Freedom For Farmers Freedom For All

Unedited-For Discussion-Comments are welcome

FREEDOM FOR FARMER FREEDOM FOR ALL Agus Pakpahan

Max Havelaar Indonesia Foundation

Jakarta, 2006

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Dedication: This book is dedicated to my late father, A.G. Pakpahan, and my mother H. O. Toyibah and father, H.E. Masykur, for whom I indebt in my life and to farmers to whom I owe freedom of life. .

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PREFACE Why agriculture is good for humanity but not for farmers? Why after more than 7000 years agriculture has been evolving, farmers’ life is more suffering? The critical issue raise in this volume is freedom. I took a position that freedom is the seed for making further steps of civilization. This is the first step to initiate further thousand steps more. Freedom is the root for survival and survival is the first step for further development. Without freedom, we cannot survive. This argument is also true for farmers. Farmers will not and cannot survive if they become object of exploitation. In turn, the whole civilization will decline if a part of societal chains are extinct. The exploitation of farmers is the same with the exploitation of our sources of life. We know that over exploitation of our resources will destroy our cuvilization. The same argument could also be used to the exploitation of farmers. Once farmers’ freedom is in existence, then the answer to the question of justice, equality and welfare of the people will come automatically. This publication would not have been possible without the involevement of all those people influenced my life. I want to thank, Agus Supriono, for his encouragement. Contributions of Drs. P. Lovell, A.A. Schmid, R. Bernstein and L. Manderscheid are so invaluable. Drs. S. Baharsjah, G. Kartasasmita, B. Saragih and M. Nasution had given opportunities for me to explore knowledge which I believed as a source of power to make better future agriculture. Discussions with R. Wibowo, Subiyono, S.Y. Harris have challenged my line of thoughts in writing this volume. Furthermore, interactions with Arum Sabil and other leaders of associations of estate crops farmers have created invaluable understanding of farmers’ life that contribute significant meaning for me in writing this volume. The final version was externally reviewed by E.M. Lokollo. Their detailed and constructive comments and suggestions led to further improvements throughout the documents, for which I am most grateful. I thank to my family: Dina, Angga, Miryani, Andya, and Abi for their understandings. To Cholik, Ninie, and H. Amin, I thank for their help in making my life easier. However, remaining errors are mine. Jakarta, 25 December 2006

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CHAPTER ONE INTRODUCTION Mankind is passing from the primacy of the past to the primacy of expectations of vast future changes. Harold D. Lasswell Evolution of Agriculture The main objective of this volume is to express voices from farmers to governments, legislators, judicial, economists, development planners, businesspersons and other related parties with agriculture and farmers on both developed and developing countries. The main message of this volume is that farmers globally have not been reaching the state of freedom1 even though agriculture has been evolving for more than 7000 years.2 Farmers in developed countries received higher income level than farmers in developing countries, however, such income is highly subsidized. The term of subsidy indicates that farmers in developed countries have no autonomy. In other words, farmers‘ life in developed countries is dependent on the helps of other communities through taxes imposed by their governments. Farmers in developing countries face severer situation because they have to survive by their own in the economic-political environment that against them. This volume takes a position that freedom of farmers is an essential value to oppose the worlds above farmers that make them unequal position and unjust treatment. The worlds above farmers are government, market, international organizations, and other forms of institutions that make farmers status, position, welfare, and power are weakening over time. Long term trend declining price of agricultural products and huge government subsidies in developed countries, among others, on the one hand, and increasing market concentration in food and agricultural markets that make consumers pay high prices of food, on the other hand, indicate that benefits of agricultural production are not accrued to both farmers and consumers. They accrue to agribusiness firms. Therefore, after more than 7000 years of agricultural evolution, agriculture is good for business expansion of corporations, but bad for farmers. To some extents, it is bad too for consumers and taxpayers. Why the divergence between farmers and corporations has been taking place and what will agriculture and farmers look like in the future if the situation continued? What should be done to avoid worsening future farmer condition? These questions are, among others, our problems and the immediate answers are waited by millions of farmers around the world. Let us take a brief history of Indonesia under colonialism and after Indonesia independent from the Dutch. I believe this short history will enrich our insight on why we have to change our value and conduct of agricultural development in the future. For the case of Indonesian or South East Asian countries, the year of 1511 was the marked of global changes. In this year, Portuguese conquered Malacca. The permanent impact of Portuguese occupation over Malacca was the chaos of trading organization systems in Asia.3 Spices were giving very valuable income at that time. 1

See, for example, for the work between a theologian and an economist, P. King and D.O. Woodyard, 1982. The Journey toward Freedom. Economic Structures and Theological Perspectives. Associated University Presses, Rutherford.

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W.C. Lowdermilk,”Conquest of the Land Through Seven Thousand Years.” U.S. Department of Agriculture, Soil Conservation Service, February 1948.

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M.C. Ricklefs, 1998. Sejarah Indonesia Modern. Gadjah Mada University Press, Yogyakarta.

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The concentration of spices was in the Maluku islands (Mollucas). For about one century, Portuguese controlled Maluku and European market for spices. High profits invited other European to find the way directly for spices to Asia. The Dutch company, “Far Land Company,” on April 2, 1595, sailed for Asia and successfully returned to Holland at the end of 1597. This successful voyage to Asia opened the way for the Dutch and other Europeans such as the British, to Asia, particularly Indonesia. Competition among the Dutch traders had reduced profits from spices trading. The situation induced the creation of United Dutch East India Company, which is well known as Verenigde Oost Indische Compagnie (VOC)4 in March 20, 16025. This is a dark marked for Indonesia because after this date, for more than 3.5 centuries, the Dutch controlled Indonesian people. The degree of control of the European nations over Asia and Africa, which is called colonialism, has increased from one period to another. In the 1600s, Maluku was completely controlled. In 1619 Jan Pieterszoon Coen took over Batavia (now Jakarta) and it was an initial point in time for the Dutch to conquered Java. In 1620s, VOC completely destroyed and emptied the island of Banda in Maluku, from local people and filled it by the slaves and outsiders that cooperated with VOC. Almost all VOC’s foes in Java were conquered in 1682. VOC ruled the region and monopolized trades. VOC was liquidated in January 1, 1800, after almost 200 years operating colonial business in Indonesia6. The 19th Century gave harsher time for Indonesian. Wars in Europe and maturing industrial revolution called new strategy for the Dutch to gain benefits from Indonesian colonialism. Diponegoro raised the last big Java war in this century in 1825-1830. In this war, at least 200,000 Javanese were killed that made the population of Yogyakarta reduced to a half. The end of Diponegoro’s war opened opportunities for van den Bosch to implement cultuurstelsel (Cultivation System) that forced Javanese farmers to plant industrial crops such as sugar, coffee, tea and indigo that at that time having very good and high value. Cultuurstelsel provided a huge amount of fund for the Dutch. Between 1831-1877 the Dutch received 832 million guilders. This amount of fund made the Dutch economy growing and healthy. In practice, the end of cultuurstelsel was in 1917 for coffee in Priangan and in 1919 in other places in Java7. The new mark of deeper colonialism was 1870. In this year, the Dutch acted an Agrarischwet 1870, namely the law that giving opportunities to the European to invest in plantations. The roles of private companies due to that act were significant. In 1860, export value of private companies and government owned companies were equal, however, in 1885, export value of private companies was ten times larger than export values of state owned companies. This situation has clearly negative impact to farmers because of the land available to them has diminished. The new pattern of land policy under this system made Indonesian farmers; especially Javanese farmers are not true farmers. They are just peasants with their average land holding size less than one hectare per farmer. Almost a century after the enactment of Agrarischwet, under the Indonesian Government now, the Indonesian government enacted the Basic Forestry Law No. 7 in 1967. This law basically has the same soul with Agrarichwet 1870 that is giving forest resources to be exploited by private companies under licensing systems. Then, virgin forest resources in the outer islands of Java were under controlled of private companies. Again, local people were displaced and the regional economy has been distorted. Furthermore, in early 1970s, government of Indonesia developed Nucleus Estate System (NES) and in the 1980s developed a national private owned estate system (Perkebunan Besar Swasta National). Both systems were subsidized and 4

J. Kay (2004) stated that “the combination of moral rigor and free inquiry is the basis of disciplined pluralism—the defining characteristic of the successful market economy”. ..”While Spanish colonists were soldiers in search of gold, British and Dutch colonization was managed by business such as the East India Company and the VOC..and its purpose was commercial exploitation”.

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Els M. Jacobs, 1991. In Pursuit of Pepper and Tea. The Story of the Dutch East India Company. Netherland Maritime Museum, Walburg Pers. Amsterdam.

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M.C. Ricklefs, 1998. Sejarah Indonesia Modern. Gadjah Mada University Press, Yogyakarta.

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M.C. Ricklefs, 1998. Sejarah Indonesia Modern. Gadjah Mada University Press, Yogyakarta.

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facilitated by government. The latter system has reduced the opportunities of small farmers to get the land for agriculture. In the food crops sector, rapid changes in farming in developing countries were induced by the “green revolution”(GR) in the 1960s and widely spread in the 1970s. GR is a system of agriculture applied to smallscale farmers by introducing a “new technology” that have been developed and used in developed countries in the earlier period. The main objective of this new development was to increase food production to cope with a large number and fast growing population in developing countries. GR was directly controlled by the government and induced by international agencies such as the World Bank and International Rice Research Institute in the Philippines. New seeds were developed, irrigations were built, chemical fertilizer and pesticides were applied, extension and research institutions were expanded and the government control almost all activities and environments faced by farmers. The results were amazing, food production, especially rice production for Indonesia, increased significantly. Such production increase was due to increasing in productivity and in cropping intensities. New seeds, one sometimes called it miracle seeds, have not only increased yield but shorten time between planting season and harvesting season. In the case of rice, time required between planting and harvesting was reduced from 6 months to about 3 months8. In the previous period, farmers only planted rice twice a year, in irrigated land, however, after green revolution, farmers planted rice three times a year. GR changed the life of farmers in developing countries significantly. They have to work harder than before. For example, increasing cropping intensities means that they have to add labours, capital and of course, reduced leisure. Farmers have to know, to use new technology, and to bear new consequences. In the middle of 1970s, for example, when new rice varieties planted widely in Java, the outbreak of brown plant hoppers had significantly destroyed all harvest. This risk was fully responsibility of farmers and they paid with hunger and other kinds of costs. Under the command of President Soeharto, every body followed all instructions and practiced what had been instructed. The magic word was development and national interest. Food selfsufficiency was one of the most important development goals and it was viewed in line with the national interest. A systematic and well-organized power in the hand of government has forced behavioural change of farmers especially rice farmers. The peak was the achievement of rice self-sufficiency in 1984, after about 15 years of hard works of farmers. The above brief story of Indonesian agriculture told us that the our world has evolved from free trade9, monopolized by the European particularly the Dutch through VOC, foreign private investors took the land and done plantation business, cultuurstelsel, forests and new land were given to private investors, and green revolution that increasing food production but reduce farmers’ freedom and welfare. Therefore, in the eyes of farmers, we have not done good things for them. What we have done is just asking them to do valuable things for us. We observed that social changes had not been induced by co-evolutionary process between knowledge, institutions, biophysical resources, technology and markets where farmers are actively involved as subject of development. Social changes have been created by “the worlds” above farmers. Therefore, the mind that controls the process of change was the mind of “the worlds” above farmers’ world. The worlds above farmers started from global powers that are represented by “global governments” which are composed of three groups: developed countries governments, international institutions such as the World Bank and International Monetary Fund (IMF) and multinational or trans-national corporations. These powerful institutions create influences to the global world and induced some changes should be taken. There are many issues of agricultural development but one of the most important issues is how to reach food 8

For example, see Chapter III for evolution of agricultural performance in Indonesia.

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See, for example Bolaky and Freund (2004) that concluded, “increased openness is, if anything, associated with a lower standard of living in heavily-regulated economies. We agree that trade is beneficial for parties involved. However, we also know that there are many factors behind trade not always make fair reciprocal benefits for one of the parties.

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security for the global population. Farmers produce foods, therefore, the roles of farmers are certainly strategic. Food security is called for if industrialization or civilization is our goals. This idea brings farmers to the global interest, namely how to continue industrialization. However, looking at the farmers’ point of view, the logic of food security is questionable because it is only reasonable for farmers if food production increase will increase their freedom and welfare. We know that increasing production does not always necessarily mean with increasing income. However, in the eyes of manufactures or consumers, increasing food production will mean increasing food security and will lower costs of food. Therefore, it will be better for industrialized world to have high stock and low price of food. Low bargaining power of farmers will certainly make the interests of industries the winner. Brief description of relationships between local and global agriculture is presented in Table 1.1. Furthermore, globalization also makes developed countries in the more advantageous position. As agricultural industrialized countries, developed countries have reached their own food surpluses. This is true for countries that have sufficient land resources and high agricultural technology such as the United States or Australia. Globalization means opening market for their surplus products, especially developing countries that characterized by high population. This is a second gained made by developed countries to make income from exporting their agricultural products to developing countries that experiencing food deficit. However, this is a real threat to developing countries farmers especially when their products must compete with agricultural imported products that subsidized by government in developed countries. Table 1.1. Relationships between Local and Global Agriculture

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Local

Local

Global

I

II

There were certain local values and local practices by farmers in developing countries. Rice farming has evolved more than a thousand year in Indonesia and Asian countries, so it is already a part of their culture.

Growing food concern of global world leaded by industrialized countries after Asian and African countries have returned to independent countries just after the Second World War. The industrialized countries play active roles in almost all aspects of agricultural development.

The agricultural systems are stable. Farmers are free to choose according to their wish. The rules are decentralized. Food Farmers are almost independent from the global world.

Local farmers are forced to change by all institutions above them even though they must bear risks and uncertainty. Over all efforts usually called Green Revolution and presumptive judgment of Green Revolution is that farmers gain significant benefits. Unfortunately it is not the case. The true is that the worlds above farmers are the gainers and farmers are the losers. Globalization is against local developing countries interest and welfare.

Globa l

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III

See II

Industrial crops such as rubber or coffee represent globalization of developing countries agriculture. Global market shows that price of agricultural products exported by developing countries has been declining over time. Developing countries agriculture becomes importer in food and loser in industrial crops. Therefore, globalization makes developing countries as the losers in all aspects of agriculture. As a result, developing countries farmers lose their freedom and welfare.

Therefore, we see that the world placed burden too much to farmers in developing countries. In fact, we can say that the world institutions have not played as responsible institutions. In one hand, they induced farmers to increase food production but, on the other hand, they let down farmers welfare all over the world deteriorating. The same thing with national government, power has been used to induce farmers to work hard to increase food production, but at the same time, farmers have not been helped to maintain or increase their welfare. What have been happening in the last 30 years or more, in term of farmers’ point of view, is that a new kind of global farmers colonization10. Therefore, development, including agricultural development, just making the worlds above farmers getting better life without giving sufficient compensation to farmers. It is important to note that market has been so unfriendly to farmers. Ethical neutrality hold by economists who give advise to policy makers usually say that declining price of agricultural products in international market is natural because supply of agricultural products exceeding demand for them. They do not consider 10

See, among others, (1) J. Ikerd,”The Colonization of Rural America”, Department of Rural Sociology, University of Missouri.; (2) R.W. Cotterill, “Food Marketing Policy: A Critique of Current Food System”, Issue Paper No. 20, May 2000. Food Marketing Policy Center, Food Marketing Policy Center, Department of Agricultural and Resource Economics, University of Connecticutt, Storrs; (3) William D. Heffernan, and Mary K. Hendrickson, “Multinational Concentrated Food Processing and Marketing Systems and the Farm Crisis”, Department of Rural Sociology, University of Missouri, Columbia, MO, Paper Presented at the Annual Meeting o f t h e American Association for the Advancement of Science Symposium: Science and Sustainability The Farm Crisis: How the Heck Did We Get Here? February 14-19, 2002Boston, MA.

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reasons behind increasing food supplies which are unethical. If we understand that agricultural production increase was due to application of power that abused farmers’ interest, then it will bring us into a question whether or not the worlds above farmers should take responsibility. Present situation suggests that global agencies preferred to hold view that all responsibilities are the responsibility of farmers alone. In fact, the usual proposed solution is abolishing subsidy to farmers11 as an implication of view: let markets work. Again, we see that when farmers are needed, we force them by whatever means to follow the goals derived from our mind; but, when we reach our goals, we change our mind to set other goals, and let farmers to survive by their own ways. Here we see that what is behind market is power used by powerful institutions for serving their interests. Market is beneficial, but if market is abused by super power, then market loose meaning as an ethical instrument for mutuality across individual through global exchange. History shows that farmers have no voice and have no power to think what is the best according to their views or interests. Therefore, what farmers have practiced was usually a product of intervened behavior done by powerful institutions. If farmers try to disobey than the disobedience farmers were forced by power. It is already shown by story of transforming agriculture or by cultivating system such as mentioned above. Farmers have contributed to global food security, however, at the same time farmers’ welfare declined significantly. The main source of farmers’ welfare declining was due to farmers have no freedom12. The forces for “modernization” in agriculture will continue to take place. Fast development in biological sciences and technology has opened new controversial issue in agriculture for both developed and developing countries, namely the emergence application of genetically modified organism (GMO). GMO is a new organism when human being inserts a new gene into a specific organism. For example, Bt-cotton is cotton that contained a gene of Bacillus thuringuinsis (Bt). The function of Bt is playing as insecticide that is killing Helicoverpa armigera that has high capacity to destroy the quality and quantity of cotton production. According to James (2004) there is 86 million hectare of soybeans biotech agriculture and 56 % out of it are transgenic soybeans. Moreover, 14 % out of 143 million hectares biotech corn are transgenic corn; 28 % of the world cotton area is transgenic cotton and 19 % of the world canola is transgenic canola 13. Recent development in agriculture, farmers in some parts of Asia, such as in China and India has used genetically engineering crops. Pro-con application of biotechnology agriculture will continue to take place in the future. If in green revolution era multinational corporations were behind government policy, now in era of biotech agriculture, multinational corporations actively induced changes in shifting of traditional agriculture to “modern” agriculture. Issue of food and agriculture has absorbed the world attention. Food and Agriculture Organization (FAO) has been established under the auspice of United Nations Organization (UNO). In the World Trade and Organization (WTO), agriculture is always a hot issue. Agricultural research institutions that cover a global context have also been established such as in the Philippines we have the International Rice Research Institute (IRRI) and in Mexico we have the CIMYT (International Research Institute for Maize). The World Bank, Asian Development Bank and other donor agencies and government in the developed world have also concentrated their concerned and assistances to promote agricultural development in the developing countries. International non-government institutions (NGOs) and universities also put energies in helping developing countries to develop their agriculture. In association with those concerns, there have been various programs and institutions have been promoted and applied, starting from increasing production, income, food security, infrastructure development, building policy formulation capacities, developing research and development 11

A. Afandi, a Minister of Agriculture of Republic of Indonesia, explicitly stated that farmers’ subsidy should be abolished see A. Afandi, “Subsidi Pangan Harus Dihapus”, PRISMA, Tahun XI, No. 10, October 1982: 62-66.

