The Welfare of Villagers Decreases

The face of villages, as the producer of food and export commodities, continues to change. The dependence on food and consumer goods is increasing. However, this has not been accompanied by an increase in income.

KOMPAS/NIKSON SINAGA

Farmers harvest bunches of fresh oil palm fruit on Wednesday (1/8/2018) at Rumah Sumbul village in Sinembah Tanjung Muda Hulu district, Deli Serdang regency, North Sumatra. Palm oil is the main source of income for the village’s economy. The farm-level price of oil palm fruit is currently around Rp 1,100 per kilogram, down from Rp 1,500 per kilogram.

INDRAMAYU, KOMPAS — The increase in prices of goods and services for villagers is often higher than the income or the prices they receive. This makes the alleviation of poverty in villages more difficult.

According to the Central Statistics Agency (BPS),  rural inflation reached 0.82 percent in July, 2018, higher than the national inflation of 0.28 percent during the month. The increase in food prices was the biggest contributor to rural inflation in July 2018.

The BPS’ survey on the prices of goods in rural areas in 33 provinces shows that the farmer exchange rate (NTP) dropped nationally from 102.04 in June 2018 to 101.66 in July 2018. The decline was mainly caused by the fall in the NTP of the food crops, smallholder plantations, and fisheries.

The fall in the NTP in July 2018 occurred because the price index received by farmers only rose 0.28 percent, while the prices of goods and services paid by the villager, especially farmers, rose 0.66 percent. The NTP is an indicator to measure the welfare of farmers.

In the first semester of 2018, the NTP was recorded at 102.14 or, rising only by 1.82 percent from 100.31 in the first semester of 2017. Especially for smallholder plantations, the NTP was recorded at 97.01 in July 2018. It means that the farmers suffered a deficit.

Kompas’ monitoring in a number of food production centers in West and Central Java, as well as export commodities such as rubber and oil palm in Jambi, North Sumatra and Central Kalimantan, during the past two weeks, shows that farmers and villagers are increasingly vulnerable to poverty because of the decline in food self-sufficiency and more dependent on the market.

Export barriers and the fall in commodity prices also contributed to the decline in villagers\' incomes. Rubber, palm, and sugar cane farmers, for example, have not enjoyed a decent price. The prices sometimes fall below the cost of the production.

Sukarta, 46, a resident of Dukuhwaru, Tegal regency, Central Java, has rarely kept large amounts of rice stock at home lately.  "The rice stock can only last for one month. The rest, I buy from the market or a stall," he said. Due to the small amount of their production, especially food crops, farmers have no choice but to sell their entire crops. They hope they will be able to go through the paceklik season ( pre-harvest time)  by buying their necessities in the market.  However, their incomes usually have depleted and food prices tend to rise during the paceklik season.

According to the head of Kalensari village in Widasari district, Indramayu regency, West Java, Masroni, some farmers actually did want to sell their rice and mostly used them for their daily needs. However, to meet the rising consumption of other foods, they have no choice but to sell part of their rice stocks, because they don’t have money.

Commodity prices

The incomes and welfare of the villagers are closely linked with the prices of the commodities they produce. The condition of the lives of the rubber farmers, for example, has worsened due to the fall in rubber prices in recent years.

Ponedi, 41, a farmer in Blok 10 village, Dolok Masihul district, Serdang Bedagai regency, North Sumatra, said, that the price of rubber latex at the farm level was currently only around Rp 5,000 per kilogram, far lower than Rp 18,000 per kilogram recorded in 2011.  "We have to be very smart in spending the money so that it will be enough to meet the needs," Ponedi said.

Oil palm farmers also experience difficulties because the price of oil palm fresh fruit bunches tends to stagnate in recent years, while prices of consumer goods continue to increase.

According to Sigro, 37, oil palm farmers in Pudak Village, Kumpeh Ulu district, Muaro Jambi regency, the price of oil palm fresh fruit bunches fell to their lowest level at less than Rp 1,000 per kg in recent weeks.

Economic observer from Batanghari University, Pantun Bukit, said that the collapses in prices of export commodities such as rubber and oil palm had led to the worsening of the economic vulnerability in rural areas, especially in oil palm and rubber production centers such as Muaro Jambi, Batanghari, Tebo, Sarolangun, Bungo and Merangin Regencies.

Based on his research, many villagers have difficulty in meeting the basic needs and education of their children. "Quite a lot of students from the oil palm and tuber producing regions have asked for a tuition fee dispensation because the worsening of the economic condition of their families," said Pantun.

To increase income

Empowerment programs to increase the income of villagers are still lacking. During the last three years, for example, the allocation of village funds, which rose from Rp 20.8 trillion in 2015 to Rp 60 trillion in 2018, was still mostly directed for the improvement of basic infrastructure, such as roads and irrigation systems.

The head of the National Development Planning Agency, Bambang PS Brodjonegoro, said farmers generally still faced difficulties in increasing crop productivity. Their income was also not optimal because they had sold their crops through intermediaries, even often being trapped in ijon (advance payment before harvesting) practices, he said.

One of the solutions taken by the government is a labor intensive program (mostly in improvement of infrastructure). The activities are funded by village funds and must be carried out by the residents themselves through labor intensive programs. The program is expected to increase their income, which in turn can help reduce poverty.

The director general of financial balance at the Finance Ministry, Astera Primanto Bhakti, said poverty reduction in the villages should not only rely on village funds. Village officials must maximize the use of village income and not to rely on funds from the central government. The use of village funds must also be more effective.

(HEN/CAS/JUD/KRN/NAD/ITA/IDO/NSA)