Agricultural Challenges 2019-2024
Congratulations to Syahrul Yasin Limpo, who has been trusted to lead the development of agriculture and food in the second term of President Joko Widodo\'s administration.
Congratulations to Syahrul Yasin Limpo, who has been trusted to lead the development of agriculture and food in the second term of President Joko Widodo\'s administration.
Indeed, it is a very heavy task with challenges that are not light, even though it can also invoke great hope if the agricultural policy is managed properly and agricultural development is well implemented.
During the last 20 years since the start of the reform era, agriculture and food in Indonesia have experienced major changes with the increasing opening of import access and liberalization in the sector. From 2001 to 2004, the value of food imports increased, although not so much, from US$2.5 billion to $3.7 billion.
During Susilo Bambang Yudhoyono’s (SBY) period in the presidential office, various programs were implemented, both improving agricultural infrastructure and subsidizing seeds, fertilizers, various kinds of credit and special programs for self-sufficiency in rice, corn, soybeans, beef and sugar. In the 2004 to 2013 term the agriculture and food budget increased sharply by 611 percent. The budget increase was mostly used to increase food production. But what happened? Did the substantial increase of the budget increase production, reduce imports and improve the welfare of farmers?
During this term rice production did experience a significant increase, from 48.9 million tons of unhusked rice (GKG) to 58.7 million tons, about 20 percent, according to data from various sources and the results of satellite imagery (DA Santosa, 2019) . However, when examined in more detail, natural factors played a greater role in increasing production than budgets and programs. From 2008 to 2010, there was a “wet drought”, also known as a hydrological drought, when rice production continued to increase throughout the year. In 2011 rice production suddenly dropped sharply from 60.1 million tons of unhusked rice to 53.8 million tons of unhusked rice because of severe planthopper pests caused by continuous rice planting in the previous years. Rice production then rose again until 2013.
Natural factors played a greater role in increasing production than budgets and programs.
A large increase in budget does not correlate at all with a decrease in imports. Food imports even jumped sharply by 346 percent. The welfare of farmers also did not improve. During this term 5 million peasant households were forced off their land (Agriculture Census 2013).
Improvement even occurs in subsectors where the role and intervention of the government both in the form of budgets and programs is very small. Research and development, cultivation technology, area expansion and the opening of markets both nationally and internationally are almost all dominated and carried out by the private sector.
In the subsector, the value of commodity exports, especially palm oil, jumped sharply from only $9.89 billion in 2004 to $43.37 billion in 2011. The trade balance also increased dramatically from a surplus of $4.86 billion to $22.77 billion in 2011. Although they later decreased to $7.94 billion in 2013, the subsector continued to record amazing achievements.
Increasing food budgets and imports
The era of SBY was replaced by that of President Jokowi. How did the agriculture and food sector fare in the first term of the current administration? The development of agricultural infrastructure in the form of new reservoirs and dams and the repair of irrigation networks was carried out on a massive scale. Various programs were rolled out, including the six commodity self-sufficiency programs, until 2019: the Upsus Pajale program, the distribution of agricultural equipment and machinery that jumped dramatically compared to the previous administration and the establishment of thousands of farmer shops, all of which were supported by a substantial increase of the budget.
Agricultural development during the current administration began with a sharp increase in the agriculture and food budget from Rp 71.24 trillion in 2014 to Rp 127.57 trillion in 2015, an increase of 79 percent. The highest budget increase occurred in the Agriculture Ministry, where it jumped by 141 percent in 2015 compared to 2014. The total budget for 2015 to 2018 term reached Rp 409 trillion, an average of more than Rp 100 trillion per year. It is natural for people to question the results afterwards.
Increases in the production of food crops, especially rice, which received the largest budget, did not experience significant improvement. The increases in rice production in the last 17 years (2001 to 2018) had been lower than population growth, namely only 1 percent annually. Rice production in the current government has not improved, as it has even experienced an alarming decline. Rice production only increased 0.28 percent per year (2015 to 2018), far lower than the average of the last 17 years.
