Exports declined in the country’s main commodities, rubber and CPO. Natural rubber and rubber product exports fell 21.15 percent yoy during the first semester from $4.11 billion to $3.24 billion. The export volume of CPO dropped 4 percent to 10.24 million tons yoy in January-April.
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JAKARTA, KOMPAS – The slowdown in poverty reduction is caused not only by the surge in food prices, but also by the weak performance of commodity exports.
Based on data from the Central Statistics Agency (BPS), the agricultural sector’s contribution to exports fell 7.68 percent year-on-year (yoy) to US$1.58 billion in January-June.
Exports declined in the country’s main commodities, rubber and crude palm oil (CPO). Natural rubber and rubber product exports fell 21.15 percent yoy during the first semester from $4.11 billion to $3.24 billion.
Meanwhile, the Indonesian Palm Oil Producers Association (Gapki) said that the export volume of CPO dropped 4 percent to 10.24 million tons yoy in January-April.
The decline in exports has affected rubber and oil palm farmers. Through the first half of 2018, the exchange rate of smallholder farmers (NTPPR) remained below the ideal index threshold of 100. The NTPPR was 98.82 in January, 99.05 in February, 99.18 in March, 99.01 in April, 99.64 in May and 98.86 in June. A reading below 100 indicates that the farmers\' earnings are down and lower than their expenditure.
Indonesian Rubber Association (Gapkindo) chairman Lukman Zakaria told Kompas on Tuesday that the decline in exports and low rubber prices had led to a dramatic drop in rubber farmers\' incomes, particularly in rubber producing areas.
"At the beginning of the year, rubber prices at the farm level fell to between Rp 6,000 and Rp 7,000 per kilogram. In the last three months, the price fell further to Rp 5,000 per kg. In normal conditions, rubber prices at the farm level are Rp 15,000 to Rp 20,000 per kg," he said.
Lukman added that the decline in the rubber farmers’ income had contributed to their weakening purchasing power. Many farmers are unemployed or work odd jobs in other sectors. With a lower purchasing power, they have to spend more on their daily needs such as basic staples.
Dwi Andreas Santosa, an agriculture professor at the Bogor Agricultural University (IPB), said that the plantation sector contributed 99.35 percent to agricultural commodity exports in 2017. More specifically, oil palm plantations contributed 66.37 percent.
The country’s food policy does not favor farmers. Subsidies still focus on increasing production, not on added value, while the food price policy focuses on consumers, so that small farmers do not benefit.
"Capital owners are getting richer while small farmers and farm laborers are getting poorer. They have to buy food, especially rice, at prices higher than their incomes," said Dwi Andreas.
The BPS data shows that the number of poor people in March totaled 25.95 million, or 9.82 percent of the population. The Gini ratio, which measures inequality, was 0.389 in March. A near-zero Gini coefficient indicates low inequality.
Dwi Andreas expressed his hope that the government would be able to improve community plantations to increase their contribution to exports. At the same time, the government should pay attention to farm-level prices under its food price policy
"What has been happening is that price intervention at the consumer level has led to a decline in prices at the farm level. The indicator, the average exchange rate of crop farmers in the last two years, is still below 100. For example, it reached 99.48 in 2016 and 98.48 in 2017," he said.
Eko Listiyanto, the deputy director of the Institute for Development of Economics and Finance (Indef), said the poverty issue in Indonesia was heavily affected by fluctuating commodity prices. When commodity prices fell, the poor population would increase as their income fell. Most of Indonesia\'s export commodities were raw materials that are highly dependent on global market prices.
National Development Planning Minister Bambang Brodjonegoro said the government was focusing on developing new economic centers so that growth would no longer be concentrated in Java and other parts in western Indonesia.