The BPS recorded that rice and filter clove cigarettes were the two main consumer goods that affected the food poverty line. Rice contributed 26.79 percent to the poverty line in rural areas and 20.95 percent to the poverty line in urban centers.
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ANTARA FOTO/APRILLIO AKBAR
Residents go about their daily activities in Kampung Bandan, Jakarta, on Tuesday, July 17, 2018. The Central Statistics Agency (BPS) recorded that some 25.95 million people lived in poverty in Indonesia in March 2018, 633,200 fewer compared to September 2017.
The price of food is a determining factor in the reduction of poverty. Nevertheless, pushing down food prices should not necessarily be seen as a solution to ending poverty.
The Central Statistics Agency’s (BPS) poverty report in March 2018 showed that the number of poor people between March 2017 and March 2018 had dwindled by 1.82 million to 25.95 million, or 9.82 percent of the Indonesian population.
This decline in poverty was accompanied by a finding that food remained a major determinant of poverty. The food poverty line contributed 73.4 percent to the poverty line in March, a slight increase from 73.35 percent in September 2017.
The BPS recorded that rice and filter clove cigarettes were the two main consumer goods that affected the food poverty line. Rice contributed 26.79 percent to the poverty line in rural areas and 20.95 percent to the poverty line in urban centers.
The BPS report said that the other factors that affected the poverty rate were the low 1.92 percent inflation in September 2017-March 2018 and the increased per capita expense of 3.39 percent for households in the bottom 40 percent. The increase in consumption is evidently related to the government’s social cash assistance, which grew 87.6 percent in the first quarter, far higher than the 3.39 percent in the same period last year. The government also disbursed its Welfare Rice and Non-Cash Food Assistance on schedule.
The Pancasila state ideology and the 1945 Constitution oblige the state to reduce poverty and improve the people’s welfare. Therefore, a reduction in poverty should be accompanied by an improvement in the quality of life. This is achievable by empowering people to improve their own socioeconomic conditions, instead of continuing to be dependent on government assistance. With proper allocation, the village funds can improve rural people’s ability to produce and consume food.
The government has strived to reduce poverty by regulating and pushing down food prices, including for rice and sugar, as best as it can. Its assumptions are that high food prices will negatively impact people’s welfare and that farmers are net food consumers.
However, a different opinion exists upon reverse logic. A 2014 Harvard Kennedy Center report titled “The Sum is Greater Than the Parts: Doubling Shared Prosperity in Indonesia Through Local and Global Integration” argues that pushing down food prices will lead to better farmers’ welfare only if the food prices are adequate for inducing farmers to continue their current production levels. However, lower prices discourage investment. As a result, productivity will not improve; production will decline and food prices will increase. The government will be forced to provide subsidies to import food.
It will be good if in-depth studies such as this that offer different points of view can be conducted to accelerate poverty reduction. Subsidies will be more effective when they are used for research, infrastructure development, providing access to village credit and reorganizing the distribution and marketing chains.