In the midst of high budget increases, total agricultural imports also increased dramatically from 19.4 million tons (2014) to 28.6 million tons (2018), more than 9 million tons in just the past four years, which were dominated by the food crops subsector reaching 22.0 million tons. The value of agricultural imports increased from $10.44 billion to $13.19 billion in the same period.
How about comparing the imports and exports of the food crops subsector of the SBY administration (2005 to 2014) with the current government (2015 to 2018)? The average annual imports to the previous government was 11.7 million tons of food, while currently it has increased to 20.6 million tons.
Meanwhile, exports of the food crops subsector even experienced a decline from 0.76 million tons on average to 0.37 million tons during the current government. Rising imports and decreasing exports of the food crops subsector increased the trade balance deficit from an average of $4.09 billion per year in the previous government to $6.75 billion in the current administration.
The welfare of farmers in the current government period has worsened. The farmer term of trade (NTP) decreased from an average of 104.45 in the SBY administration to 101.75 in the current administration. The welfare of food crop farmers also hardly improved from a farmer term of trade of 100.14 in the previous administration to 100.32 in the current administration. Once again, Indonesia\'s agricultural trade balance was saved by the private sector, especially oil palm plantations. The annual average agricultural trade balance surplus declined slightly from $8.86 billion (2005 to 2014) to $8.34 billion (2015 to 2018).
The budget is so large and continues to increase from one period to the next, so the government has practically no impact on increasing production.
Resolving the problem
Reflecting from the data, that is really ironic. The budget is so large and continues to increase from one period to the next, so the government has practically no impact on increasing production. On the contrary, what happens is the food imports increase sharply and farmers\' welfare declines. When looking further into existing policies and programs, there is practically no difference between one government and the next.
The main differentiator is just a budget problem that always increases dramatically when the government changes. With the same policies and programs, the end result can be predicted. It is often stated that Indonesia has great potential in the food sector, so ideas such as the world\'s food barns or, in the previous government, to feed the world, have become the main agricultural development visions to date. The reality is actually not so.
The best food land only exists on Java, which must compete vigorously with the interests of settlements, infrastructure, industry and services. Some of the best food lands outside Java also face the same problems as those on Java and there is even one more threat, namely conversion to plantations, especially oil palm. All the jargon and rhetoric delivered so far collides with the fact that in the second term of the administration there have been agricultural commodity imports of 28.6 million tons of which 22 million tons were food imports. Imports are very likely to continue to increase in the following years.
Then, is there still a glimmer of hope for the development of the agricultural sector? There is always hope. The plantation subsector, which until now has been dominated by the private sector with very little government intervention, should indeed proceed as it has so far. Intervention too deep into this sector can have undesirable negative effects. The most important task of the government is to protect and secure this subsector through diplomacy at the international level. At present Indonesia ranks first in the world for oil palm and is "still" ranked first for coconut and cloves, second for rubber and pepper and third for cocoa and nutmeg. Hopefully, the ranking can survive and even be increased.
The biggest problem is in the food crops subsector, which is the largest, most important and dominant group of small farmers. All interventions, policies, programs and budgets so far have had practically no impact on this subsector. Instead, what is happening is that food imports continue to increase. Nevertheless, this subsector has great potential and can even become a driver of Indonesia\'s economic growth in the future (DA Santosa, "Towards Indonesia 7.0", Kompas, 29/7/2019). Policies and programs of the type of "continuing what the previous minister has done" will certainly lead to failure as reviewed at the beginning of this paper.
The drafters and implementers of agriculture and food policies are expected to understand what really needs to be done so that agricultural development does not go in the wrong direction from the President\'s vision and mission. If this does not happen, then there is really no hope for the future of Indonesian agriculture. Hopefully not.
Dwi Andreas Santosa, Professor at the School of Agriculture, Bogor Agriculture Institute; Chairman of the Indonesian Farmers\' Seed Bank Association (AB2TI) and Associate of the Center of Reform on Economics (CORE) Indonesia.