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In the 1960s, one gram of gold was equivalent to one quintal of paddy, now one gram of gold was equivalent to eight-quintal paddy. Therefore, for present farmers they have to sell 800 kg paddy to buy one gram of gold. It shows that farmer’s welfare has declined

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James, C. 2004. Preview: Global Status of Commercialized Biotech/GM Crops: 2004. ISAAA Briefs No. 32. ISAAA: Ithaca, NY. China and India have planted Bt-cotton about 3.3 million and 0.5 million hectares, respectively.

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institutions, and others. Several changes have been induced by those efforts. A continue long-term declining agricultural real prices had been raised by Prebisch and Singer since more than 50 years ago. Declining food and agricultural prices is the case for agricultural primary products that produced by millions of farm families across the world. However, prices of food and other processed products have not been declining, or even increasing. For an illustration, between 1975-1995, real corn prices in 1995 were lower than its price in 1975, but consumer price index for food increased for more 200 %14. At the same time, multinational corporations in food and agricultural sector grow in a tremendous rate. In fact, the 20 th Century was belonged to multinational corporations such as shown by their fast accumulating wealth and power in their hand. Out of 100 institutions in the world, including states or nations, according the income performance, 51 out of them are multinational corporations. Just as for illustration, income Mitsubishi was larger than Indonesia’s gross domestic product (GDP)15. Significant changes in the world economic structure such as shown by multinational corporations in generating wealth has tremendous impact to the world economic structure, especially to farmers in developing and developed worlds, consumers and tax payers. If the world’s economy has been growing for more than 50 years, but majority of people’s wealth declining and on the other hand, a few people become very rich, then there must be something wrongs in our global economic institutions. Economy shows interdependencies across economic participants. One’s income is others’ cost, and vice versa. It is very clear. Growth reflect that there is a new “bread” that has been produced by the world’ communities. However, then a majority of the world’s community has no share to the new “bread”; in fact, they only share the costs, such as environmental costs. All new bread and some flows of benefits that resulted from our ancestor investments or created by nature, e.g., natural forests and marine resources or mineral resources, are all taken by the richest. So, income, wealth, enjoyment and other kinds of value dimension—material values and immaterial values, are skewed distributed, more than 80 % of the world’s resources are enjoyed by the developed countries. The above issue is not a new one. In fact, it is our historical issues since the origin of our human life. The efforts to solve the above issue are also not new either. The world has built so many institutions and efforts to overcome the world problems. The capacity of human mind such as shown by human artefacts—material or immaterial human artefacts, has also significantly increased. Tremendous increase is happening in science and technology that has made the world become so “small” now. Information, communication and transportation technologies have been developing at the rate that far beyond average individual minds to comprehend. What decided in Washington D.C. now, for example, people all over the world will know just right after decision was made. Opening Suez Canal in 1869 has revolutionized transportation patterns, but it still took months to travel from Europe to Indonesia. Transportation revolution now, has made the possibility to travel around the world in only a day. Therefore, human mind capacity to overcome the world’s longest problems such as poverty hunger, famine, and other aspects of human sufferings now are significantly increasing. However, such power has not been fully used to solve those problems. In fact, we are just recently thinking about how to solve poverty in a global context and the poor world is waiting for the results16. 14

See American Corn Growers Association, “Consumer Food Prices versus Farm Prices over the last 25 years”, Concentration in Agricultural Markets February 2002 Washington, DC. www.acga.org

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See www.Corporate Watch.org Human efforts to fight poverty have not been so long relative to our history. In fact, human inter-relations in the past were based upon power that created one party as the winner (if one is stronger) and other parties as the losers (if they are weaker). History of slavery and colonialism are by themselves creating the slaves and the losers have no rights to gain wealth. According to our parents stories, for example, during the Dutch colonialism the local people that was called Bumi Putra was treated as the third class of citizen after the Western and the Asian foreign origin; and under the Japanese occupation, even only in a short time, the impact to local people were very significant. Most food and other things that useful for the Japanese had been taken. In fact, beautiful women were taken for sex and other pleasure. A novel written by Suparto Brata (2002) “Saksi Mata” (Penerbit Buku Kompas, Jakarta) told a part of the story. During the Japanese occupation, in my mother’s family we have two cases of missing women that up to now we have not known what had happened to them. A good novel written by Mayon Soetrisno (2001) “Banda Neira.” (Taramedia, Jakarta) visualized an unimaginable behavior of the colonial. Furthermore, the book “ Max Havelaar” (1860) that was written by Multatuli also shows us how the colonial zed people were suffering from poverty.

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Farmers’ freedom has been taken by the worlds’ above them Why majority of people in the world are still suffering for survival? Why the world sufferings are concentrated in Asia, Africa, and Latin America? Why agriculture is good for humanity but not for farmers? Why our global environments deterioration is threatening? People talked and spent resources for global sustainability, but why we have not reached our goals? Why we have terrorist suicide bombing? Many more questions will make us frightening and feel no hopes for our future sustainability, if we use our pessimistic attitude. Of course, it will be more beneficial if we hold our optimistic side of our mind and find the ways to solve our problems. What is our source of optimism? The main source of optimistic view is that our created mind of the future itself. History is lesson and future is product of our mind. The past cannot be changed because we cannot be back into past time. However, future, according our time now, is an open option. One thing that should not be forgotten is that we have no rights to destroy the rights of future generation, namely our predecessors, from opportunities for having good life. Better environments, available good quality of natural resources and sufficient good food is only examples that we discuss most of our time now. However, we are lack of thinking and doing basic efforts on how to maintain peace, harmony, and stability that will be transmitted by us to our next generations. In fact, what our next generations receive from us is a bequest of the world conflicts or sources for making potential future conflicts. Lack of freedom such as reflected by huge mass poverty and wide inequality, is, among others, source of conflicts for our next generations. Therefore, taking care of such issues is implying that we are taking care of our children. We are naturally endowed not only capacity of mind in term of logic, but also we are inherited of mind that contains spirit and feeling of humanity. It is very logical to have labor as a slave because the cheapest labor is if he/she as a slave. However, such kind of logic is not acceptable by currents human social values. Human spirit and feelings have evolved in such a way that slavery is not only immoral but also legally prohibited. Market without morality can slip into slavery such as what happened in the past. The same thing with what we called by development. Development without morality can also slip to slavery that is making one disadvantage group of people as slaves of other advantage groups of people. Therefore, both market and development call for morality ground and morality ground will not come automatically. It is natural for us now to expect having better future of the world. The world community can learn together on how to develop and to internalize such expectation into our moral values and into our daily practices. The most important sources for changing our mind for having better future is contained in the human potentials that enable us to change our mind. Self-generating interactions that create new mindsets that more pro-better future condition are essential. Evolution of mankind has come to a situation that the gap between farmers or agriculture and the frontiers of human activities is much more distant than, for example, 30 years ago. The present era is usually called as era of information or knowledge base economy. Bill Gates, among the richest man in the world, is a symbol of successful persons in our new era. Bill Gates’ income this year reached US$ 46.5 billion or equivalent to total average income of 6,478,873 people in Indonesia in 200217. In this era, we observed that farmers in developed countries are only composed of about 2% to 5 % of total labor force. The evolution of developed countries societies has passed agricultural revolution, industrial revolution and now are in the age of information era or knowledge based economies era. Therefore, the largest part of labor force is in industry and service economies. The contribution of agriculture in the developed countries economies is the smallest part, only about 2 %. However, the new era is not yet occurring in developing countries. Most of people in developing countries are still dependent on agriculture. Therefore, agriculture still plays important roles in both as source of income and employment. The growth of agriculture provides large contribution to poverty alleviation and food security. Agriculture also plays a determinant role in stabilizing economies as a whole. As poor countries most of 17

Bisnis Indonesia, 12 Maret 2005.

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households’ expenditure goes to food, so increasing food prices will have significant impact to majority of the people. On the other hand, low food and other agricultural product prices will reduce incentives for farmers. Industrialization which is viewed as a must for reaching a higher stage of economy, demand for not only huge investment but also calls for cheap inputs, including low wages. Because of surplus labor in developing countries, especially unskilled labor, then low wages are also an integral part of labor market. Low agricultural commodity price and low wages make majority of people, namely farmers and labours, receive low income. Low income means low capacity to invest in skill and knowledge. It also implies that developing countries face severe constraints in globalization. It is a pattern of vicious circle of poverty. Vicious circle of poverty is the same as vicious circle of unfreedom18. If development as freedom, such as stated by Sen, then freedom is solving vicious circle of poverty in itself. Alternatively, freedom is foundation of values in development, or freedom as an initial cause of development processes when poverty is only one aspect of development. This analytical foundation has further reaching implications than the present commonly used framework of development thinking. One of the most important thing of this framework is to place an individual as a fully human being, not as a labor or capital. We started from spiritual thing, namely the spirit of human to seek freedom. Spirit is an eternal power that opens the mind of human of each individual to seek the meaning of his existence, position, function, role, or values as human being in his/her self or in relation to other beings. Freedom is an abstract concept. According to thesaurus the meaning of freedom could be liberty, autonomy, lack of restriction, self-determination, independence, choice, free will, and sovereignty. Farmers are man that work in agriculture. They plant crops or raise livestock for their living. They use their products or sell them to the market. Farming is a job of farmers. Are farmers freemen? Or, do farmers have freedom? As mentioned in the earlier section, farmers in developing countries are mostly poor farmers. Poor farmers, especially those farmers who live in remote areas, may seem as free farmers because they have not received intervention from their outside world. However, they are poor because they cannot maintain sufficient food for the whole year or they have lack of medical treatment where they are sick. Their life expectancy is short or mortality rate is high. According to this situation we call them unfreedom farmers. The reason is simple. As normal human being, living in such kind of situation is suffering. Life is more joyful if we can live longer in healthy and wealthy condition. How about farmers in developed countries? Farmers in developed countries are having sufficient food, shelter, transportation and so on, for example, but all those things are received from government subsidy and the source of subsidy is from taxpayers. We also view that this case is not the case of farmers’ freedom. It is important to see the latter case as unfreedom because they have no autonomy; their life is dependent on unwilling helps from other people. People do not like to pay tax but they have to pay because of the law. If subsidy is eliminated than farmers in developed countries will also face severer life than now. Therefore, if we use this point of view we will have the case that farmers in both developed and developing countries are facing unfreedom, the different among them is only a matter of whether there is government subsidy or not. The development view that currently practiced is usually see that how to solve vicious circle of poverty is using government institution to lead development process or asking other agencies including non-government institution (NGO) to help farmers. The term of community development, participatory approach, social safety net, and other name reflects that farmers are still viewed as weak persons and the helpers such as extension workers or NGOs are stronger body. This way of approaching problems is not appropriate because we still spiritually seeing farmers are weaker than us and we are stronger than them. However, it does not mean that we should not help farmers, and let them dying as in the case if one sees that a person drowned in a river and one says it is his fault because he cannot swim. In fact helping each other is our duties to get better future. Farmers are strong people, perhaps even stronger than us. They can help themselves. History shows they can “swim” for more than 7000 years. The proof that they are strong people is that they are still surviving by using

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See Amartya Sen, 2000. Development as Freedom.. Alfred A.. Knoff, New York.

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their limited resources and capabilities. However, they were drowning deeper and deeper by the worlds above them. Why they are poor (unfreedom) is because they face too much intervention by the worlds above them that make their life suffering. What have been taken by the worlds above them are not only their labors, skilled and knowledge (most importantly their tacit knowledge), but also the main essential of human life, namely their minds. Not only taking farmers’ minds, the worlds above them have been injecting new mind and power that make their unfreedom. This process has been done along the history of agriculture, especially in developing countries. Fortunately, farmers are still strong to some degree, such as indicated by their survival rate up to now. However, such farmers’ unfreedom has reached into a critical stage of mind, namely their increasing dependencies to the worlds’ above them. Who are the worlds above farmers? We can learn from history. Above farmers, there are many kinds of powerful abstract worlds. . In economic world there is what modern people called market. Market has been viewed as an ideal world economy that is believed can or will make everybody’s welfare progressing. Subsistence farmers always viewed as traditional institution that has to be changed into a commercial institution, namely market institution. Farmers have been induced by incentives from exchange institution (market) to produce surpluses and sell those surpluses to market. However, market structure faced by farmers usually not a kind of idealized market structure. Market faced by farmers is a kind of market that is well organized by traders or manufacturers. Farmers face local monopoly that is tightens up with other monopoly or oligopoly markets in regional levels. This regional oligopoly market is subordinate of national oligopoly markets and this national oligopoly markets are controlled by international or global oligopoly markets. Therefore, prices, which reflect value per unit of product sold by farmers, are very low relative to value products paid by consumers. The higher the surplus of farm products created by farmers, the lower the share of market value received by farmers. On the other hand, the lower the price of farm products the higher the benefits of communities above farmers’ world. However, it does not necessarily or automatically means the welfare of consumers will increase. Trend of real prices of processed food paid by consumers, such as shown in developed countries, have been increasing even though prices of agricultural primary products have been declining. Recent farming crisis in developed countries such as in the US and in EU showed what has been happening to farmers and agriculture in developed nations. Farmers in developing countries have been experiencing worsening situation19. Therefore, structure of market power such as experienced in history is ideal instrument for making farmers unfreedom and on the other side making the worlds above farmers more freedom of life. Second abstract world that make farmers more powerless is government. Government is a form of institution that justifying legitimised collective action based on laws or regulations. Therefore, what government does is legally justifiable. One commonly accepted government action is imposing taxes to citizens. Therefore, all people including farmers must pay taxes. Taxes are collected in central government and distributed by rules established by government. To what extent taxes paid by farmers directly, and “indirect taxes” such as reflected in lowering price of food, have been returned to farmers and rural communities? If we use number of poor people in rural areas are larger than that of poor people population in urban area, and rural infrastructures are poorer in rural areas than in urban areas, then we may hypothesize that most government income from taxes have been used in urban regions. In Indonesia, in 2004, government collected tobacco duty for more than Rp 27 trillion or about US$ 3 billion. However, tobacco farmers and clove farmers in Indonesia instead of supported by government for preparing or finding new employment opportunities in the future, have received almost nothing. US$ 3 billion a year is almost equivalent with total export of industrial crops such as palm oil, rubber, coffee, and cocoa. Therefore, farmers are just giving support to the worlds above them. Pricing policy of food is also an example of government’s or more precisely policy makers’ value that against farmers’ interest. Cheap food price policy is fine as long as farmers do not only pay such cheap food. All people must have access to sufficient food in both quantitative and qualitative term, but farmers have already 19

See, among others, William D. Heffernan, and Mary K. Hendrickson, “MULTI-NATIONAL CONCENTRATED FOOD PROCESSING AND MARKETING SYSTEMS AND THE FARM CRISIS”, Department of Rural Sociology, University of Missouri, Columbia, MO, Paper Presented at the Annual Meeting o f t h e American Association for the Advancement of Science Symposium: Science and Sustainability The Farm Crisis: How the Heck Did We Get Here? February 14-19, 2002Boston, MA.

