“People in the West usually place their goals at the front, placing first those goals they wish to attain. Then they spend all available energy to achieve these goals with best possible results. The Oriental, in contrast, thinks first of the energy to be spent. Any energy required is placed in front, and through least effort he wants to achieve the greatest results. And, since he expends little energy, he will also achieve little”, wrote ’s First Vice President Mohammad Hatta, who was also an economic expert, way back in 1936.    [1] 

Last week the public debate in Indonesia has shifted to the issue of “productivity”: how low productivity relates to Indonesia’s lag in national competitiveness vis-à-vis global competition; on how low productivity relates to poor self sufficiency in food supply, especially in the national staple of rice, and how low productivity sustains and increases poverty, especially rice farmers and fishermen, and finally how productivity relates to national culture, mindset and behaviour.  

While most agree on the realities, - although data issued by the World Bank and the National Statistics Board differ in the depth and breadth of poverty in today, - the data have sparked the debate on their cure and solutions. 

Whilst productivity guru, Michael Porter, expounded on Indonesia’s “productivity” in general, and productivity in industry in particular,(see Indonesia Digest 43.06),

C. Peter Timmer of the Center for Global Development, who has studied the problem of rice production in Indonesia since 1992,  concentrated on the issue of productivity related to national food supply management, the continued state of poverty of Indonesia’s rice farmers and government policies to improve farmers’ lot while having to guarantee the continued food supply for the nation. 

The price of Rice in local markets now escalating  

Another trigger in this debate is the fact that since last week, the price of rice in the market place has soared from10% to 15%, or up some 100% compared to last year. The most obvious reasons for the increased prices is the very late arrival of the rainy season this year, which has forced the rice planting season to be postponed by at least two months, and has caused the depletion of rice stocks in a number of provinces. An additional reason for dearer rice are the end of the year festivities, which brings with it the Christmas and New Year holidays, but which this year is added with Idhul Adha, which is the Muslim day for the offering of cattle, - all of which will naturally jack up food prices, especially the price of rice. 

Seven provinces – Papua, West Irian, Bengkulu, East Kalimantan, the Riau Islands , West Sumatra and North Maluku, and also Jakarta - have already requested the national government to activate “market operations”, meaning to flood local markets with affordable rice to press down sky-rocketing prices. This rice is taken from buffer stocks piled from rice imports. A few months ago when the government planned to increase rice imports to prepare for just such a situation, there was a hue and cry from parliament and the press, stating that domestic stock was ample, moreover, rice harvests were ongoing.  

World Bank Data: 49% of ’s population lives on less than US$ 2 per day 

Meanwhile, in the latest data issued by the World Bank on 7 December as reported in Kompas daily, World Bank estimates that 49% of Indonesia’s population, or 108.78 million people are poor or are on the verge of falling into poverty, as calculated on the basis of a daily income of US$ 2.0 or Rp. 19,000 per day.  While rice farmers and fishermen form the highest majority of the poor. 

In September, Indonesia’s National Statistics Board announced that ’s poor – calculated on an income of US$ 1.55 or less per day – has reached 17.75% of total population (only). 

World Bank says, that just by shifting up the parameter marginally, figures showed that a very large number of ’s marginally poor are on the edge of poverty, - or are almost poor - and can quickly fall into poverty. 2004 data has shown that almost 38% of poor households were not included in the poor category just one year before. 

Furthermore, when poverty is measured not by income alone, but against the Millennium Development Goals, then ’s problems loom larger, as this country lags far behind other Asian countries, says WB representative, Andrew Steer. 

For, 25% of Indonesia’s children below five years of age suffer from malnutrition; 

307 mothers die at childbirth out of every 100,000, which is three times the number in Vietnam, or six times the number in China and Malayasia. Moreover, public access to education, drinking water and sanitation still remain crucial problems.  

The World Bank East Asia Update in November reported that the doubling of fuel prices last year has caused ’s poor to increase by 39 million. However, it is not so much the rise in fuel price, as the rise in the price of rice, that was triggered by the rise in fuel prices, which is the main factor behind the rise in poverty levels in , says the World Bank (See Indonesia Digest 41.06). This is since rice makes up about 25% of the consumption basket of the poor, whilst three quarters of the poor are net consumers of rice.  

World Bank thus recommends that should open itself more to rice imports. 

