Three Years of Food Sovereignty

The Rembuknas III-2017 was held to assess the performance of the government during the first three years of the Jokowi-JK administration.

A series of meetings as part of the Third National Dialogue 2017 was held recently to assess the performance of the government during the first three years of the Joko Widodo-Jusuf Kalla administration and provide input to the government on the development of agriculture and food.

The gatherings started with the holding of the National Farmers\' Meeting in Karanganyar on Sept. 27-18, 2017, which were attended by farmers from 51 regencies. Meetings were then held in Syiah Kuala University on Oct. 16, 2017, the Bogor Agricultural University on Oct. 20, 2017, and the Jakarta International Expo on Oct. 23, 2017, with a total of 1,373 participants.

Such  meetings could be held thanks to President Jokowi\'s openness and willingness to be criticized. Farmer welfare dominated the dialogues. Poverty in rural areas declined slightly from 14.37 percent in March 2014 to 13.96 percent in March 2017, down 0.41 percentage point, according to the Central Statistics Agency (BPS). The reduction is too small compared to average economic growth of 4.97 percent per year and inflation of below 4 percent during the last three years.

Farmer welfare and food situation

The quality of growth and the trickle-down effect did not occur, with the depth index and the severity index of poverty even further widening from 2.26 to 2.49 and 0.57 to 0.67, respectively. Farmers\' purchasing power (NTP) as one indicator of farmers\' welfare decreased from 101.98 (January-September 2014) to 100.71 (January-September 2017), according to the BPS. Purchasing power in food crops has the lowest value and dropped from 98.59 to 97.21 in the same period.

Thus, the claim that farmers\' welfare has improved over the last three years is not true. The decline in the welfare was reported by farmers during the national gathering. The second most highlighted topic during the gatherings was the agricultural data on the sharp increase in rice production.

According to Agriculture Ministry data , the production of the unhusked rice rose from 75.4 million tons in 2015 to 79.14 million tons in 2016 and to 81.57 million tons in 2017. If the data were true, then there should have been a rice surplus of 11.3 million tons (2015), 11.4 million tons (2016), and 11.2 million tons (2017).

The surplus should have caused a decrease in the average price of rice to Rp 5,600 per kilogram in 2015 and lower in 2016 and 2017. However, in reality, rice prices instead increased sharply to a range of Rp 10,500 to Rp 10,900 during the last two years.

In addition, if the data were correct, there would be an increase in rice stock to 33.9 million tons  by the end of 2017, which would be enough  to meet the  demand for rice for the entire population for one year. Almost all data of the commodities included in the food production improvement programs have a low rate of accuracy.

Third, management and food institutions. Government decisions or policies issued on the basis of false data has led to controversy. One example is when the beef import quota was drastically cut in June 2015 based on the assumption that the cattle population during the period was sufficient. The controversy continued amid allegations of monopoly practices by business players involved in beef, poultry, chili, shallots, corn and sugar production.

Rice prices rose sharply after May 2015 amid claims of a spectacular increase in rice production. The prices began to fall in March 2016, as the harvest season began and 1.3 million tons of rice was imported.

The establishment of the Food Task Force and the issuance of various ministerial regulations to reduce prices have led to the criminalization of business players. Such interventions had no impact on the price of rice in 2017, which even increased in July.

The prices of four commodities have risen sharply in the past three years amid low inflation: beef (16.5 percent), medium quality rice (18.9 percent), sugar (19.7 percent) and shallots (47.8 percent), which also resulted in an increase in farming costs.

Efforts to lower prices at the consumer level have adversely affected farmers. During the national dialogue, almost all businesses and farmers complained about such programs.

So far, almost all policies related to food governance are ad hoc in nature, unintegrated and involve so many technical ministries that it makes the range of control and oversight too wide.

Various regulations issued without prior research were also criticized by business players involved in animal feed, food and beverage production. They complained about the disruption in raw material supplies that threatened their businesses and competitiveness.

Fourth,  food quality and safety. In the Global Food Security Index (GFSI, September 2017), Indonesia\'s food quality and food rating remained poor and was ranked in 86th position out of 113 countries. Poor food quality and security have the potential to degrade the quality of human resources and increase health costs.

Fifth, livestock development policy. The policy to import buffalo meat has distorted the market and could increase the circulation of oplosan (mixed meat). The policy has resulted in a decline in the feedlot business by up to 70 percent, and an increase in potential losses in the cattle business of Rp 26.85 trillion per year, lowering farmer income by Rp 30 trillion per year.