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contributed to make food and agricultural products available to all people. If government wants to have cheap food, then cheap food price should be compensated for farmers by the rest of communities. Argument that imported food is cheaper, for example, should be checked whether such international food price is distorted by subsidies in exporting countries or not. Or, whether do we have alternatives to achieve cheaper food price without declining farmers’ income. The point is government wrong policies will create a situation that will make farmers’ life deteriorating. International agencies decisions in influencing global markets and national governments in developing countries will create a harsh situation for farmers. Under the name of increasing competition that cannot be differentiated from farmers’ exploitation actually create more bad than good to farmers. On the one hand, international agencies pushed governments in developing countries to open markets for products from developed countries, but on the other hand, developed countries give subsidies and protects their domestic markets for products from developing countries. The worst case is to take freedom of developed countries people by using their assistances as weapons. Almost all assistances to developing countries have influences on increasing agricultural production. However, because international markets have no changes in term of both market structure and values behind exchanges, then increasing agricultural production means declining price. All farmers’ products are primary products. Declining prices of agricultural primary products mean declining farmers’ income. Therefore, the goal of increasing production of agricultural primary products under assistance of international agencies just created negative effects for farmers’ freedom. Multinational corporations working in food and agriculture have high interest in increasing production of agricultural primary products. Expanding production means expanding demand for agricultural inputs. Therefore, demand for multinational products such as pesticides or seeds will increase. Increasing global food productions induced by global policies, which are directed by international agencies give indirect supports to multinationals or trans-national corporations working in agricultural inputs. This global goal is also in the interest of multinational corporations that working in manufacturing food products. Global surplus of raw materials means cheaper prices for them, and it is does not mean cheaper food for consumers such as indicated by trends of prices of food globally. Therefore, increasing surplus of agricultural products gaves multinational corporations more rooms for making larger profits without benefiting farmers and consumers. We clearly observed, for example, the establishment of agricultural manufactures do not necessarily create better prices for farmers. Most academicians especially economists have also stand up under the name of free trade or competitive markets to inject views or beliefs that free trade will give better situation for all people in the world. However, for farmers, free trade means free fall of prices and so free fall of farmers’ income.20Argument that cheaper is better is a nice argument and it is true for certain condition, namely when we act as a consumer.21 The argument that at the end a right policy is judged by how far consumers’ surplus is achieved is right as long as market price has been able to articulate all characteristics contained in certain goods. The more the goods contain characteristics of basic resources, the cheaper the market price will be. It is not caused by natural resources are in abundance condition but because of market is imperfect. We can take environmental quality as an example. Clean air is not abundance in a city now, but clean air has zero prices. Of course, there are high costs such as reflected by high health costs that should be paid by urban communities. In agricultural products such as food there are also elements of basic resources for human health that is not internalized in its market price. Vitamins, minerals, and other things are contained in a banana, for example. However, price of a banana does not relate with such basic resources for better human health. In fact, most competitive markets argument for cheaper price is only profiting certain groups of people such as traders and manufactures under influence of multinational corporations. See Greenfield, Gerard, “Free market freefall: declining agricultural commodity prices and the ‘market access myth”, Focus on the Global South. http://www.focusweb.org/main/html/Article310.html 20

21

Ikerd, John , “The High Cost of Cheap Food”. Published in Sustaining People through Agriculture column, Small Farm Today, July/August, 2001 issue.

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Farmers have no friends. The worlds above them are just pursuing their owned interests without taking care farmers’ interests. This case has been true for along history of farming. Policies generated by government have picked larger corporations as the winners and created farmers as the loser. Farming crisis in developed countries can be taken as major lesson for farmers in developing countries and vice versa. For better future, changing the historical trend is necessary.

Changing the History Does history come by itself or must we create our own history? If we want to have our future as we perceive or even better than what we perceive now, we have to make our own history. We can exercise our mind by making projection of agricultural prices trend to perceive what will farmers’ history be. If we use linear trend to simplify our thinking, then we will find, for example, the declining rate of agricultural prices from 1960 to 2000 about 0.58 a year, namely declined from 208 (1960) to 87 (2000)22 where price index in 1990 was 100. If agricultural prices are continuously declining at that rate, then at the end of this century, agricultural price index will only be 29. Can we imagine what will happen to farmers if they follow that trend of price declining? Number of farmers in developed countries has reduced to about 2 % out of labor force, and contribution of agricultural primary products to the GDP is only about 2 % now. On the contrary is the case in developing countries where agriculture still plays dominating roles in their economy, especially in employment creation. One of easily seen consequences of continuously declining agricultural prices is increasing incidence of poverty and inequality between farmers and other groups of developing countries societies. Economic development is expected to transform the economy from heavily based on agriculture to industrial economy. This kind of evolution has been a process of rapid changing economic structure in developed nations. Less than a century, for example, the US economic transformation has reduced number of farmers from more than 50 % in 1860 to less than 10 % in 1960 and now is about 2 % 23. Can developing countries follow the path of structural evolution such as happened in developed countries? Can information era be compatible with agricultural development in developing countries? China Cultural Revolution had been paid by about 27 million death of people because of hunger and famine during 1949-1951, and now after more than 50 years China has not yet become a developed country. Green revolution has been practiced for more than 30 years but Indonesia still have about 20 % people in poverty and income per capita only reached the level of about poverty line standard. Therefore, what goals should be taken and what direction and instruments must be taken to reach our better future? In the case of Indonesia, if the economy grows 5 % a year, then in 2035 income per capita of Indonesian will be just what has been achieved by Malaysia in 2002. What are sources of growth for maintaining 5% annual economic growth? Can we rely on industrialization in a sense we develop factories as many as possible? Meanwhile, do we have better alternatives? What are the basic conditions should be made to allow most people productive? What are requirements for creating better environmental quality? What are the roles of agriculture should be placed? There are many more questions can be listed. However, the point I would like to raise that there is no easy answer. If we consider that Indonesia is a fourth largest populous country in the world and in 2035 Indonesian economy will still be dominated by agricultural economy such as Malaysia or Thailand now, then Indonesia will have not much opportunities. Majority of people will still depend on agriculture in general and more importantly value system of most Indonesian people will still be dominated by rural value system. Therefore, basic question is that if the opportunities are still mostly laying in agriculture, should we continue the way to build agriculture just like what we have done in the past and what we do now. Alternatively, should we create new values and means to create our better future? 22

The World Bank, 2001. World Development Indicators.

23

See The World Almanac, 1999. A Primedia Company, New Jersey.

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What are basic values underlining agricultural development in the past? First, policy makers were just seeing and treating farmers as only an instrument, especially in food crop development. Government and other agencies, including international agencies such as the World Bank, have predetermined the goals and the ways to achieve the goals. Therefore, government has been playing as a supra institution that determine the future of the people. Second, agriculture in general has been used as a major instrument to spur economic growth. However, the agencies to run the economies were given to private or state owned enterprise (SOEs). Two major sources of income related to agriculture here, namely forestry and plantations. Through Basic Forestry Law 1967 natural forests have been divided into concessionaries and large and rapid tropical forests logging were initiated. At early stage of forestry development, forestry played as a second important foreign exchange earnings just below gas and oil. Furthermore, in plantations government has given land and capital through a scheme of subsidy to private large companies and SOEs. Those two policies can explain the origin of conglomerate business in Indonesia such as we can find now. Third, government has also induced the development of cooperatives such as KUD (Koperasi Unit Desa, or Village Cooperative Unit) and the institutions above them, including the establishment of Ministry of Cooperatives. In addition to KUD system, government also established Bulog (Badan Urusan Logistik, or Logistic Agency) that has main task to control and to manage distribution of basic staple food, especially rice and to control price stability. Bulog was very a powerful institution. In the area of farm production, government also developed local, regional, and national institutions, which are responsible for diffusion of new technology. The main task of this institution is to conduct agricultural extensions. The institution of mass guidance (Bimbingan Massal) was one of the strongest institutions that directly controlled by the President. Fourth, government also developed strategic industry for agriculture, namely fertilizer factory. The supply of fertilizer is controlled by the government and conducted by SOEs working in this area. Fifth, in area of credit financing for farmers, government developed a credit scheme, which was channelled by Bank Rakyat Indonesia (BRI). However, since 1984 BRI was converted as general commercial bank that provided credit to farmers with borrowing rate about 34 % interest rate a year. This practice and this high interest rate are continued up to now. Sixth, agricultural research institutes were expanded and made the Agency for Agricultural Research and Development (AARD) became one of the largest agricultural research institutes in the developing countries. Hundred of agricultural young scientists beginning 1970s were sent to the US or Europe countries to take advance degrees. . Seventh, infrastructure mainly irrigation has been developed and expanded. The development of irrigation involved surface irrigation, ground water irrigation, and swampy irrigation. Farmers Water Users Association was also developed as a part of irrigation development, not as a part of agricultural development. Many more aspects have been developed during the New Order government. The above mentioned are only some essential aspects that are related to farmers and agricultural development. The development process was guided by Five Year Development Plan, which is called Repelita (Rencana Pembangunan Lima Tahun). National Planning Agency (BAPPENAS) produced Repelita and BAPPENAS controlled budget allocation for all government-financed development. Therefore, it was era of centralized design and control of development processes. The above way of development has produced some successful story, according to the view of policy makers. One of the most important success stories is Indonesia achieving rice self-sufficiency in 1984 that made President Soeharto received an honour recognition from the United Nations. In addition, the economic growth of Indonesia was consistently high that made Indonesia became a member of “Asian Miracles” or “Asian Tigers.”

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However, the indication of slowing growth of agriculture, especially agricultural productivity, has emerged since early 1990s. After 1984, Indonesia’s rice production has not reached its self-sufficiency level. The term of self-sufficiency then was changed to “self-sufficiency on trend,” namely allowing a country to import rice in a given year but on the trend production of rice is sufficient. The world surprises of Asian countries achievements have changed the mind focus of Asian policy makers including Indonesian policy makers. Industrialization comes to emerge as a myth of ways to achieve further progress. The world of globalization was also becoming the world of development mantra in Indonesia. On the other hand, policy makers’ mind and the mind of intellectuals, mostly from school of economics, put lesser attention to agriculture. The mindset has changed to industry and service sectors and almost every body forget agriculture. Only after economic crises arrived in Indonesia in 1997, policy makers rethought about agriculture and the word of poverty alleviation come again into daily polemics or discussions. Economic crisis taught that agriculture has saved the country from the worst condition; agriculture was the only sector that contributed positive economic growth. Indonesia should pay the cost as much as Rp 600 trillion to recapitulate banking business and spent more money for social safety nets. Economic crisis has made Indonesia returned into the “dark age” and made every concerned citizen to worry about what will happen to Indonesia in the near future. What was missing in the way of development in the past? One of the most important aspects that were missing in the past was a farmer in which they are composed of majority of population. The future of Indonesia was given to government and to conglomerates, and to international agencies. Therefore, what we mean by development was what in the mind of government and in the mind of conglomerates. History has been forgotten and the glamour of material wealth has displaced objectivity. We did not appreciate that small farmers’ ancestor has created almost all rice field in Indonesia. In addition; almost all industrial crops such as rubber, coffee, coconut, tobacco, cloves, sugar and others have also build by small farmers; except palm oil plantations were developed by large companies but they developed such efforts under government supports. The latter means that people have supported them, too. On the other hand, government and conglomerates’ mind have inhibited energy spirit of farmers and other forgotten people. Economic crisis and other weakness of Indonesia now reveal that government and conglomerates are important institutions but they cannot be given a task that will determine better Indonesia’s future. The reason is simple but basic, namely the main interest of government officials is to secure their position, and the main interest of conglomerates is how to maximize their wealth through creation of profits or rents. Those kinds of interest are incompatible with Indonesia’s progress, stability, and harmony. If we want to have better future we have to redirect our way of development. It is not only valid for Indonesia but also for all developing countries. This volume will try to seek knowledge and concerns of how we build our future. The main subject is farmers and agriculture, but the results are relevant for general development issues. Basic premise here is that freedom is the root of spirit or power for releasing energy useful for development. Development itself is defined as increasing capability of farmers can do or can be24. The issue will be much more complex because the situation of the world has changed significantly. When most Asian countries reached independence from colonialism in 1950, for example, the world population was only 2.5 billion people but now the world population is about 6 million people. Furthermore, in 2025, the world population was predicted about 7.5 billion. In 2050, the population of the world was projected around 8 billion (low projection) to 11 billion people (high projection). Therefore, within 100 years since 1950, the world population at least will increase by more than three times25. The world’s resources become scarcer. If we assume Indonesian economic growth is maintained 5 % a year, using a simple growth formulation suggest that income per capita of Indonesia in 2050 will be about US$ 8,000. This average level of income 24

25

This is following Sen’s thought of development, see: Amartya. Sen, 1985. Commodities and Capabilities. Elsevier Science Publishers, North Holland, Amsterdam; and A. Sen, 1993.Capabilities and Well Being. In M. Nusbaum and A. Sen (Editors). 1993. The Quality of Life. Clarendom Press, Oxford Source: United Nations, World Population Prospects: The 2000 Revision (New York: February 2001).

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achieved by developed countries in 1977-1978. In addition, a country that has income per capita around US$ 8000 in 2002 was Saudi Arabia. Income per capita of Indonesia in 2002 was US$ 710, and in this year income per capita of South Korea was US$ 9,930. So, observing those figures at least we may have an intuition or a sense that in 2050 will Indonesia be like South Korea in 2002? Whether or not Indonesia will be able to reach that level of per capita income is uncertain. What is quite predictably certain is that global situation in the future will be more intense with competitions. In fact, there might be also more intense conflict among nations. One of the most probable factors for intensifying conflicts in era of globalization is that there will be more competition of population on land or space for life. Most of population in the world in 2020 will be in Asia and this situation will make Asian countries to think and work harder and to maintain a more peaceful condition. Agriculture, natural resources and control over resources Agriculture is human activities that dependent on natural resources. Farmers are individuals or communities that raise their living from agriculture. The development of technology, organization, and management has induced a new form of agriculture, namely raising livestock or planting crops by corporation. The latter is an application of industry principles into agricultural practices. King called the latter as industrialization of agriculture26. The expansion of industrialization of agriculture has changed the tradition of family farming into corporatization of agriculture, and it will have significant impact to natural and environmental resources. In developing countries, such as mentioned in earlier section, in fact, has been practiced since the middle of 19 th century, especially in plantations of industrial crops. A company in Indonesia may have more than 100,000 hectare. So, we have majority of small farmers with land size less than one hectare, and at the opposite side we find a company with land size more than 100,000 hectare. What are the implications of this pattern of ownerships? What will be our future of agriculture when majority of farmers is lack of land but there are a few companies controlling land, capital, and markets? Can we transform our rural economies when majority of rural people are landless? Can we transform national economy from agrarian economy to industry when most farmers have no control over land, capital, and agricultural market? In other words, can we transform our economy if majority are the poor and lack of opportunities and minority are rich and controlling all economic opportunities? Let us learn from the US experience. One of the most interesting cases with the US is that rapid economic transformation in reducing number of farmers out of agriculture had not caused social revolution. All transformation is a matter of economic forces. In 1820, numbers of the US farmers were 71.8 % of labor force, and a hundred year latter, 1920, number of the US farmers reduced up to 27 % out of total labor force in the US. Compare to the situation of Indonesian now, there are still more than 40 % of labor force engaged in agriculture. In 1940, number of farmers reduced to 17.4 % with average size of farm 70 hectares (174 acres). In 1994, the number of the US farmers declined to about 2.5 % and the average land holding size increased to 191 hectares (471 acres). Increasing land holding size was also induced by President Abraham Lincoln that enacted Homestead Act 1862 that given opportunities to the US farmers acquired the land with very cheap price with a unit of the land 65 hectares (165 acres). What had happened in Indonesia was the opposite case27. In 1870 the Dutch colonial enacted Agrarisch Wet 1870, namely an agrarian law that allow foreign investor to open and use the land for plantation. Such types of law is still used up to now, and have made more than 19.9 million hectares of plantation companies’ controlled land in 2002. If we compared to total wet land (paddy rice land) in 2002 that only 7.8 million hectares and

26

(1) M.B. King, 2000.”Interpreting the Consequences of Midwestern Agricultural Industrialization”. Journal of Economic Issues, Vol. XXXIV, No. 2, June 2000. (2) J. Ikerd, 1995. “The Industrialization of Agriculture: Why we should stop promoting it”. Paper presented at the Harold F. Breimyer, 1995 Agricultural Policy Seminar, University of Missiouri, Columbia, November, 16-17, 1995.

27

See (1) S. Kartodirdjo and D. Suryo, 1991. Sejarah Perkebunan di Indonesia. Kajian Sosial Ekonomi. Penerbit Aditya Media, Yogyakarta. (2) S.M.P. Tjondronegoro and G. Wiradi (Eds.), 1984. Dua Abad Penguasaan Tanah. P.T. Gramedia, Jakarta.

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associated farmers and labourers 40.6 million persons, then the land holding size is small (BPS, 2003)28. We see that the distribution of land holding size is very skewed, a tiny land controlled by farmers, and huge land controlled by corporations. Economic transformation from agriculture to industry calls for huge energy. In the developed countries, it is implied by reduction of numbers of farmers, farmers have energy to transform their position so that they were or their children were acceptable in the new employment opportunities, i.e. emerging industries, not only in a blue collar labor but also in educated labor. Again, Abraham Lincoln has contributed in this human resources transformation through Morrill Act 1862, namely the establishment of Land Grant College in all over the US. Therefore, there was an expansion of human resources capacities in both agriculture and agricultural based industries through development and application of new knowledge and technology in those areas. Agriculture and rural areas supplied not only agricultural product surpluses but also high quality of human resources that migrated from rural/agricultural areas to the cities that demand for their labor and skills. The economic expansions in cities have induced smaller labor demand in agriculture and in effect declining number of farmers. Increasing population has no negative effect in term of reduction of farmers land holding size, but in the contrary the new situation make scarcer labor in agriculture. This scarce labor in agriculture induced demand for mechanization, and the latter increased demand for manufacture products. Therefore, cities and rural areas have been in a synergy situation. In Indonesia and in other developing countries as well, fragmentation and conversion of agricultural land took place. On the other hand, the growth of industry has no sufficient power to absorb additional labor force. In South Korea, the share of agricultural GDP had reduced from 41 % in 1957 to 4 % in 2002; and such reduction was followed by reduction of agricultural labor from 70 % in 1957 to 12 % in 2002. We see that any 1.0 % reduction of agricultural GDP in Korea has been followed by 1.56 % of reduction of labor in agriculture. The same case was also happened in Malaysia and Thailand but with a smaller reduction percentage of labor, namely only about 1.02 % and 1.1 %, respectively. In Indonesia, however, any 1.0% reduction of agricultural GDP was only followed by reduction of 0.43 % agricultural labor. Here we see that industrialization in Indonesia has not produced sufficient energy to make economic transformation, except only in agricultural GDP term that it has declined from 56 % in 1957 to 17 % in 200229. According to the above fact, we can see that economic transformation is difficult to take place where majority of farmers are small farmers and majority of labor force are poor. This implies that certain designed structural changes related with land or with agricultural resources must be undertaken and at the same time, industrial policies should be focused on how to fasten economic transformation. Analogy with what Abraham Lincoln has been done in 1862; Indonesia also needs such a kind of innovation to support agriculture and rural economies and at the same time opening new opportunities in industrial and services sectors. One option is to shift agricultural corporations to move to downstream industries and farmers take over the ownerships and control in plantations or other agricultural lands. Market is used in such transformation, and financial institutions are created to support such plan. The process could take more than 20 years of operation. We believe that economic transformation will not take place as long as majority of farmers and workers are poor and such situation will continue take place if there is no new design of broadening ownerships and participation of the Poor into economy. It is a basic strategy for sustainable development, namely increasing what people can do or can be by majority of people that they are now in poor situation. They potential energy should be materialized in the form of positive participation and it calls for the above new design. Social revolution or social disharmony will threaten Indonesia if the present situation continues taking place in the future. Learning from the experience, commands or guidance approaches that have been used in the past have

28

Badan Pusat Statistik, 2003. Stastistik Indonesia. BPS, Jakarta.

