquire low-interest credits from the government, but I simply could not get one as there are too many requirements that most farmers like me could not meet," says Syamsuddin.

So far, the government has succeeded in expanding rice fields, especially outside Java. But because of lack of irrigation and poor soil conditions in those places, national rice production remains flat. The government aims to have around 10 million hectares of rice fields in 2003 in order to achieve self-sufficiency in rice.

Some of the irrigated rice fields have also been converted into other non-agricultural uses, such as golf courses. In April, Megawati expressed concern over the decreasing number of rice fields in many farming areas in the country, especially in Karawang and Bekasi, both in West Java, due to conversion into golf courses that number some 250 around the country. "Even the colonists never touched those areas that are the main source of rice for the country. We are even worse than they were, because we turn productive land to golf courses," Megawati said.

The conversion of fertile and irrigated rice fields on Java further exacerbates problems in rice production and puts in question the food security programs of Indonesia, which already suffers perennial rice shortages and continues to import rice from neighboring countries such as Vietnam, Myanmar, Thailand, China, Pakistan, India and Australia.

Indonesia is expected to produce 50.18 million tons of rice in 2001, down from 51.8 million tons in 2000. This year's total domestic demand for rice is estimated to reach 52 million tons.

Indonesia imported about 1.2 million tons of rice worth US$279 million from January to October 2000, down the previous year. Indeed, at the height of the economic crisis in 1998, it imported 5.8 million tons of rice. More than half of rice imported in 1998 was in the form of grants from friendly countries on an emergency basis.

The country achieved self-sufficiency in rice during the Suharto regime in 1984, but resumed importing rice in 1986 due to low domestic rice output.

The Association of Indonesian Farmers (HKTI) has repeatedly urged the government to ban rice imports or at least impose high tariffs on imported rice in order to prop up domestic rice prices and encourage farmers to grow more. But even Cabinet ministers cannot reach agreement on the issue. The agriculture ministry's proposal to ban, or at least impose high tariffs on imported rice, has met strong resistance from the ministry of trade and industry, which argues that such a move runs against the spirit of trade liberalization. Currently, the government imposes a 30 percent tariff on imported rice.

The country's inability to meet domestic rice demand raises concerns about its ability to reduce hunger in line with the World Food Summit's target of a reduction by half in 2015 and its readiness to implement the ASEAN (Association of Southeast Asian Nations) Free Trade Agreement (AFTA) in 2002, when member countries have to reduce tariffs for agricultural products to a maximum of 5 percent. Being a member of the so-called Cairns Group of agricultural nations, Indonesia is also expected to liberalize the rice trade by 2003 and reducing import tariffs for rice set at zero percent.

"The truth is Indonesia has no clear policy on food security, making it difficult for international donors to help the country achieve rice self-sufficiency," Imai says.

At the very least, the changes in officials responsible for food issues have not helped in efforts to address food insecurity. Under former president Abdurrahman Wahid the agriculture minister has been changed several times since October 1999, with each minister introducing different policies.

"First of all, the government has to decide on whether food security and rice self-sufficiency are on its list of priorities or not, and then we will analyze how to achieve the ultimate goal," Imai says. "Indonesian farmers are very clever and have potential. What they need is a little working capital," says Imai, adding that FAO is now more concerned with small food security projects.

Under the sun's scorching heat one Sunday afternoon, Muazim shoos away birds pecking at his rice, ready to be harvested in the coming weeks. "I have to keep a watchful eye on my paddy field because birds always come in flocks to eat the rice," says the 75-year-old farmer as he walks about his 20-by-30 meter field in Bekasi, a bustling town in the outskirts of Jakarta, in West Java.

The rice field does not belong to Muazim, but to a migrant from North Sumatra province who bought the farm to build a house. The rice field's owner is living in Jakarta and allowed Muazim to look after his piece of land, which is situated within a housing complex. Muazim plants rice twice a year, harvesting around 250 kilograms of unhusked rice every season, barely enough to support his family. To augment the family's income, Muazim's wife, 65-year-old Mimi, works as a traditional masseuse and part-time cook.

Muazim had his own rice field before, but sold it to a middle-upper class housing developer and distributed the money to his nine children. Now living with his wife and five unmarried children, Muazim depends very much on his "borrowed" rice field, which he has been tilling since 1985. "I don't know what will happen if the owner takes the land back," he says.

Muazim epitomizes most Indonesian farmers, especially those on Java island, who sell their irrigated rice fields to migrants, investors or housing complex developers, as rice prices remain low. Java produces up to 60 percent of the country's total rice output. Official data from the Central Bureau of Statistics show that between 40,000 and 50,000 hectares of rice fields on Java island alone are converted into non-agricultural purposes every year. Paddy fields in Java are mostly irrigated and fertile, producing up to seven tons per hectare, compared to two to three tons outside Java.

(Inter Press Service)

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