Recommendation

A policy to guarantee prices at the farmer level is needed. Fertilizer and seed subsidies and aid in agricultural equipment (alsintan), the value of which ranges from Rp 40 trillion to Rp 45 trillion per year, have been ineffective in increasing production and improving the welfare of farmers.

Changing the subsidies and farming equipment aid with after-sales cash transfers could increase farmers\' incomes by 31 percent. The establishment of farmer-owned businesses, based on cooperative principles both in upstream and downstream activities, is needed. The government must abandon the program-based development of the farming business, which often leads to failure. Improving the business climate, access to capital, ease of licensing and protection when starting a business are important issues that have to be carried out by the government.

The focus on high-value commodities and the development of postharvest technology based on farm households is further leverage to improve farmers\' welfare. The development of modern postharvest technology in production centers is necessary so as to increase the shelf life of agricultural products and protect prices.

The protection of the industry through the ease of provision of raw materials is an important key. A long-term and comprehensive road map for the supply of raw materials for farmers and fishermen needs to be established by involving all stakeholders and the exemption of value-added tax (VAT) for primary agricultural products.

A number of strategic  efforts related to rice, corn, soybean production (Upsus Pajale) and unhusked rice purchases (Serapan Gabah or Sergab) are considered ineffective and a waste of state funds.

Continuous rice cultivation without a fallow period has caused serious ecological disruption resulting in a 40-60 percent reduction in production. It has also led to crop failure in many places due to pest attacks, especially during harvest seasons I and II in 2017. The reformulation of the programs and budget audits of the program are needed. The Sergab program should be carried out to ensure that unhusked rice is purchased when prices fall below the government\'s price benchmark, not an effort to buy unhusked rice at below market prices.

The agricultural extension program and the involvement of Babinsa (non-commissioned Army officers) in agricultural counseling programs are ineffective and should therefore be replaced by mobilizing entrepreneur farmers and mentoring by universities and research institutes.

Through this approach, within the next two years, a strong self-help counseling program could be established. In addition, farmers need to be involved in every policy formulation both at the central and regional levels. Patterns of assistance and programs that have so far reduced the creativity of farmers and farmers\' access to better innovation and technology products should be eliminated.

The agrarian reform program through land redistribution for smallholders should be increased in order to improve farmers\' welfare. It will need great effort to halt the pace of agricultural land conversion and land ownership from farmers to investors. Incentives need to be given by eliminating property tax on farmland.

The process of collecting production and stock data should be carried out more independent by gradually reducing the role of ministries. During the transition period, the President could establish a special unit of agricultural data using the latest data collection methods and technologies.

The National Food Agency at the ministerial level directly under the President needs to be immediately realized in accordance with Law No. 18 of 2012 on food.

The agency would oversee all existing state-owned food companies and be fully responsible for national food reserves, stock stability, major commodity prices.

The central government and local governments need to be highly committed to helping micro, small and medium industries in the field of food through increasing the provision of and access to sanitation and hygiene facilities and infrastructure, increasing access to capital, as well as increasing human resources and access to information.

In an effort to penetrate export markets, the government should be more active and ready in agricultural and food data as well as preparing strong agriculture and food diplomacy.

The consumption of imported basic foodstuffs is getting higher and higher. Indonesia\'s wheat imports in 2016 reached 10.8 million tons, the second-highest in the world after Egypt. The food diversification program based on local foods, horticulture, various seeds, various tubers and various vegetables needs to be strengthened.

Educational programs and the strengthening of food and nutrition diversification should be given starting from elementary school. In the field of livestock, the development of   farmers’ cattle  is still neglected, causing a dependence on imports of milk and derivative products, which account for more than 80 percent.

The poultry business also needs special attention. The existence of large companies that dominate the poultry business from upstream to downstream threatens the activities of small breeders. It is necessary to issue a presidential regulation to address an emergency situation in both sectors.

Finally, evaluation of the performance and leadership of relevant ministries should be undertaken by the President by considering stakeholder input. Hopefully, Mr. President will have time to read the recommendation from the national food dialogues, which was read out for 1.5 minutes in front of him on Oct. 23, 2017.

DWI ANDREAS SANTOSA

An IPB professor and chairman of the Division of Food Sovereignty and Food Security, Rembuknas III-2017