29

Agus Pakpahan, 2004.” Industrialisasi yang menyakiti petani”. Suara Pembaruan, 17 Nopember 2004, p.5.

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negative relationship with the growth of initiatives and self-reinforcing30 participation. The concept of participation not only involves participation in the decision making process but also in ownerships. Commanded and guided behavioural changes will reduce both vertical and horizontal interactions among parties, shape a short term unidirectional flow of information, namely, from top to bottom, make everything routine, increase dependency, decline adaptive and innovative capability, and reduce sense of community. Broadening ownerships will by itself develop power of farmers to control participation of other parties in the economic processes. Demand for a more participatory development is revealed in rural areas, and so, in agriculture. Promoting more equality and poverty alleviation, maintenance of the capacity of nature resources, and other similar issues not only involve economic matter but also involve political, institutional, and moral issues. In the longer run, institutional renovation including renovation of values, regulatory frameworks, and organizations is a source of social energy, a source of sustainable agriculture. Since a choice of plant or livestock raised is a part of community choice, conditioned or influenced by cultural variables, then our agricultural tradition, reflected by current performance of agriculture by itself shows a nature of degree of sustainability. Market or government policy imperfections might fail to provide us right information about future demand and supply conditions, therefore, giving us wrong scarcity indicators particularly when the existence of risk and uncertainty are considered. Our high dependency on only a few species of plants and animals in the first case reflects our high degree of risk and uncertainty. If rice harvest collapses, such as we experienced in the 1970s during the outbreak of brown plant hopper, then our food systems will also fail. In addition, observations of our agricultural practices in Indonesia show that they do not correspond with the nature of tropical ecosystems. Farming technologies developed in the tropics, particularly by the Dutch, are monocultures such as there are found in estate plantations. Rice field, which has been developed over centuries by local people, is also monoculture agriculture. Conversion of natural tropical forests into forest industrial plantations (Hutan Tanaman Industry), which is also monoculture, is not compatible with what tropical forest ecosystems teach us. Surprisingly, even though Indonesia is an archipelago 31 country, our marine resources have not been used as basic resource in development, and therefore, have not been fully utilized. The expansion of monoculture farming, monoculture forest plantations, among others, will have far reaching implications on sustainability. The more monoculture land, the lesser the degree of sustainability will be. We need images of our tropical agriculture. When there is fixity of resources, then any continued application of the same amount of input will bring us the work of law of diminishing returns. At present, about sixty percent of food is produced in Java, where as Java is only composed of 7 percent of the total area of Indonesia. On the other hand, Java is composed of about 60 percent of the country’s population. Heavy industrialization in Java has caused a large amount of rice field to be converted into housing, factory, public facilities, and other non-agricultural uses. The rate of rice irrigated land conversion has been approximately about 30 to 40 thousand hectares a year since the period of the 1980s. Land conversions will not only affect food production but will also render past irrigation investment 32 that is not fully utilized as planned. The rice irrigated land conversion will also reduce agricultural areas in physical terms, such as the size of agricultural land holding of farmers. To compensate for a small size of land, farmers 30

31

32

The concept of reinforcement is different from, the concept of punishment. Punishment refers to an action of punishing an individual or a group of individuals without knowledge of the relationship between the outcome and the cause of an action that was conducted by parties being punished. On the other hand, reinforcement refers to a concept of changing behavior through manipulating the reinforces with knowledge of cause and effects of one’s behavior. See B.F. Skinner, 1953. Science and Human Behavior. Macmillan, New York. See A. Nontji (1987) for information about the sea of Indonesian archipelago. In the past 25 years, heavy irrigation investments, especially for rehabilitation, have been conducted in Java until there is more land suitable to be developed for irrigation. As an illustration, the new irrigation investment cost per hectare has increased exponentially, namely it was Rp.0.6 million, Rp.1.7 million, Rp.2.4 million, and Rp.4.9 million per hectare in Repelita I, II, III and IV, respectively.

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apply a large amount of chemical fertilizer. Too much fertilizer pollutes soil and water resources. Hill’s slopes farming has also caused intense soil erosion. In short, Java’s land faces a very strong pressure on her ecosystems. On the other hand, the outer islands’ resources, particularly those of eastern Indonesia are in general still under-utilised. The spatial imbalances of natural resources use will become a major obstacle for having sustainable agriculture in Indonesia. In the near future, the agricultural sector will be forced to be a more service -oriented sector, i.e. a more demand driven sector. Since the economic environment will be more competitive than that of the past era, agriculture products should also be able to be marketed efficiently and effectively on one side, and increase farmers’ general welfare, provide job opportunities and maintain environmental sustainability on the other sides. This situation can only be solved if there are right non-marginal changes in the development policies and strategies of agricultural development, namely, the policies and strategies that facilitate and increase participation, productivity and efficiency of the people’s economies. In addition, right non-marginal changes in development policies and strategies also call for the increase and better knowledge of participants who deal with agriculture regarding what and how to produce, to conserve, to process, to distribute, to market, to coordinate, and so on. The real challenge here is how to transform agricultural societies, including governmental bodies that deal with agriculture and rural people, into more service orientated practices. Consumer preferences will evolve along with changes in technology, values, institutions, and knowledge of a society. Globalization of world trade will drive faster value changes. The shift of consumer values, as consequences of many factors, will change the demand for agricultural products. In the future, people will be increasingly aware of what to eat, to wear, or to use to support their life and life styles. Therefore, the meaning of food for consumers will change from food as just a basic need, to food as the main input for maintaining health and enjoyment. Consumers will also demand a more aesthetic environment when they do shopping, eating, and other human activities dealing with agriculture and its products. The demand for a new vision of agriculture above reflects the needs for enhancing the competitive capability required by Indonesian agriculture in the era of a global economy. Environmental ethics and human rights will induce consumers and other interested parties to ask those production processes not damage the environment, not violate animal rights, labor rights and others. This trend is growing in developed countries and will have significant impact on domestic consumers. The enforcement of environmental ethics and human rights will have significant impact also on natural and environmental resource allocation, and therefore, will change the pattern of agricultural production, distribution, and income. Sustainable agriculture will also be a product of social capability to form and to adjust to changes in basic values underlying human affairs. Successful experience in agricultural development in the first long-term period of development has become very significant social capital for Indonesia. The increase of rural and agricultural output has a significant affect on absolute poverty alleviation, food availability at affordable prices, and employment opportunities. On the other side, there are also some demands for a new vision of strategies, policies, or approach in agricultural development. Now, a very basic question is how to redefine and to redesign agricultural development to ensure the sustainability of Indonesia’s agriculture without violating farmers’ interest. The above expressions are mainly derived from Indonesia’s experience before the Asian economic crisis attacked Indonesia in 1997. Before economic crisis hit Indonesia, the situation was so optimistic. In addition, most of Indonesian elites, especially non-agriculturalists, did not consider agriculture as an important sector, especially as source of economic growth, because the contribution of agriculture has only reached 17 % of the Indonesia’s GDP. However, when Indonesia experienced negative economic growth that reached –13.2 % in 1998, the growth of agriculture was still positive, namely 0.2 %; and non-food sector astonishingly grew at the rate of 6 %. This situation opened the mind of Indonesian people that agriculture was an important sector that has rescued the economies to deeper crises. However, even though agriculture showed more resilience than the rest of economic sectors, data showed that the average annual growth of agricultural output within the period of 1993-2000 has been much lower than that of the growth within the period of 1968-1992, namely

22

1.0 % and 4.0 %, respectively33. More interestingly is the average annual growth in productivity which showed that the average annual growth in agricultural productivity in the period of 1968-1992 and of 19932000 were 2.6 % and –0.1 %, respectively. Therefore, we observed negative growth not only in terms of output but also in terms of productivity. The above situation showed that we face a very critical problem. Therefore, we have to question ourselves whether or not the systems we created in the past is a sustainable agricultural systems. The economic crisis provided us with a very important lesson and we have to find a way of how to face the above challenges. Liberating farmers’ freedom is the first initial steps for future development of agriculture. This volume is devoted to development of that paradigm to deal with future Indonesia’s challenges. Organization of the Book This volume is organized into ten chapters. Chapter I is an introductory chapter that outlines our major issues or problems that will be discussed in the next chapter. Basic general question here is that why after more 7000 years of evolution, farmers all over the world, especially farmers in developing countries are still poor or still lack of freedom. In fact, farmers in developed countries, even though they operate large area of land and using high technological inputs, they are still depending their life on the government subsidy. I think this is very important question to be answered by global communities because the nature is also globally taken place. In Chapter II we developed a framework of analysis. I tried to use concept of sustainable development that have been developed in the literatures of sustainable development. At the end, however, I used a concept of capability provided by Amartya Sen as a critical concept for sustainable agricultural development. I take freedom in a sense of capability and in a sense of lack of intervention faced by farmers as foundation for sustainable agricultural development. Freedom itself is necessary condition for establishing power of farmers to be able to bargain with “the worlds above them.” Chapter III elaborates action of thought in agricultural development in Indonesia for period of more than 30 years. The basic idea here is that before we can evaluate development performance of agriculture, at the first stage we have to understand what thoughts behind the process of agricultural development. Major lesson here is that Indonesia has practiced centralized planning and government has involved deeply in agricultural development processes. This frame of thought, however, has deeply influenced by international agencies, particularly donor agencies. What have been attained by Indonesian agriculture is presented in Chapter IV. Here we outline major indicators of agricultural development such as production and development of agricultural infrastructure. The consumption side, especially food consumption is also discussed. Furthermore, in Chapter V we discussed a global dimension of agricultural performance. Parallel situation between Indonesia and global performance of agriculture situation suggested that our problem is in fact globally inherited. In Chapter VI we try to renew our vision of agricultural development. In this Chapter we have developed the action of thought that is important for renewing our vision of sustainable agricultural development. It is started by quoting a deep thought in Dhammapada that place a high important of action of thought in seeking a desirable good future life. Based upon this notion we develop of framework for seeking a uniqueness or relativity of agriculture with other human actions. Here we arrived with a notion that position, distance, hierarchy and network in association with agriculture is very complex. This finding implies that we need a new philosophical orientation, which we called eclecticism. Furthermore, we analyze what is the most important implication of agriculture by using a previous framework. We come with a notion that there is very closed relation between agriculture and freedom. This finding provides a great insight for renewing our vision. Based upon this finding and supported by very illuminating case such as Sumpah Pemuda and Bahasa Indonesia creation, we come with one of the most important principle elements for having sustainable 33

See Keith O. Fuglie,”Productivity Growth in Indonesian Agriculture, 1961-2000”, Bulletin of Indonesian Economic Studies, Vol. 40, No. 2, 2004: 2009-25.

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agriculture: FREEDOM FOR FARMERS. So, our mission is how to create laws, regulations, policies, planning, designs and other aspects of development for reaching future desirable agriculture such as expressed by FARMERS’ FREEDOM. In Chapter VII, we elaborate concepts of freedom, justice, welfare, and equality in relation with farmer’s position, roles, functions, and other meaning in agricultural foundation of agricultural development. By using historical perspectives and global evidence, we come with a conclusion that farmers should be freed from past philosophical orientation. Since practices of global agricultural development have been determined or intervened by international frame of thoughts that have been engineered by international institutions, then the first move of unlearning old habits and building a new one should also be initiated by international agencies. Furthermore, it is necessary to enlighten agricultural development thinking by seeing at the beginning that farmers as subject of development. They are free to choose whatever they want to decide. However, choice is conditioned by the opportunity set that faced by farmers. Poor farmers face fewer opportunities than rich farmers. Farmers in developing countries, of course, are facing more constraints than farmers in developed countries. International cooperation should be directed toward establishing mutual respects and mutual benefits across nations, especially developing countries and developed countries. The trend that the developed countries should feed the world should be avoided by making agricultural capacities in developing countries expanding to the degree that they are able to feed themselves. Agriculture is unique just like a zebra or a tiger. They are two kinds of animal that are having their own uniqueness. If we think of that, a zebra and a tiger are just an animal without awareness that those are different animal, and then put them in one place, then surely it is natural to expect that a tiger will kill a zebra. Its uniqueness of agriculture as human life support should be used as a common denominator for setting social global actions to empower developing countries agriculture. It means that self-control, mutual respects between developing, and developed countries should be implemented based upon basic values such as described above. Global common goods will be self-generated if we can promote better life of agriculture in developing countries just like what have been proved by history of freeing slave and colonialism. It is certainly a very difficult task for global communities but it will not make the evolution of civilization pass away. Chapter VIII focuses our discussions on “The Worlds Above Farmers’ World,” namely, markets, government, and other institutions that dictated farmers’ life. Here we see that farmers globally have contributed significantly to humanity and civilization, but increasing performance of agriculture has made farmers sufferer. The world has shown that the advantage groups have taken profits from disadvantage groups such as farmers. The world above us, according to farmers points of view, will become the world is ours if we can establish and internalized new spiritual values such as freedom for farmers. The problems associated with agriculture are so complicated. In Chapter IX we have tried to discuss some possible lines of thinking and try to derive alternative solutions that seemingly possible to be undertaken. The basic line of thought is to how can we reach win-win possible outcomes among participants in different contextual settings. We found that theoretically there is a possible win-win outcome among parties in all contextual levels. However, reaching this outcome calls for deep reorientation of our mind in order to reach new spirit, new values, and new awareness of our problems. To reach that stage of mind we have to use freedom as our basic frame of values. Justice, welfare, and equality dimensions of values will come automatically as we accept freedom as our foundation. There are already common understanding about the problems we face in food and agriculture in all context of development. However, we still have difficulties to solve the problems because we use insufficient foundation. Green revolution, market concentration and government failures to attack the problems are mainly due to seeing farmer’s jus as object of development. Therefore, the faith of farmers is not improving even though agriculture is developing. World food surplus and growing wealth of food

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and agricultural industries in one hand, and farmers’ declining welfare on the other hand are paradox of the world. Farmers have contributed to humanity such as solving the world’s famine and hunger but at the same time, farmers themselves have no improvement in their welfare. Therefore, farmers’ freedom is also declining. It also means that the world has done injustice to farmers. Widening inequality between farmers and other parts of societies, particularly multinational corporations are a strong indicator of injustice. Investing in mind and institutions that can improve our mindset is the key. Market, locally or globally, should be harnessed by developing new institutions that enable farmers to broaden their ownerships as a means of control. A system that integrate farmers bank, farmers trading house and farmers education in general should be established. This is the only way to increase bargaining power in the market. The new roles of government and global institutions, including multinational corporations are the keys. Conflicting interests between developed and developing countries create new interdependencies among them. Developing countries should be supported to develop new sources of food, income, and employment as a part of poverty alleviation, food security, environmental sustainability, and regional development through developing present underutilized crops. One of the most important determinants to make the impossible becoming possible is visionary leader and leaderships that should become a part of all institutions. Chapter X is closing chapter. In this chapter, I use an analogy between the oak and the teak. Both trees are growing in very different climate but they give us very illuminating lessons. First, they always produce what good for nature, including for human beings. Second, they fully adapt to their environment for food and for living. The word of adaptation has very important meaning because there is uniqueness of nature across the globe. Tropical climate gives people more diversity of food but lesser in volume; on the other hand, temperate climate gives more volume but lesser diversity. We learn that adaptation is the first key for sustainability and for the world stability, harmony, and peace. We discussed in this volume that globalization is unavoidable. It is part of evolution of human interactions in our world affairs that cannot be stop, except by the stop of civilization itself, and we do not want this to happen. Agricultural crisis takes place in both developed and developing countries. Among many causes of farmers crisis that is in common between developed and developing countries, is the concentration of market power in the hand few multinational corporations. Farmers in developed countries are lucky because their government still care of them by giving them huge subsidy. However, consumers and taxpayers should bear the costs. In developing countries, farmers should find ways for their survivals. I come to believe, as I have mentioned several time, the source of solution is creativity. Social environment should be developed to induce creativity. It is more probable to come to our goals, spurring productivity, rather than asking ones to be creative without dealing with his/her environment34. Freedom is the roots for making people to be creative hand in hand with justice, equality, and welfare. The case of sugarcane farmer association described in this book is given for further understanding on how designs agricultural development in developing countries has been evolved. Government here just plays as a catalyst. Finally, the whole volume of this book has been devoted to express concern that after more than 7000 years of evolution of agriculture, farmers have not yet enjoy the world of freedom even though they give opportunities for other people to evolve and to enjoy good life. Farmers must seek their own freedom.

