Opinion in the Jakarta Post October 16 2013: Let's Be Pragmatic in Developing Agriculture Sector

Opinion

Let’s be pragmatic in 
developing agriculture 
sector

Hatanto Reksodipoetro, Jakarta | Opinion | Wed, October 16 2013, 11:21 AM

When I read Hendri Saparini’s views in the article “Responding to IMF advice” in The Jakarta Post on Sept. 24 2013, it was like listening to a tape recorder.

What I mean, really, is that we know what needs to be done, but it just has not been done. I cannot help asking myself: “When can the government start working and stop talking?” 



I cannot agree more with the author that the failure to develop the agriculture sector in the last decade is among the key causes of the current state of our economy.



In February 2011, I wrote an opinion piece for the Post regarding the poor condition of the sugar sector. Indonesia consumes 4.5 million tons of sugar annually, but ever since the early 2000s local production has barely been able to meet half of the demand. 



Hendri Saparini said: “In the absence of proper preparation, food liberalization would only end up with the irony of a rich and fertile country that has a high dependency on imported foods.” 



But in the sugar sector, even under the current highly protected trade regime, we are already seeing this irony play out. We have been resorting to importing raw sugar from overseas to cover the shortage. 



There is political intention from the government, but it never translates to political will. There is no shortage of studies and recommendations on how best to increase production and no paucity of experts in the country versed in both on-farm and off-farm issues. 



But apparently, politics responded differently. 



President Susilo Bambang Yudhoyono (SBY) had promised that the agriculture sector would top his government’s policy agenda at the beginning of his first presidential term in late 2004. In fact, SBY officially launched a “Revitalization Plan” in June 2005 for the country’s agricultural development. 



By 2009, the results of the policy were meager to say the least, and the plan was extended for another five years. Judging from the current state of affairs in the agriculture sector, would it be wise to renew the plan? 



When it has come to implementation, the government has seemed to be deft at making rhetorical statements on the need to raise food production and increase farmers’ income, which have only led to an increased budget and more corrupt officials. 



An opinion piece in this paper in Nov. 2005 (“Agricultural development remains in the periphery”) gave a correct warning on what needed to be addressed: “How can we talk about food security if there is no synchronization among government institutions in the planning and management of food stocks? Each institution has its own data, which can easily be used by certain parties for their own private interest.”



Indeed, how could any plan be designed, let alone developed, based on different sets of data? Which data should we use? And if we cannot even agree on one set of correct data, we may be fooling ourselves to believe that any plan would fly. Yes, unfortunately, lack of coordination among different policymakers has always been the biggest weakness of our country. 



Even assuming the authorities finally agree on a set of data, increased food production might not necessarily put more food on peoples’ plates because infrastructure (electricity, roads and ports) is underdeveloped or even non-existent in some provinces. Poor infrastructure has increased logistics costs, resulting in higher costs of production, hence higher food prices. 

 

Hendri Saparini seems to believe that there is a need for the government’s hand to “manage” commodity prices. But managing prices is not as simple as giving authority to a single institution, such as Bulog (State Logistics Agency) to get the correct prices in the market. 



By law, Bulog still has the authority to manage the price of rice, for instance, and yet we still experience crisis almost annually. 



Moreover, such an institution could cause multiple costs to the economy, including “moral hazard”. When Bulog’s monopoly was abolished in the late 1990s, I believe they deserved it because they had only made a handful of Indonesians “filthy rich” (some had been able to purchase houses in Beverly Hills). 



Would extending Bulog’s monopoly beyond rice today be any different? Are we not reading reports of abuses of power almost daily from different parts of Indonesia? 



So, let us get down to basics. First and foremost, let us get our acts together, beginning by agreeing on one set of data as well as one set of problems (on-farm as well as off-farm). 



From the many different studies that have cost the country billions of rupiah, let us agree on “a plan” on how to develop the agriculture sector, and put it in practice. Trade policies and instruments would then have to be designed to support the plan. 



Lastly, in a democracy stakeholders have the right to make their views known, including from non-government organizations. But the buck must stop somewhere, and someone must have the courage to take the risk. 



Collective risk-taking is ideal, but in the real world the highest authority must ultimately take the final responsibility. It is hoped that the next elected government will be more serious.

(The writer is the founder of Trade Policy Forum (TRAP Forum) and former secretary general of the Trade Ministry)