Dillemma between Rice Imports and High Prices of Rice  

This statement immediately brought a deluge of protests, since, agricultural experts reasoned that it is exactly because the government has allowed the import of rice in large volumes that the price of rice domestically has been kept artificially low, thus providing little incentive for farmers to improve productivity, thereby keeping rice farmers forever poor. 

In this context, senior researcher in the Center for Global Development, Peter Timmer, reasons that although relatively stable high prices of rice will indeed become an incentive for rice farmers to continue planting, however, these high prices alone will only be an artificial sweetener if farmers remain trapped in low productivity, especially since the government’s agricultural revitalization program remains rhetoric, said Timmer in Jakarta recently, as reported in Kompas of 30 November. 

Low Productivity and Increased Poverty ’s Social Time Bomb 

Indonesia’s social time bomb, does not hinge on the debate whether it is best to focus on rice self- sufficiency or to stabilize the price of rice. Indonesia’s social time bomb will be the increase in the number of poor families and a failure to significantly push productivity, both in rural areas as in the cities, said Timmer. 

Utilizing pricing policy as incentive to increase production is far from adequate, says Peter Timmer. Such policy was indeed successfully implemented in 1987 that has made self-sufficient in rice at the time. However, then, farmers gained from improved use in technology, the irrigation infrastructure was in place and fertilizers easily available. 

Today, however, the situation is far different. The productivity of farmers can not be increased because of present poor technology and poor infrastructure. Thus we see that large numbers of the rural poor will invade cities outside of the planting and harvest season, because life in rural areas can no longer sustain their existence. 

This is because agricultural revitalization, on which 60% of ’s population depends, has not been a major focus for national development.   

With the drastic change in today’s market structure and the “supermarket” phenomenon, the government must not only revitalize rice production but must also manage its marketing and distribution chain. The government must link up farmers and their output into access to market technology and to consumers. And, since output in production is no longer exceptional, management capabilities that guarantee high quality production of food supply that offers added value must become the most important aspect. Moreover, modern logistics also require the use of information technology, the management of stock and the control of price. 

Farmers should also be urged to diversify from rice production only, into planting vegetables, fruit or even biofuel, for example, recommends Timmer.  

Traditional Collective Mindset amidst Global Competition 

On the other hand, sociologists and anthropologists see the problem faced by Indonesian poor rice farmers as being trapped in traditional mindset, where most are content to plant in the age-old traditional manner and produce just sufficient to feed the family. Moreover, the Indonesian culture on the whole is complacent, fatalistic, and paternalistic, having little motivation to change and advance. ’s formal educational system so far has also not been helpful, since education has been focused more on teaching knowledge rather than instilling innovation and creativity in the youth.  

Another hampering factor is the traditional extended family system, says anthropologist Fediyani Saifuddin from the University of Indonesia in Jakarta .  In this culture, a person is brought up to act in a structured social framework. In this system, he or she is not free to act alone without the consent of the entire family or community. And so, when collectivity loosens, - for instance when he or she goes to work in the city and lives separated from the system- then problems will arise. 

Amidst these debates, President Yudhoyono has instructed his ministers to start “market operations” to stabilize the escalating price of rice. For, not only are the rural poor suffering from dearer rice, but now most especially the poor population in the cities.  Subsequently, Trade Minister, Mari Elka Pangestu informs that rice has been distributed to three of the seven provinces that have requested for market operations. The reason for the increase in price is not because of hoarding or market speculation, Minister Pangestu said, but because of failed harvests, and the long dry season that have reduced production, and as a consequence, reduced available domestic rice to be sold in markets.  

While rice expert Bustanil Arifin on SCTV on 14 December explains that rice stock in usually follows a cycle of abundance and depletion. During February through May, just after the grand harvest season, rice is in abundance, and stocks are in plenty. However, after May stocks start to deplete and are usually at its lowest ebb during December and January. 

This year, however, because of the long drawn out dry season, when the planting season has had to be postponed by at least two months, it is foreseen that harvesting will begin only in April. It is hoped that prices do not continue to soar.

The National Logistics Board, BULOG has confirmed that its present stocks are sufficient for a 5-months supply. 

Meanwhile, as alternative solution to this perennial problem, Bustanil Arifin urges the government to accelerate the diversification of the national staple diet, away from depending on rice alone. For this purpose, farmers should plant cassava, maize or other staples, while an industry should be established to process such commodities for national consumption.  
(Sources: Kompas)                                                             (Tuti Sunario)