34

See Mihaly Csikszentmihalyi, 1996. Creativity. HarperPerennial, New York.

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CHAPTER TWO SURVIVAL AND FREEDOM OF FARMERS: Increasing Farmers’ Welfare through Sustainable Agriculture Evolution of agriculture has come into a very complex situation. The development of science and technology, markets and organization in a more and more globalise world has made nature of the problems we face now are very different from what we had in the past. On the contrary, farmers’ welfare in developing countries agriculture now are still not significantly different with the past situation. In fact, farmers’ welfare has not shown a significant improvement, or their welfare is even worsening. More than 30 years of agricultural development has increased production such as easily found in national statistics. Farmers’ income and their assets cannot compensate the growing numbers of their families. Fragmentation of agricultural land and high magnitude of rural and urban poor households are indication of declining agricultural capacities in developing countries. In addition, the deterioration of environmental quality in both rural and urban areas is also an indicator of declining capacity of developing countries habitat. If we visited rural areas now, we can feel that the rural livelihood is very hard. The similar situation is also happening in the cities. Traffic jams and growing street vendors suggest that urban life is not healthy35. Farmers situation in developed countries are also similar. Their farm sizes are growing as indicated in national statistics. However, farmers’ incomes are determined by government subsidies. Suppose there is no subsidy, developed countries farmers will have the same experience with what has been experienced by farmers in developing countries. In term of technicality, farmers in developed countries have made a good reputation such as reflected by agricultural surpluses. The surplus is not only more than enough for supplying food and other agricultural products for population in developed countries but also give significant contribution to the world’s food supply that make world prices of agricultural products continuously declining. We see that agricultural subsidies that provide benefits to farmers in the developed countries, in turn create severe impacts to farmers in the developing countries. What will happen to the world if the above situations continue taking place? The world agricultural production surpluses, in association with declining the world prices of the products, imply continue declining farmer’s welfare. Farmers are majority of population in developing countries. Therefore, declining farmers’ welfare implies declining welfare of most of the people in developing countries. In the longer-run, declining welfare of majority people will endanger not only in economic term but also in all aspects of human civilization. If we believe the path of civilization is reflected by the economic societies evolution from agriculture to industrial societies and then knowledge based societies, it implies there must be improvement in human potentials of most of the people within a nation. Poor countries with majority of their people still working in agriculture will highly depend on the power of agriculture providing them resources to increase their human potentials. It is natural if economic societies evolving toward higher level of societies, the number of people willing to work in agriculture declining. History teaches us that supply of high quality of human resources will determine the process of evolution toward higher and more complicated economic societies. Higher quality of farmers’ life will induce the growth of high quality of human resources. 35

We experienced that until 1970, the environmental conditions in my village were still good. We can easily find fishes, eels, and birds in our rice field. Birds are good indicators for environmental quality. Now, we have silence spring such as Rachel Carson has described. I moved to Bogor, West Java, in 1974. It was cool and we have to use a blanket when we slept. At that time, there was no air condition in Bogor. Now, Bogor’s temperature is hot and humid. Up to 1980s, we have no traffic jams in Bogor, but now traffic jams are almost everywhere. In the 1980s, travel time from city of Bogor to IPB campus in Darmaga took only 15 minutes; now take about one hour. The same situation also takes place in other places in Java.

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Poor farmers families have no capacities to allocate resources for their future. They have no resources for investing in increasing human potentials for their children. Most of their time will be spent for struggling to overcome their basic needs. Life is miserable and miserable life is bad. It is bad for them and it is bad for the whole communities. Piece and harmony among people in the communities will be endangered by high inequality among members of communities. Crimes will certainly be fertile in disharmony communities. The seeds of conflicts will grow everyday and finally will harm the stability. Increasing scale of potential conflicts will easily change to open wars. Once a war take place, it will be difficult to overcome. Globalization that sows potential conflicts such as indicated by widening inequality across nations, especially between developed and developing countries will reshape globalization of trade to globalize conflicts. The seeds of potential conflicts are declining global welfare of farmers. In the past farmers are silent. They made a move through lowering productivity because there were no incentives for them to work hard. In Indonesia, this case is shown by the declining productivity growth of agriculture, mainly food, since 1990s (see Chapter IV). Not like developed countries’ case, developing countries are still in a condition of food deficit. Declining growth of agricultural productivity in the longer-run will increase food dependency of developing countries to developed countries. However, if this case continues, developing countries will lose not only foreign exchange earnings to buy food, but also will be suffer from opportunities to reach better future. The reason is easily found. Let us imagine that Indonesia, for example, will have population size about 260 million people in 2020, about 50 million more than the population size in 2002. Most of them will be still dependent on agriculture but agriculture gives no sufficient income to them. Because the world is surplus of food and the food price is relatively cheap, then Indonesia choose to fill the food deficit by importing food from developed countries. This decision is economically sound, according to most economists, because imported food is cheaper. Therefore, food is imported and because of it will be always cheaper and cheaper relative to domestic costs, Indonesia becomes net-import food with increasing in size over time. Food is product of farmers, actually products of peasants. As mentioned above, peasants have no resources to upgrade their human potentials. Imported food, cheaper for consumers on the one hand, but it will destroy farmers’ life. The global trade becomes unethical because cheaper food from developed countries are due to huge subsidies given to developed countries farmers by their governments. Therefore, it is clearly observed that small farmers in developing countries are not competing with farmers in developed countries, but they actually must “compete” with governments in developed countries. First lesson here is that developing countries government policies that make dependency of food to developed countries is policy choice that kills their own farmers. It is important to notice the spiritual values hold by policy makers in developing countries, especially Indonesia. How much care the policy makers to their people that compose of majority people that vote for them in election? How much care they have for the future of the nation when the future will depend on the life of majority people? How much their understanding of their existence, position, roles or functions to develop their country? Declining farmers’ welfare is indication that the nation future is in danger. It is impossible to reach higher stage of evolution of economic communities without lifting farmers’ welfare. In this chapter, we will try to answer what is our basic value for our survival and for reaching better future. We propose that the starting point is to have farmers’ freedom. Once farmers’ freedom is with us, then the answer to the questions of justice, equality and welfare of the people will come automatically. Nature of Survival and Freedom

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We see a bird in a cage that its life is dependent on a man or a woman that take care of it. The longer the bird keeps in the cage, the weaker the bird can make life by its own. If the owner of the bird one day let the bird free in its natural life to follow other birds that have life in natural ways since its birth, the bird that just left the cage cannot be survive. The bird will not know how to catch insects for its food; the bird will not able to fly very far because its wing is weak. It will take time for that bird to learn how to live in a natural ways. Of course, a mankind is not a bird. However, to some extent, if the mind of mankind has been taken for more than 7000 years, it will also take time to learn how to live in a natural way. History of farmers in developing countries is just like a story of mankind where their mind has been taken for a long period. History of colonialism, Cultivation System, Green Revolution, and others are history that makes farmers have no freedom. It is illogical for farmers want to increase production of food if they know the return of his investment is low. Nevertheless, they have been forced to work to increase food production, which at the end make their welfare declining. Social trap is induced by external mind to make farmers as an instrument for maintaining their interest. Cheap food price is not farmers’ interest. Therefore, farmers have been trapped into a social system that locks them in the cage, just like a bird puts into a cage by its owner. The difference is that the bird in a cage is given food and care by its owner; farmers in developing countries must take care of themselves. It is natural for mankind to find the ways for their survival. History has shown that people learn that “being a man in a cage” is not only unpleasant but also inhuman. Movement for independence from colonialism and imperialism conducted by the “men in a cage” is very important lesson from our history of civilization. It is also a proof that searching for freedom is a natural character of mankind. If seeking freedom is a natural character of mankind, just like the law of gravity in nature, then freedom is the first source of energy for making better future. What is freedom and why is it important for mankind survival? Freedom is an abstract concept. The interpretation of freedom could be liberty, autonomy, and lack of restriction, self-determination, independence, choice, free will, and sovereignty. We will not discuss concept of freedom in the philosophical context. In this chapter, we will develop the concept of freedom within the context of practical meaning. In order to get insight what is freedom, we may get its meaning if we contrasted with unfreedom, the opposite meaning of freedom. Based upon this contradiction we will learn what the meaning of freedom for mankind survival is. To make the issue clear, let us imagine an individual who just was born. It is impossible to apply the concept of freedom in this case if we mean by freedom as free from intervention of others. We differentiate between the concept of intervention and coercion when the earlier concept has not always given a negative meaning. A new borne baby cannot make his or her own life. We know somebody must take care of a baby to survive. In a normal condition, his or her mother and father must look after the baby. A new borne baby, of course must be granted of freedom from coercion from both his/her parents and from other people. We will not discuss the issue of freedom in association with such a case of a new borne baby in this volume. We will try to develop a framework of freedom in association with survival of economic societies. We observed that human relationships evolved from a harsh relationship such as shown in the case of slavery to a form of relationships that show mutuality among individuals within a certain group that was distinctly different from other groups. The latter case is shown by history of colonialism that formally ended after the Second World War. However, the issue of freedom is still relevant up to now because even though colonialism formally was ended, majority of the world citizens, particularly people in developing countries are still suffering from poverty and other characteristics of human distractions.

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Biological survival is determined by positive population growth rate over time. It is determined by the difference between birth rate and mortality rate. If birth rate is sufficiently higher than mortality rate, then the population will sustain. The same measure can be applied to humankind population, and we observed that humankind population has significantly increased. In 1950, the world population was just 2.5 billion and in 2000, the world population reached 6 billion people. Furthermore, in 2020 the world population was estimated about 8 billion people36. Total population in developing countries in Asia in 1961 was 1,604,635 and increased to 3,568,390 in 2002. Three countries such as China, India, and Indonesia composed of 2.52 billion people or 72 % of population in developing countries in Asia in 2002. Asian developing countries in 2002 composed of more than 60 % of the world population. Furthermore, it was predicted that by 2015 majority of the world’s population will live in cities and by 2025, the European countries will experience the declining of total population (FAO Stat). The increasing rate of population growth has reinforced the world community to control population growth through widely application of birth control practices. Controlling birth rate is the case that is not only important in term of biological aspect of humankind survival but also in morality or ethical aspect. For example, if we know that the sustainability of humankind will depend on the rate of birth, why we should control the rate of birth that has given by nature? In the 60s or in the 80s, we still observed there were large number of people opposed the birth control practices. However, even though now there are still number of people opposing population control, the magnitude is much lower now than the case in earlier time. Based upon the case of birth control, we may say that the way people to see the world have changed radically. In the past time, most people viewed that having children is a natural way and it should be treated as a faith. In fact, having a large number of children was viewed as a good thing to have by a family. Then, new value has been growing. This new value says that the world we live cannot support the life of mankind if the population of mankind growing following its natural rate of growth. So, the rate of growth of population should be controlled through the wide applications of birth control. Can we imagine that most of people change their basic value in a very short period in human history? People now feel that having a large number of children is shameful even though it is his/her own choice to have how many children he/she wants to have, except in a certain country like China that the state imposed a quota of number of children which is allowed to have by a couple. Population control is believed as a means for increasing standard of living. The idea of population control is the idea that associated with basic nature of human freedom, namely freedom to reproduce naturally. Present generation views that population control will give better present and future life of the communities. Without holding such values the decision to conduct population control will be unreasonable decision. We see that the evolution of knowledge and experience of humankind finally come to believe that it is a right thing to do control population growth even though it is in contradiction with biological nature of humankind. If we believe that controling population growth is a right decision for reaching better survival life of humankind, then such capability of controling population growth is a process of freeing humankind from having more constraints for having better life in the future. The main lesson from the above discussion is that if we believe that mankind survival is obtained by putting restraint to its natural character, and such increasing survival rate is viewed as increasing freedom, then we can say that within the above context, the development of freedom of humankind will be attainable by applying socially acceptable restraints. Wether or not such application of restraint is achieved voluntarily or imposed by the state will depend on a social context of problems faced by communities. 36

Source: United Nations, World Population Prospects: The 2000 Revision (New York: February 2001).

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Scarcity of food is one of the main reasons underlining the thought behind the issue of birth control. Perception that we will have no sufficient capacity to feed the world population in the future has been used to influence the people’s thoughts over time. Increasing scarcity of food means increasing degree of unfreedom. Therefore, hand in hand with the world champaign to change people’s mind regarding population control, the world communities promoting food production increase. One of the most succesful strategies in this regard is the promotion and application of Green Revolution. The result of Green Revolution is the world’ food production has increased significanly. For example, the world rice production increased from 316.4 million ton in 1970 to 597.8 million ton in 2001. Including the US, participates in rice production and the US is the third largest rice exporting countries. In 2001, the US exported 3 million ton of rice, just below Vietnam that exported 4 million ton of rice. Furthermore, the world production of wheat was only 310.8 million ton in 1970 and the world produced wheat 590.5 million ton in 2001. Leading wheat exporting countries in 2001 were the US, Canada and France that exported wheat 27 million ton, 18 million ton and 17 million ton, respectively. The world coarse grains37 production has also increased from 565.5 million ton in 1970 to 918.6 million ton in 2001. Leading coarse grain exporting countries in 2001 were the US 55 million ton , Argentina 12 million ton and France 11 million ton38. The above data shows that the world food production has increased significantly within 30 years period. Within that period rice and wheat production have increased almost a double, and grains production has increased about 62 %. Except in rice, we see that leading exporting countries for wheat and coarse grains are developed countries especially the US. Argentina is the only the leading exporting country from developing countries. What is this mean? The most important meaning is that developing countries are still strugling to feed their people and this situation has also been taken as an opportunity by developed nations. This implies that if free trade for food is allowed then farmers in developing countries will be suffering, especially if we consider that agriculture in developed countries have been heavily susidized. The share of developing countries in the world population increased from 73.6 % in 1980 to 78.5 % in 2001. The reverse case is for population in developed countries, namely, developed countries’ share in total population declined from 26.4 % in 1980 to 21.5 % in 2001. The same pattern also took place in agricultural population. In 1980 total agricultural population in developing countries was about 2 billion people, and increased to almost 2.5 billion people in 2001. On the other hand, agricultural population in developed countries declined from 159 million people to 97 million people in 2001. We observed the oposing directions between developed and developing countries in agricultural population. The share of developing countries agricultural population increased from 93 % in 1980 to 96 % in 2001; in developed countries agricultural population share declined from 7 % in 1980 to 4 % in 2001. Therefore, we may infer that developing countries agricultural population not only composed of all agricultural population in the world of agriculture, but also still positively growing. On the other hand, population of developed countries agriculture has been declining over time. However, one should note that it does not mean developed countries agriculture has been weakening by declining number of agricultural population; the opposite is true such as partially reflected by indicator of countries leading food exports mentioned above. Table 2.1. Agricultural and Rural Population in Developed and Developing Countries Items Total population 37

Coarse grains refers to all cereals except wheat and rice.

38

FAO, “Summary of Food and Agricultural Statistics 2003. Rome.

Developing Countries

Developed Countries

30 1980 1990 2001 Share in total world population (%): 1980 1990 2001 Average annual growth rate (%) 1980-1990 1990-2001 Total agricultural population (million): 1980 1990 2001 Share in total world’s agriculture population: 1980 1990 2001 Average annual growth rate of agricultural population (%): 1980-1990 1990-2001 Annual growth in agricultural labor force (%): 1980-1990 1990-2001 Rural Population as % of total population: 1980 1990 2001

3,258.6 3,998.9 4,816.0

1,171.1 1,255.9 1,318.1

73.6 76.1 78.5

26.4 23.9 21.5

2.0 1.7

1.7 1.4

2,056.7 2,304.4 2,478.6

158.8 133.8 96.7

92.8 94.5 96.2

7.2 5.5 3.8

1.1 0.7

-1.7 -3.0

1.5 0.9

-1.8 -2.6

71 65 59

30 28 27

Source: FAO, “Summary of Food and Agricultural Statistics 2003”.

Now, it is time for us to answer whether the path of agricultural development has been fruitful for farmers. It is certainly true that consumers have advantage from the increasing food production. However, for farmers significant increased in world production was another matter. The declining real prices of agricultural primary products have reduced the world’s farmers income. The indication is very clear, namely, developed countries’ farmers have been subsidized. Farmers in developing countries must have the same situation, but they do not receive government subsidy. So, farmers in developing countries have experienced declining welfare in association with the world agricultural production increase. It means that farmers’ freedom has been declining over time. Agricultural development path has made consumers better off but has induced farmers’ welfare worse off. Freeing Farmers from the Cage Such as mentioned in earlier discussion, the condition of farmers now is just like the bird in a cage. Developed countries farmers are fortunate in a sense that they are given subsidies by their government that makes them still able to maintain their life in a normal condition. However, I believe even they are not happy to live with subsidy but at least they can maintain a normal life. However, farmers in developing countries have been suffering to face unequal distribution of wealth. Farmers have been working so hard to increase food to serve consumers’ interest and to serve other parties that received benefits from increasing agricultural production. However, what farmers get is just more suffering life that does not only make them in the bottom of wealth pyramid but also loosing their opportunities to survive and to gain better life in the future.

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The declining agricultural population in the developed countries at the rate –3% a year between 19902001 indicated that there are more opportunity shared by population that remained in agriculture. On the other hand, increasing rate of agricultural population growth in developing countries means that they face declining opportunities for better life because economic transformation reduced the share of agriculture in the total gross domestic products. It means the number of farmers increased but at the same time the income shared by farmers declined. Having sufficient income such as experienced by farmers in the developed countries is important to be discussed. First of all, we should ask whether or not source of income received by farmers through subsidy is not only economically justifiable but also ethically reasonable. We may ask also whether a term of subsidy is a right term to use in the case of food in particular and agriculture in general. I would like to argue that using a term of subsidy in the case of food or similar products is inappropriate. Price, which is derived from market, especially market that has been distorted by increasing concentration of market power, does not reflect all aspects which are contained in food. When food is abundance in quantity, safe in quality, rich in variety and certain in availability, this situation is good by itself. However, when this is the case, the market price of food will fall as long as that situation is more certain. We learn that increasing the degree of food security, food safety and other positive things in association with food, ceteris paribus, will decline food market price. Therefore, in term of farmers’ point of view, increasing food supply is against their interest as long as farmers are not compensated by values in return on what they have contributed. The term of agricultural subsidy disregard other things than value, which is reflected by food market price, is valuable things. Food consumers also do not make calculation of those values because consumers naturally want to pay goods as cheap as possible. We learn that there is no such thing free in our world. Therefore, agricultural subsidy is a matter of expenditure for goods that are not registered in the market. Consumers tax for food is a mechanism to collect payment for goods which are inherently contained in food. This tax revenue is appropiate if it is returned to farmers, because farmers are entitled for labor, skills and other efforts in association with food they produce. We suggest that the term of subsidy is changed to other terms, for example, farmers’ collective income. The above issue is critical because we face market imperfection. The ethical consideration is Pareto’s ethics. Pareto ethic says that a policy is called Pareto improvement if a reallocation of resources makes at least one person better off without making anyone worse off. If we use this as a norm, we will easily see that what have been done in the past have made consumers and other non-farmer groups gaining significant benefits. On the other hand, what have evolved in agriculture have created farmers worse off. This is the argument for creating farmers’ income compensation. Will the above situation continue in the future? Certainly, the answer is yes if the worlds above farmers are unable to help farmers to eliminate “the cage” that has been conditioning farmers’ world for along their history. What is the cage that put farmers in it and how can we eliminate this cage? The cage is actually our mind. Our mind that has taken farmers’ mind. We think that it is our right to substitute farmers’ mind with our mind. Even though socio-economic surveys have been conducted before agricultural development policies were set by policy makers, but because at the end of policy formulation farmers’ interest was not internalized, then the policies were biased against farmers’ interest. Policy analysts are usually hiding behind the free trade logic. For example, an analyst may say that at the end we have to abide market rule that says economics of exchange is determined by value, which is put by consumers the goods that they want to buy. It is the same thing with the producers, they are economic calculating human beings that do calculation whether they get profit or not. In business it is natural that one gets in or gets out from a business, one gets profit or gets loss. Therefore, it is natural for the most

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efficient producers to get profit and remain stays in business, and the inefficient producers get loss and get out of business. The new efficient producers will come to fill the old inefficient producers. Market is so natural, and only market will give us progress. Therefore, we have not to worry about one gets out of business as long as consumers are freely allowed to determine the values of goods. It is so nice to listen to the above arguments. Of course, it will be very fortunate if we can reach such the above model as a part of our reality. However, we learn that competitive market is only a dream or just a model. In the developed countries, we see how agricultural market is increasingly in the hand of a few corporations. The same situation is also true in developing countries. Market imperfections are the economic cage that creates farmers will always become the looser. Why the world has been successfully creating the economic cage such as described above? If we believe that human behavior is conditioned by structure and structure is product of culture, and then culture is product of evolution in social mind, then there must be a long proses of evolution that bring us into present world pattern. Let us suppose that society culture is reflected by the dominance occupation in the communities, then in 1980 there was about 63 % of developing countries live in agriculture and this figure only slightly reduced to 51 % in 2001. Another indicator is the rate of growth of labor force in agriculture. In developed countries the rate of growth of labor force in agriculture has negative sign, namely from –1.7% (1980-1990) to – 3 % (1990-2001). On the other hand, in developing countries, the rate of growth of labor force in agriculture, even though it has declined in its magnitude, namely 1.1 % in 1980-1990 to 0.7 % in 1990-2001, but the sign is still positive. The above figures suggest that most developing countries are still in the stage of agriculture, and such as easily seen that developed countries are industrialized countries. This is not a new knowledge, but what we would like to emphasize is that what are the implications of such slow structural transformation for developing countries future? Why market, especially what we call free market or free trade that associated with globalization, following what the world called Washington Consensus, have not resulted in significant socio-economic transformation of developing countries? Why only South Korea, Singapore or Hong Kong that able to catch up with the world changes in economic of globalization? Why did Asian economic crisis happen even though powerful international institution guided and watched the process of development? We can add more the list of questions here, but it is not our purpose. The main purpose in this section is how can we find the ways to open the cage that where agriculture and farmers has been put in it along the history. Let us start with observing us and use cultural perspective as our point of departure. Culture is simply understood as our way of thinking, feeling and believing. Based upon this perspective we will arrive to a situation that what is actually going to do by us is an implementation of our belief into a series of actions. Believers of free market will say that free market is the best instrument for solving the world economic problems, but believers of central planning will come to conclusion that centralized planning is the best. Believers of privatisation will say that privatisation of state own enterprise is the solution for reaching economic efficiency, but believers of government roles in the economy will say state own enterprises are needed to overcome socio-economic problems that cannot be solved by private business. We use the word belief because we learn that there is no single recommendation provided by economists or development analysts. In fact, the word of Washington Consensus, for example, is by itself reflects that there is no single truth in economic policy. All depend on underlying assumptions and all depend on what one believes39. 39

See Irma Adelman (1999),”Fallacies in Development Theory and Their Implications for Policy”, Working Paper No. 887, Department of Agricultural and Resource Economics and Policy, University of California, Berkeley.

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Of course, intellectual belief does not come an in instant time. We went to school for years, did research, attended seminars, did readings, met people, did consultancies, made policy decisions and so on. Those are very valuable learning process. The accumulation of such learning process, whether we like it or not, has induced our mind to hold certain belief. It is a natural process because we cannot be independence from our experiences. If fact, we never know what reality is, what we see, collect, analyze, and store in our mind are only pieces of image of realities40. What are the images of agriculture? Agriculture is usually imagined as the main characteristic of the earliest stage of civilization where low level of technology, management and human knowledge and skills are embodied. Agriculture is also perceived as being a part of rural areas and rural life, which are usually contrasted with urban areas, and urban life. It means that when we produce an image of rural areas, what we get in our mind is a picture of more people engaged in agriculture, a simple form of community organization, a quiet area with more wild plants and animals, lack of sophisticated physical and social infrastructure such as schools and industry, and so on. On the other hand, when we imagine an urban community we produce a picture of more people per square kilometre and those people’s attachment to each other are weak, or in other words, the sense of community among them is low. Urban is imagined as environment contains more sophisticated urban transportation, air pollution, more than a minimum safe standard pollution emission rate, more diverse and more sophisticated social-economic infrastructure, more differentiated social groups and their origins, and so on. In short, rural areas are identified with agriculture and urban areas are taken for granted as industry, trade and commerce, education, and government centers. Therefore, rural is used as an adjective for backwardness whereas urban is used as an adjective for a precocious society. Agriculture is the job of farmers. Farmers and their family in developing countries are mostly poor, lack of education, lack of skills, short sighted vision, slow, conservative, lack of sense of business, not bankable, lack of innovation capacities, and so on. Moreover, agriculture is not usually viewed as an industry and often is implicitly viewed as an inferior sector where high level of technology, management and human knowledge and skills are not required. In the context of a macro economy, as the economy moves toward industry, the role of agriculture is accepted naturally declines. Some people imply that agriculture is not an important sector and then of concern about agriculture becomes worthless as the economy enters the industrial era. One of the most important lessons from understanding the images of agriculture and farmers is that there is a significant social distance between farmers and the worlds above farmers. If we take the law of gravity as an illustration, we know that the closer a thing to the earth surface, the stronger the earth gravity power. In the case of socio-economic organization of agriculture, we find the reverse case. Farmers are the weakest elements in the agricultural economy. The power of Washington or London, for instance, is unlimited relative to power of farmers in Ciburial, the author’s home village. The power of Jakarta, is also “unlimited” relative to the power of farmers in the top of mountain Power is called for in any transformation. Certainly not only power we need in process of transformation, but also a great of power is required. The law of entropy in physical science suggests that dissipating energy for a long time will transform energy from free energy to bounded energy41. When energy has already in a form of bounded energy, like a log of wood has become ashes, then we need a new source of energy if we want to have heat. We may make an analogy between a log of wood or forested land with an individual farmer or farmers community. When a log is burned or forested land is cleared, it means there is no more energy in a place where the forest used to stand. When farmer community has not been any longer as community but just a collection of individuals due to their historical experiences in colonialism or poverty, for example, then their energy has been dissipated. How to rebuild a community that has been experiencing dissipation of energy along history is just like a bird tries to find a way to get out from a strong cage. If it is not impossible, but it only will take time and difficulties. 40

See K. Boulding, 1961. The Image. Knowledge in Life and Society. The University of Michigan Press, Ann Arbor.

41

See Dictionary of Science & Technology, Wordsworth Reference, 1996. Herthfordshire, Great Britain.

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If we learn from the case in developed countries, farmers have not been able to get out from the cage. What they get is help from their government to maintain good life through subsidies. However, if farmers can assure their government to change the essential meaning from income transfer to exchange, namely collective payments from consumers to farmers for goods that have not been registered in market prices, then farmers have become freemen. It seems a simple matter, but it is actually not. It is a principle matter. It will directly change the status of payment, the status of farmers, the status and function of agriculture itself. Of course, it is only one of alternatives to release farmers’ crisis in developed countries. How can farmers get out from the cage for farmers in developing countries will be much more complicated and difficult than the situation for farmers in developed countries. However, there is no such thing impossible. One of the most difficult tasks is how to develop new spirit that can produce new belief that farmers believe themselves that they are freemen. They have to believe that they have the same status with other men whatever their position or their status, namely the status of freemen. It is true that most farmers are poor but poverty does not define that they are lower status of men in the societies. It is true that farmers cannot buy luxurious goods but it does not say that without luxurious goods farmers; status is lower. Here we are dealing with the status of farmers as humankind. As humankind farmers have equal rights with other men in political or economic opportunities. As a poor man now, farmers have equal rights as humankind with other men to build their own future. Freedom opens humankind to highest potentialities humankind has. Freedom does not close opportunities of humankind just because he/she is a poor man. Therefore, freedom is a basic principle for rebuilding communities. However, how to get freedom? How to realize freedom after long history farmers have no freedom? Of course, there is no easy answer. However, we have to learn from history because history is a fact, history is data. We have to learn the process of how slaves become freemen. We have to learn how the European from the Dark Age to enlightenment. We have also to learn how Asian and African countries become independent countries. We have to remember what Franklin D. Roosevelt had said that what make us frightened is frightened itself. The same thing is with farmers’ case. What make farmers cannot do is just because farmers believe they cannot do. Freedom is just like light. When we start to make candlelight, we will be able to see what we cannot see before. If there are more lights, then we will see more space that it was dark before. If more and more farmers believe that they are free humankind, then there will be larger freedom farmer communities. These freedom farmer communities will create lights for the rest of farmers that still in a dark side. Freedom will open mind of humankind. If they have opened the mind of humankind, then freedom will come. Nevertheless, who will be the first man to turn the first light? Evolution theory suggests that there will always be a strand among the community of plants or animals that strong enough to adapt to certain shocks. It means that there will always be a leader or leaders in certain communities that can sow a process of change. It does not mean that he or she will originally come from inside the community. A leader may come from everywhere because the idea of leader or leadership does not merely mean in physical term42. Leader itself can be in a form of ideas or knowledge that move from one part to other parts of the world. If farmers in developed countries, for example, can establish market for goods that produced by farmers but their values have not been registered in the market price now, such as the case proposed above, then farmers in developing countries will buy the idea and use it in their environment. Therefore, globalization era such as what we face now should be seen as opportunities for taking advantage of what good things or bad things that can provide lessons for the farmers’ world. We cannot stop the world’s moving, we have to adapt and to innovate to change our destiny. The spirit for freedom is the basic spirit for survival. Spirit is invisible but this invisible thing that makes the world visible. If we understand the world where we live, then we will have a chance to make the impossible becoming possible. The idea of freedom will also sow the seeds of energize that will create powerful social energy. The energy can be released by more than 2.5 billion of farmers in the world or the energy of more 40 42

See H. Gardner, 1995. Leading Minds. BasicBooks. New York.

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% of the world population. However, how to materialize this spirit into form of social energy? One immediate answer is how farmers to organized themselves. Just what in the case of light, one candle light is far from enough. We have to turn on billions of candle lights. We have to turn on the billions of farmers mind, including the mind of their children. The first goal of the organization is not how to produce food or fiber, but how to reach humanity for farmers’ world. It is very reasonable because farmers have contributed to the civilization of the world community, but the world has not given proportional return to farmers. Agriculture is good for humanity but not for farmers. This is the voice that should be spoken to the world’ above us. We have to turn begging, crying and hoping to singing for freedom. We have to send our voices to governments and corporations. We have to say that they eat every day, but do they know what they eat and understand where the food comes from? Do they know that what make them grow and healthy because of they have enough food? Do they realize that enough food is due to farmers had been working so hard? Do they remember that there will be no cities if there is no village? They are mostly market believers. We are also market believers, in a sense that we believe that farmers’ income comes from exchange. Therefore, we have the same belief. Our matter is a term of trade that generated by current market. A term of trade that has not included many goods associated with food and agriculture. In fact, if farmers are economic animal, it is better for us to come to cities as a beggar or a criminal that give more income rather than to plough the land for corn or rice. Farmers do not like that kind of mind. There is culture embodied within agriculture, and farmers are the creator and the players as well. Freedom and organization may have the opposite direction if organization is wrongly design. It is really our challenge. Freedom is by itself release all kind of constraints, but organization is by itself imposing constraints to the member of the organization. So, what is the value of organization? We can imagine when we want to build a house. There are many things should be prepared, starting to find the site, thinking what kind a house we want to have, preparing budget, having a blue print, find the best carpenter, and so on. The point here is that we cannot build even a house by ourselves. We need helps and supports from other people. Now, we can imagine if we want to have a good price of corn. Corn is produced by millions of people. It is impossible to have a good price of corn if only 1000 of corn farmers to try to make a good corn price. Of course, it is not a new idea. Many countries have tried to develop farmers’ organizations; one of them is a farmers’ cooperative. In Indonesia, for example, we not only have farmers cooperatives, we have also Ministry of Cooperatives. However, we have not reached our goals. The reason is simple, they are not farmers organizations, but organizations that have been created by the worlds’ above farmers. Therefore, there is no freedom within organization; in fact, farmers’ freedom has been destroyed, consciously or unconsciously, deliberately or unintentionally. Therefore, the first point of departure is that farmers must realize that they must build their own “house”; they must make and own the organization. When we start to make our own house of freedom, we first have to “stop” for a while. We need to stop, just like when we are in the middle of the road, and we are confused whether we have to turn left, right, go through with the same direction to reach our place where we want to reach. Let us stop for a while and think together what is our farmers’ house of freedom. We called it Farmers House of Freedom or in short FHF. This is the house of freeman, men, or women. Freeman is humankind that abdicates to freedom in a sense that we have equal status as humankind with other humankind regardless their status or their position. It is the starting point for having character that we are having freedom of mind. With our freedom mind, we start to exercise our mind. We fly to the future, as far as we can imagine. We see here that we cannot ask somebody to make our own imagination or ask them to dream for us. It will be one of the most dangerous things if we do that to somebody. In fact, this is our mistake in the past that we asked somebody to make our house of the future. Even make a dream is difficult but every body can make their own dream, whether the dreams are realistic or not it does not matter. The matter is that we have to have our own dream. In the FHF, we can share our dreams. I tell you my dreams, you tell me your dreams, and everybody listen to

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each other what are our dreams. It does not mean that we have to get together physically in sharing our dreams. It does not also mean that everybody dreams should be good and beautiful. The essential thing here is that we have a starting point for expressing our ideas about future that we want to go there together. It is a starting point for us to build our spirit for rebuilding our communities’ life. Dreams, imaginations and similar things are not sold and bought in market place, they are produced in our mind and we can produce them when we totally stop of doing other things. It could be a minute, hours, a day, or every day. It does not matter at all, the matter is we have to produce and share our spirits. We meet every time we want in the FHF. We leave messages, notes, and other useful things for sharing with others farmers. We communicate in FHF. We believe one day all of our experiences in FHF will accumulate into our belief, the belief that we use as a plan of action. Then, when it becomes our own common belief, it means we have done to solve conflicts between individual freedom and organization. It should be realized at the first time that we might not be able to come with 100 % agreement among members of FHF. However, it should not reduce our spirit to do whatever reachable common beliefs in the FHF. In fact, the one of the most important roles in organization is doing conflicts resolution among members. The process of evolution of FHF will teach us how to come to better organization, but evolution of FHF will never take place if we have no FHF. As mentioned earlier, building farmers organization is not a new issue. In fact, there are already farmers’ organizations in the world. It shows that the demand for farmers’ organization is real, especially in developing countries. Now, the real issue is why farmer organizations have not yet reached their goals. Why national or global policies are still against farmers’ life? What are the basic limitations that make farmers organization mostly have not work? Of course, if we listen to analysts that mostly saying that farmer organizations will fail to work because of transaction costs are too high to make them effectively working will influence our spirit and we will turn it back our fate to governments or to the world above us. What they say is important to be considered because it is true that investing in mind and using mind in organization are costly. However, if we do nothing or just giving to somebody to change our life is the same with putting our self to the cage and ask somebody to take care all of us. It means that if we put ourselves voluntarily to the cage and ask somebody to give us life, we just make ourselves unfreedom. History has proven that the way and the outcomes of living in the cage do not give us better life. In fact, our life has been deteriorating, especially the life of farmers in developing world. Freedom is reciprocal, namely, our freedom is other obligations, and their freedom is our obligations. Therefore, mutual respects are necessary for plural communities. Even though mutual respects are expected voluntarily given by communities, but when we are dealing with incompatible good among parties, market cannot solve the goods characterized by high transaction costs. One practical solution here is to enact laws or regulations. Through laws and regulations, common denominator can be established and transactions among parties are changed from market transaction to administrative transaction43. However, it does not mean that when there are laws and regulations we will move fast and we solve our problems. Using law is also costly, especially when laws are violated. It means who has money to pay the court he/she will win the case. However, at least we have already moved one step, namely legal acknowledgment of farmers’ interest into the system of law. FHF should work hard to influence the legal systems (legislative bodies) and the court system (judicative bodies) and government system (executive bodies). We have to understand that legal process is a process of making whose interest counts. 44 We observed that lack of farmers’ interest in the legal systems now, especially for the case in developing countries. Therefore, it is easily understood that farmers in developing countries are weak when they are confronted with the issues that against them. Farmers are a part of society that legally has been neglected. What can we do to influence those strong agencies that for along their period of life have neglecting farmers’ 43

See A.A. Schmid, 1986. Property, Power and Public Choice. Praeger, New York.

44

See R. Chambers, 1997. Whose Reality Counts? Putting the first last. Intermediate Technology Publications, London.

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life? This is not an easy question to answer. First, we have to make open communication with them. Here we have to use varieties of languages, including farmers’ voices that release through mass actions. Mass action like demonstrations is voices. It could be an effective language to deliver voices if it manages correctly. Other voices are creating noises. Freedom for farmers itself already make noise. Creative mind will always produce noises as long as we pick up a right issue. Making noises are not bad. Noise is voice just like what usually done by children in a classroom when their teacher cannot manage the class well. In the era of globalization we learned that our problems are also determined by decisions made in other countries or decisions made by international organizations such as the World Bank or Asian Development Bank. Therefore, farmers also have to make noises to them. There are already website in the Internet that try to make noises to international organization. Farmers in developing countries should also actively make noises. One example is rejecting the projects financed by loan from them if the projects are considered have no or little benefits gone to farmers. It is not our purpose here to develop and to list our strategy and tactics for making influence to the world above farmers. Here we just to take care of the issue that farmers’ freedom belief is a starting point for releasing us from the cage that has been built for centuries. Here we proposed that believing that we are freedom humankind is the starting point of knowing our problem. Knowing what the problem, how to solve the attainment of a belief is a complete act of thoughts. A successful thought is any act of complete thoughts to resolve the problem started with and result in justified problem-solving beliefs. The valid grounds for beliefs are primary grounds including observation, actualization, analysis, and inference and auxiliary grounds including memory and authority45. Freedom, Agricultural Development and Food Security The concept of economic development is the concept that have been used to express the economic processes of how to developed of economic status in developing countries, it is not a concept of how to develop economies in the developed countries. In general, the objective of economic development of developing countries is to develop transformation process from agricultural economies to industrialized economies that have been reached in earlier times by the Western communities. Within this framework, Rostow stated that economy of developing countries would follow three stages of development. First, precondition of the national economy for a long period (up to a century or, conceivably more) when the nations build the condition for take-off. The process for establishing precondition for take-off has varied and requires major change in political and social structure, and changing in effective cultural values. Second, the stage of take-off itself, which is defined within two or three decades, and third, a long period when economic growth becomes normal and relatively automatic46. Economic development actually has become a specialized field of study in economics47. Progress in economic disciplinary knowledge has been used as basic input by international organization and governments in developing countries in formulating development policies and practices. Development economic theories rarely consider basic aspects of society, except Sen, namely freedom. This 45 46

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H.S. Leonard. 1967. Principle of Reasoning. Dover Publications, Inc. New York. W.W. Rostow, “The Take-off Into Self-sustained Growth”, in A.N. Agarwala and S.P. Singh, (Eds). 1963. The Economics of Underdevelopment. A Galaxy Book, Oxford University Press, New York. There are many books in this area have been published and have become textbooks that used as a source of knowledge not only for scholars or policy makers in developed countries but also more important for scholars and policy makers in developing countries. They are, among others, (1) A.P. Thirlwall, 1979. Growth and Development, with special reference to developing economies. (2nd) English Language Book Society and Macmillan. London; (2) E.W. Nafziger, 1990. The Economics of Developing Countries. (2 nd). Prentice-Hall International, Inc. New Jersey; (3) M. Gillis, D.H. Perkins, M. Roemer, and D.R. Snodgrass, 1987. Economics of Development. (2 nd). W.W. Norton and Company, New York, (4) H.J. Bruton, 1965. Principles of Economic Development. Prentice-Hall, Inc., Englewood Cliffs, New Jersey. (5) A. Sen , 2000. Development as Freedom. Alfred A. Knoff, New York. (6) F. Ellis, 1992. Agricultural Policies in Developing Countries. Cambridge University Press, Cambridge. (7) C.P. Timmer (Ed.), 1991. Agricultrure and The State. Cornell University Press, Ithaca, New York. (8) A.T.`Mosher,1976. Thinking About Rural Development. Agricultural Development Council, Inc., New York.

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volume has been inspired by Sen’s view about development and used freedom as basic value in agricultural development. When the world’s societies are in interdependent and wealth is generated through exchange, then a process of exchange is determined by the structure of market. Farmers in developing countries are a part of society that a long their history has been treated as low level of society. Under colonialism that took, more than centuries has created social structure in developing countries that make farmers and other rural inhabitants have no access to economic or political power. They are majority of the population but they are minority in power. Therefore, their interest was not internalised into policy decision-making processes. In consequences, they are just object of development. Agricultural development in the past has neglected farmers. Agricultural development is better be interpreted as development without farmers in a sense that farmers was just treated as an input of production. Whose interest is food security? A simple logic will easily answer that food security is not farmers’ interest; it is the interest of consumers. In developed countries, population of farmers is only about 7 % out of total population. The remaining 93 % of population do not grow food. It means that they are dependent on farmer’s efforts to sustain their healthy life. Moreover, in developing countries number of farmers are 51.4 % out of total population, means that the rest of 48.6 % of developing countries population do not grow food. People cannot live without food. Farmers have food already because they grow their own food. If farmers do not want to plant crops or raise livestock then the civilization will return to the earlier stage of evolution. One may say that the above argument is trivial. The reason is that the past evolution shows that the world food production has increased significantly. Data showed that food availability per caput in developed and developing countries in 1969-71 was 3130 kcal/day and 2110 kcal/day, respectively. In 1999-2001, food availability per caput in developed and developing countries have increased to 3260 kcal/day and 2680 kcal/day, respectively (FA0, 2004). Even in Africa that is called by Artadi and Sala-i-Martin (2003)48 as “The Economic Tragedy of The XXth Century,” per caput food availability has increased from 2180 kcal/day in 1969-71 to 2430 kcal/day in 1999-2001. According to this global trend, one may conclude that we should not have to worry with food problems because the food productions show the trend that is sufficient to give enough food for the world population. Table 2.2 hypothesizes the relationships between human activities and their impacts on human life. Human activities are classified into two different groups namely highly certain and highly uncertain outcomes; and the impacts of outcomes are classified into, first, causing fatal impact to human life and second, not causing fatal impacts to human life. Fatal impacts of outcomes of human activities are meant the outcomes that are causing mass human death such as found in famine. We see that if there is fatal world harvest due to, for example, outbreak of certain kind of pests and diseases or due to long drought, the impact to human life will be devastating. Agricultural technology has developed significantly, but there is still uncertainty in association with droughts or pests and diseases outbreak. In addition, agriculture is highly dependent on political situation in a country or a region.

Table 2.2. Relations between human activities and their impacts to human life. Highly certain

Highly uncertain

No fatal impact Production of manufacturing Scientific research, which has no relation with on human life goods such as in industrialized humankind as a research instrument, or impacted by countries. research results application. Highly or fatal Production of medicine and Agricultural production, particularly food productions 48

E.V. Artadi and X. Sala-i-Martin, 2003. “The Economic Tragedy of the XXth Century: Growth in Africa”.

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damage human life

on medical instruments.

in developing countries or in areas that are agricultural systems are fragile or unstable.

The outcome of scientific research is also uncertain because the nature of research is exploring the unknown. If the research does not use human as an instrument or the application of the results, for example, has no relation with human life, then when the research is not successful, there will be no fatal impact to humankind. In most cases, production of manufacturing products is mostly highly conditioned that minimize the uncertainty. However, if there is defect in products, such as in the case of medical instruments or medicine, even though there can be fatal impact to human life, the number of cases will not as large as in the case of famine. Therefore, if we consider the main character of agricultural production that is characterized by high uncertainty, we should never ignore the issues of food security. Our concern here is that the issues related to food security have given too much emphasis on consumers’ side and have not paid proportionate care to farmers’ life. It is impossible to have sustainable food production without increasing farmers’ welfare. Giving too much attention on food trade or food relief based on assistance from developed countries will also increase dependency of developing countries that will cause the decreasing capacities of developing countries to produce food in the longer run. Increasing food import or food assistance from food surplus regions such as developed countries will also endanger environmental sustainability in developing countries due to much dependency on a few sources of food, particularly for the case of tropical climate regions. Tropical climate regions are endowed by high varieties of food but small volume, on the other side, temperate climate regions have only a few varieties but in large volume. Therefore, cheap food price because of increasing subsidized food imports or food assistance will not only increase rural poverty that most of the member of communities are farmers but also will endanger environmental resources especially tropical countries’ biodiversity. It will be useful to learn what Lappé49 called 12 myths of hunger. Based upon these myths we will focus our discussions on the meaning of farmers’ freedom for future concepts of development of agriculture. The 12 myths of hunger according to Lappe are: Myth 1 Not Enough Food to Go Around According to Lappe et. al., the problems associated with hunger are not because there is no food, but because “many people are too poor to buy readily available food. Even most "hungry countries" have enough food for all their people right now. Many are net exporters of food and other agricultural products.” This description is also stated by Sen (1884) to describe the cause of famine in Bengal that killed about 1.5 million people in 194350. Sen come with an approach to solve hunger, namely entitlement approach. Myth 2 Nature's to Blame for Famine According to Lappe, nature rarely caused hunger or famine, but people usually destroy the vagaries. Unequal land distribution, namely too much land and capital are controlled by few powerful people or institutions that cause other people poor. In addition, human institutions and policies that determines who 49

12 Myths About Hunger based on World Hunger: 12 Myths, 2nd Edition, by Frances Moore Lappé, Joseph Collins and Peter Rosset, with Luis Esparza (fully revised and updated, Grove/Atlantic and Food First Books, Oct. 1998).

50

A. Sen, 1984. Poverty and Famines. An Essay on Entitlement and Deprivation. Clarendon Press, Oxford.

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eats and who starves during hard times. ”The real culprits are an economy that fails to offer everyone opportunities, and a society that places economic efficiency over compassion.” Myth 3 Too Many People Population is, of course, important but saying that hunger or famine is due to high population density is not true. Java is a good example where Java is one of the highest populated island in Indonesia, but Java contribute about 60 % of food supplies in Indonesia. For illustration, Java population densities were 975 people per km2 in contrast with Papua 6 people per km2. Myth 4 The Environment vs. More Food? Increasing food production does not necessarily means destroying environment. What usually destroy environment are large corporations such as what happened in deforestation or marine exploitation. The application of integrated pest management in food crops has reduced the application of pesticides. In fact, high application of pesticides is true in horticulture crops or industrial crops that are controlled by large corporations. Those application of pesticides has no connection with feeding the hungry people. In addition, small non-rice farmers usually do not use pesticides, but they apply organic farming practices. Myth 5 The Green Revolution is the Answer The problem is associated with Green Revolution is its narrow focus of goal, namely increasing production. Increasing food production will not automatically solve hunger if the poor cannot buy additional food. Furthermore, this our concern in this volume, Green Revolution has not increased farmers’ welfare. In fact, increasing food production and productivity have declined farmers’ welfare. Myth 6 We Need Large Farms Minimum size of land holding, of course, is important. However, large farming size does not assure that it will produce food in such an efficient way. In fact, there are many idle land made by large landowners who control most of the best land. Myth 7 The Free Market Can End Hunger We observed that cause of famine in the world’s food surplus is still in existence due to mainly the poor has not enough purchasing power to buy food. Furthermore, when the world’s food deficit occurs, food price increases and again the poor cannot buy food. Market can eliminate hunger when sufficient purchasing power is widely equal. Increasing food market concentration such as what happen now has increased price of food paid by consumers and decrease price of agricultural products received by farmers. Competitive market is nice in the textbook but in reality, market is distorted by the power of few corporations. We should not neglect the roles of other institutions such as government and power of communities at large in solving hunger, famine, and poverty.

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Myth 8 Free Trade is the Answer Food is produce by farmers and processed by manufactures. There is imbalance power between farmers and manufacturers. Farmers receive declining price of their products over time, on the other hand consumers pay increasing price over time. Free trade does not assure both consumers and farmers gain benefits. In addition, according to Lappe the trade promotion formula has proven a miserable failure in alleviating hunger. In most Third World countries’ exports have boomed while hunger has continued unabated or actually worsened. Myth 9 Too Hungry to Fight for Their Rights Lappe stated: “Bombarded with images of poor people as weak and hungry, we lose sight of the obvious: for those with few resources, mere survival requires tremendous effort. If the poor were truly passive, few of them could even survive. Around the world, from the Zapatistas in Chiapas, Mexico, to the farmers' movement in India, wherever people are suffering needlessly, movements for change are underway. People will feed themselves, if allowed to do so. It's not our job to 'set things right' for others. Our responsibility is to remove the obstacles in their paths, obstacles often created by large corporations and U.S. government, World Bank and IMF policies.” Myth 10 More U.S. Aid Will Help the Hungry Lappe stated: “Most U.S. aid works directly against the hungry. Foreign aid can only reinforce, not change, the status quo. Where governments answer only to elites, our aid not only fails to reach hungry people, it shores up the very forces working against them. Our aid is used to impose free trade and free market policies, to promote exports at the expense of food production, and to provide the armaments that repressive governments use to stay in power. Even emergency, or humanitarian aid, which makes up only five percent of the total, often ends up enriching American grain companies while failing to reach the hungry, and it can dangerously undercut local food production in the recipient country. It would be better to use our foreign aid budget for unconditional debt relief, as it is the foreign debt burden that forces most Third World countries to cut back on basic health, education and anti-poverty programs.” Myth 11 We Benefit From Their Poverty Lappe stated: “The biggest threat to the well-being of the vast majority of Americans is not the advancement but the continued deprivation of the hungry. Low wages-both abroad and in inner cities at home-may mean cheaper bananas, shirts, computers and fast food for most Americans, but in other ways we pay heavily for hunger and poverty. Enforced poverty in the Third World jeopardizes U.S. jobs, wages, and working conditions as corporations seek cheaper labor abroad. In a global economy, what American workers have achieved in employment, wage levels, and working conditions can be protected only when working people in every country are freed from economic desperation.“ “Here at home, policies like welfare reform throw more people into the job market than can be absorbed-at below minimum wage levels in the case of 'workfare'-which puts downward pressure on the wages of those on

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higher rungs of the employment ladder. The growing numbers of 'working poor' are those who have part- or full-time low wage jobs yet cannot afford adequate nutrition or housing for their families. Educating ourselves about the common interests most Americans share with the poor in the Third World and at home allows us to be compassionate without sliding into pity. In working to clear the way for the poor to free themselves from economic oppression, we free ourselves as well.” Myth 12 Curtail Freedom to End Hunger? Lappe stated: “There is no theoretical or practical reason why freedom, taken to mean civil liberties, should be incompatible with ending hunger. Surveying the globe, we see no correlation between hunger and civil liberties. However, one narrow definition of freedom-the right to unlimited accumulation of wealth-producing property and the right to use that property however one sees fit-is in fundamental conflict with ending hunger. By contrast, a definition of freedom more consistent with our nation's dominant founding vision holds that economic security for all is the guarantor of our liberty. Such an understanding of freedom is essential to ending hunger.” The 12 myths formulated by Lappe at. al. (1998) such as described and quoted above are the myths built by the world’s communities above farmers and beyond the poor. This volume will explore the last myth above, namely freedom aspect. In Chapter III, we describe action of thought of agricultural development in Indonesia that has made farmers less freedom. Here we will highlight the process thought in general and what are the outcomes such as described in Chapter IV. Farmers’ freedom as essential aspect of humankind and the source of spirit in development has been mentioned several times in the previous sections. Here we will emphasize the essential meaning of freedom for sustainable agricultural development. The meaning sustainable agriculture then will play as the starting point to understand why freedom is important. In addition, we understand that sustainable agriculture is essential for sustainable food production that will support the existence and progress of humankind civilization. To have insight for meaning of freedom in sustainable agricultural development, it will be important to understand the mainstream meaning of sustainable development that currently commonly accepted by scholars and policy makers in the area of development. We would like to see that development is by itself the interplay processes of many efforts to accelerate changes in belief hold by the society, which is actually reflected in the community social behavior. We have to start exploring beliefs because what has been actually done, in fact, is a matter of exercising beliefs hold by policy makers that are reinforced by scholars’ en economics and in other fields of sciences that are related with development issues. Such belief has reinforced decision-makers such as farmers, traders, and policy makers to act according to that belief. Let us see what has been done in Indonesia as our case study. The main goal of agricultural production in Indonesia was to reach food self-sufficiency through increasing food production. Green Revolution is basic instrument to achieve that goal. It was believed that food self sufficiency will produce goods not only to consumers but also to producers, namely small rice farmers because rice is major staple food for most Indonesia now. All efforts were concentrated in increasing rice production and the efforts were centralized in central government through new institution called BIMAS (Mass Production Guidance) and chaired by President Soeharto. This was very powerful institution, which controlled almost all government institutions. Farmers must follow all guidance: what variety should be planted, how to irrigate the farm, how to plant rice, how to apply fertilizer, and so on. Village Cooperative (KUD) was established and paddy produced by farmers were sold to KUD where price of rice was controlled by government. Bank channelled credit to farmers under supervision of government. BULOG (National Logistic Agency) was established and main function was to stabilize food price through open market operation and stock management. To support agricultural production, government established and expanded an agency for agricultural research and development (AARD) and an agency for agricultural extensions and training. Furthermore, rice was planted in almost all regions in

43

Indonesia. “Agricultural rice villages” become places that highly intensive visited by government officials from all levels, namely, districts, province, and national levels. The main result of those efforts is the achievement of rice self-sufficiency in 1984 and all Indonesian now are preferred to eat rice rather than to keep their previous local traditional foods such as corn, cassava, or sago. The belief of rice self-sufficiency as the main goal of agricultural development has continued up to know. However, such a belief cannot be supported by reality that Indonesia, given available resources especially limited irrigated farms and high costs of development of new rice field, including environmental cost, has reduced full self-sufficiency belief into self-sufficiency in trend belief. In fact, Indonesia must see food production issue in a more realistic way. The last 12 years development shows because the growth rate of rice production and its productivity growth has declined dramatically since 1993. The growth annual rate of rice production has declined from 5.5 % in 1968-1992 to 0.7 % in 1993-2000. Furthermore, the annual growth of productivity of rice output per capita has declined from 3.7 % in 1968-1992 to –0.3 % in 1993-2000 and the annual growth of food crop output productivity per capita has declined from 4 % to –0.4 % in those respective periods. In general, the annual growth of agricultural total factor productivity has declined from 2.6 % in 1968-1992 to –0.1 % in 1993-2000.51 The point we would like to raise here is that centralized power and make farmers unfreedom in a sense of practicing agriculture and in a sense of policy making decisions are not sustainable. When power of government to control farmers and to finance agricultural development declining, the resources will flow to other sectors of human activities. Those inputs have been very significant to change farmers’ behavior in previous time. Control by coercion made farmers afraid, so they follow. Availability of other input supplies make farmers has no options to choose other alternatives. However, the worse case is that farmers’ welfare has been declining and rural life become suffering. The transition from command and control approach such as took place since Reformation Era that started in 1998, make the situation of farmers uncertain. Here we see that agricultural production, especially food, is a product of political decision and transitions or changes in political climate has been significant determinant for sustainable agriculture. What is the meaning of sustainable development? We will have the following various descriptions of the meaning of sustainable development in recent literatures. To understand what scholars or some remarkable institutions mean by sustainable development will enrich us in understanding about sustainable development and so will help us in shaping or reshaping our mind in trying to find solutions for future farmers and agriculture. Sustainable development is a concept that represents the latest step in a long evolution of public concern with respect both to natural resources and to the environment52. Continuing debates among economists and development practitioners on the one side and strict ecologists and environmentalists on the other, indicate that there are different images about the meaning and how to use natural and environmental resources and on the meaning of development as well53. According to IUCN sustainable development is “the management of human use of the biosphere so that it may yield the greatest sustainable development to present generations while maintaining its potential to meet the needs and aspirations of future generations”54. Furthermore, development is sustainable if it satisfies present needs without compromising the ability of future generations to meet their needs (WCED, 1987). This 51

52

Keith O. Fuglie, “Productivity Growth in Indonesian Agriculture, 1961-2000”. Bulletin of Indonesian Economic Studies, Vol. 40, No. 2, 2004:209-25. S.S.Batie, “Sustainable Development: Challenges to the profession of agricultural economics”, AJAE, December 1989 : 1083-1101.

53

See, for example, Science, Vol.253, August 1991, “Extinction: Are Ecologists Cry in Sustainable Development”, The European Journal of Development Research, Vol. 3, No. 1, June 1991: 1-13 1.

54

IUCN. 1980. World Conservation Strategy. International Union for the Conservation of Nature. Gland. Switzerland. See also WCED, 1987. Our Common Future: The Brundlandt Report. Oxford University Press, for World Commission on Environment and development. New York.

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definition requires some clarification on the meaning of sustainability. It also fails to provide us with clear ideas of what constitutes development. According to WCED (1987: pp. 40, 89), “Our Common Future” is focused on economic growth as the main theme to both solving the world’s environmental problems and to improving the living of the poor as well.55 Even though there is a consensus among sustainable development advocates, diverging interpretations, which in general can be categorized into two groups, still exist. The first group which views sustainable development as the “pursuit of economic growth (as measured by the gross national product) subject to environmental constraints.” The second group views sustainable as the “ maintenance-of-the-resource.”56However, ‘the growth group’ is more popular because, according to Daly, this “growth ideology is extremely attractive politically because it offers a solution to poverty without requiring the moral discipline of sharing and population control”57. According to Pearce (Batie, 1989), the maximization subject to constraints criteria can be described in two stages of maximization: first, the establishment of some contractional arrangement, incorporating ecological principles and environmental ethics to establish the “rules” applicable to the development policy. Second, within those rules, the economic maximization utilitarian principle is applied. This principle leads to advocacy for seeking the” right incentives” to produce “solution-oriented technologies” and the “right prices” to “internalize the externalities” (Speth in Batie, 1989). Since institutions then determine generation and flow of incentives, right institutions are the key. The maintenance-of-the-resource group takes a different position. To this group “well being is not the same as well having,” and nature is to be respected and not “exploited” for production inputs and outputs (Sachs in Batie, 1989). Therefore, to this group sustainable development is a minimization concept that implies minimizing the use of the natural environment. Batie’s (1989) dichotomy on thought of sustainable development as categorized into two groups seems too simplistic, especially when maximization and minimization criteria are used to demarcate the problem. The more important problem associated with economic development thought is not about maximization or minimization rules of behavior but about lack of reconstruction of biophysical58 and cultural59 foundations in economic development. In fact maximization or minimization as dictated by optimizing framework will be very difficult to apply in areas of technological or institutional changes where the following situations will most probably take place: (1) a second order condition due to the existence of increasing return to scale or externalities is hardly sufficient to fulfil. (2) Lack of common denominator between the good and the bad agreed upon by all 55

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We cite the following from WCED (1987 :pp.40,89) : “Far from requiring the cessation of economic growth, (sustainable development) recognizes that the problems of poverty and underdevelopment cannot be solved unless we have a new era of growth in which developing countries play a large role and reap large benefits .... If large parts of the developing world are to avert economic, social, and environmental catastrophes, it is essential that global economic growth be revitalized. In practical terms this means more rapid economic growth in both industrial and developing countries…”. H.E.Daly, 1992. Steady-state Economics. (2nd). Earth Scan, London.

57

See also M.Cernea, “Farmers’ organization and Sustainability. In T.J.David and I.A.Schirmer (eds.) 1987. Sustainability Issues in Agricultural development. The World Bank, Washington D.C.

58

P.P.Cristensen, 1989. Historical Roots for Ecological Economics-Biophysical versus allocative approaches. Ecological Economics, 1: 17-36.

59

See also P. Sonderbaum, 1992. Neoclassical and institutional approaches to development and the environment. Ecological Economics 5: 127-144. Furthermore, for more explicit treatment on cultural capital see (1) F. Berkes and C. Folke, 1992. A systems perspective on the interrelations between natural, human-made and cultural capital. Ecological Economics, 5(1992):1-8; (2) L.W. Milbrath, 1989. Envisioning a Sustainable Society. Learning Our Way Out. State University of New York Press, Albany, New York; (3) R. Axelrod, 1984. The Evolution of Cooperation. Basic Books, New York; and (3) E. Ostrom, 1990. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press, Cambridge.

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members of the society. (3) Lack of knowledge or incomplete information of individuals regarding the rules or the relationships of states and variables concerned. (4) In fact, in a context of evolutionary perspective, evolution selects for populations with the ability to learn to adjust to both internal and external changes rather than for populations with optimal, but fixed behavior60 Therefore, there are many alternatives aside from maximizing or minimizing criteria61. Lyman and Herdt62 operationalize the meaning of sustainable development in a context of agriculture. In their view, “sustainability is first defined at the highest system level and then proceeds downward; and, as corollary, the sustainability of a system is not necessarily dependent on the sustainability of all its sub-systems. Congruent with this definition, CGIR63 defines “agricultural sustainability as successful management of resources for agriculture to satisfy changing human needs while maintaining or enhancing the quality of the environment and conserving natural resources.” Along with CGIR’s definition, Francis and Hildebrand64 put more specific definition of sustainable agriculture, namely, “a sustainable agricultural system is the result of a management strategy which helps the producer to choose hybrids and varieties, soil fertility packages including rotations, pest management approaches, tillage methods, and crop sequences to reduce costs of purchased inputs, minimize the impact of the system on the immediate and the off-farm environment, and provide a sustained level of production and profit from farming”. Similarly, Bird defined sustainable agriculture as both knowledge and management intensive and it must “provide long-term added value to the biological, environmental and human capital on which agriculture is based.” 65 Contrary to the more practical definition of sustainable agriculture above, Francis and Youngberg66 viewed sustainable agriculture as a philosophical ground for agricultural development. According to them “sustainable agriculture is a philosophy based on human goals and on understanding the long-term impact of our activities on the environment and other species. Use of these philosophy guides, our application of prior experience and the latest scientific advances to create integrated, resource-conserving, equitable farming systems. These systems reduce environmental degradation, maintain agricultural productivity, promote economic viability in both the short and long term, and maintain stable rural communities and quality of life.” Furthermore, there are some misconceptions about sustainable agriculture according to Francis and Youngberg. Those are (1) “sustainable approach are only for small farmers.” (2) “Reducing inputs means going ‘cold turkey”‘. (3) “To go ‘low input’ means to convert the entire farm.” (4) “Substantial input use 60

See P.M. Alien, 1994. Evolutionary Complex Systems: Models of Technological Change. In L. Leydesdorff and P. Van den Besselaar (Editors). 1994. Evolutionary Economics and Chaos Theory. New Directions in Technology Studies. Pinter Publishers, London.

61

See G.L. Johnson, 1986. Research Methodology for Economist. Harper and Row, New York., and A. Etzioni, 1988. The Moral Dimension. Toward a New Economics. The Free Press, New York.

62

J.K. Lynam and R.W. Herdt,”Sense and Sustainability: Sustainability as an objective in international agricultural research”, Agricultural Economics 3 (1989) : 381-398.

63

CGIR. 1988. Sustainable Agriculture Production: Implications for international agricultural research. Report of CG Meeting at FAO, Rome. Consultative Group for International Agricultural Research Secretariat, Washington, D.C.

64

C.A. Francis and P.E. Hildebrand, 1988. Farming Systems Research and Extension (FSR/E) in support of sustainable agriculture. In D.E. Voth and T. Westing (Editors), 1988. Contributions of FSR/E toward Sustainable Agricultural Systems. Farming Systems Research & Extension Symposium, Univ. Arkasas, Fayetteville, October 9-12.

65

G.W. Bird, 1988. Sustainable Agriculture: Current state and future trajectory. Congressional Testimony on Sustainable Agriculture. April 18 Washington, D.C. In C.A. Francis, C.B. Flora and L.D. King (Editors). 1988 Sustainable Agriculture in Temperate Zones. John Wiley & Sons, Inc., New York.

66

G.W. Bird, 1988. Sustainable Agriculture: Current state and future trajectory. Congressional Testimony on Sustainable Agriculture. April 18 Washington, D.C. In C.A. Francis, C.B. Flora and L.D. King (Editors). 1988 Sustainable Agriculture in Temperate Zones. John Wiley & Sons, Inc., New York.

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reduction is the same as going ‘organic’. (5) “Sustainable farmers must use older, open pollinated varieties and not hybrids.” (6) “Yields are reduced when chemical and fertilizer inputs are reduced.” (7) “Low-input approaches increase risk in farming.” (8) “Current cash-grain crops and systems make most efficient use of inputs”; (9) “Farmers change systems for philosophical and religious reasons”; (9) “Low-input farming means low management and low levels of production”; (10) “Total agricultural production would be drastically reduced by widespread application of low input practices”. Reading through the list of those misconceptions, one understands that their primary cause is lack of knowledge or high ignorance of individuals or societies toward a better understanding of sustainable agriculture. Understanding sustainability as defined above limits the scope of sustainability in the context of humankinddevelopment-environmental and natural resources interrelationships. Even though “development implies change that leads to improvement or progress,”67 the improvement or progress itself has usually not been endogenized into the concept of development. Development is process of change, however, it is not simply a matter of things getting bigger or smaller68. In the first case, we learn that development has been emphasized in terms of consequences; and in the second case, we learn that we lack attention to the need for knowledge of processes of development. Measuring development by consequences, we lack knowledge of sources of progress and lack appreciation for the meaning of progress, which renders the economy sustainability. For example, growth of GDP has commonly been treated as progress in and off itself 69. Heavy attention on environment sustainability as a complementary definition of development also seems to characterize development in terms of consequences, e.g., cleans environment. Whether clean environment is by itself sustainable development is another question. One can argue that it will not be the case. Of course, high income per capita is desirable in term of giving more freedom to choose to individuals, but it does not mean that development is increasing income without knowing how incomes have been generated and used. Therefore, it is necessary to understand sustainable development not only based on consequences, which reflect the chosen goals of society, but also to endogenize development into the causes of development itself. Development should also be seen as a continuing process. In fact, sustainability is only meaningful if we put the problems of development into a context of changing processes over time. An example is that per capita income level of Indonesians in the year of 2018 has been projected to be about US $ 2,60070. This is not interesting by itself in terms of policy analysis, but it is more interesting to know the processes of development required reaching that income level. Let us clarify the argument with the following example. Knowing the death of someone only gives us information that he/she has already died. It could be more interesting if we had information about how the death occurred and what make him/her death. Therefore, information about dying, namely a process gives richer implications and understandings than information of death (events). Similar argument can be applied to development; namely, knowledge of processes of development is more interesting and important rather than knowledge of development consequences per se. What do integrate causes, processes, and consequences of development in order to achieve sustainable development? If we can distinguish between properties of people, commodities, and societies, then the agents 67

A. Pakpahan, “Knowledge and sustainable agricultural development “, Indonesian Food Journal.

68

H.E. Daly and J.B. Cobb, Jr. 1989. For the Common Good. Redirecting the economy toward community, the environment and a sustainable future. Beacon Press, Boston.

69

D.W. Pearce and J.J. Warford, 1993. World Without End. Economics, Environment and Sustainable Development. Published for The World Bank, Oxford University Press, Oxford.

70

This income level was projected based upon the condition of Indonesia before falling into economic crisis, namely it was projected in 1993 (see Repelita VI). However, due to economic crisis, income per capita of Indonesia has fallen to US$ 710 in 2002. By assuming economic growth 5 % per annum, then using a simple growth formula we will get a projected income per capita of Indonesia US$ 1550 in 2018.

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of development are only people as both individuals and societies. In addition, if we understood that what conditioning or controlling social interactions of individuals or organizations within communities toward a thing, a situation or a condition is institutions, then the second prime factor is institutions, including values. Therefore, in the context of sustainable development, people and institutions are both dependent and independent variables in shaping and reshaping individual and community behavior toward sustainable or unsustainable development. Let us develop a short description of nature of human resources and institutions, which are relevant with the purposes of this volume. Human resources are different from other resources. Man is humankind and as humankind man has more powerful minds that make he/she different from other organism significantly. Of course, a man has labor power just like a horse, but a man can create a new thing that cannot be done by other organisms in the world. Spiritual capital, social capital, and material capital are embodied in mankind71. The primary task of a decision-maker is to make a decision, and to act or not to act accordingly. Actions involve knowledge acquisition, analysis, and interpretation. The capacity of an individual to acquire, to analyze, and to interpret is not only limited by his or her own mind capability (bounded rationality72), but also by real cost of conducting those activities including monetary and non monetary costs are high. Investment in human capital then is attributable to increase both improvement in quality of making decisions, namely significantly reduced (increased) wrong (right) decisions that creates significant real costs (benefits), and improvement in quality of action, namely significantly reduced (increased) wrong (right) actions that creates significant real costs (benefits). Both value free positivistic knowledge and knowledge about values is necessary inputs for both making decisions and conducting actions73. This is the change from muscle power to mind power. Technology is a main product of mind power. It is done through the application of organized knowledge to practical tasks74. As knowledge of know-how, technology increases the capacity of a society to solve its practical problems in one hand and provides feedback for advancement of knowledge on the other. Just like an organism, technology as a human artefact evolves over time. In the process of its evolution, a new invented one replaces an obsolete technology. In this sense, human development is a continued process to extend human capability in inventing, accumulating, and utilizing knowledge to solve both practical and theoretical problems. Knowledge, which is a prime attribute of human resources and civilization, has been neglected in development concept for a long time. In the conventional model of development, people are viewed as an exogenous factor or just viewed as labor. This framework of thinking has not given sufficient attention on the roles of knowledge in society. In fact, economic theory assumes that decision-makers have perfect knowledge or complete information. Therefore, what has been focused on in the study of economic is not the behavior of economic agents but the behavior of commodities with prices, quantities, interest rate and so on75. The above framework of thinking has put capital or money as a major factor in the development, not knowledge, ideas, or spirit of people in development itself. The stock of current knowledge, including scientific knowledge, is related to knowledge transmitted from earlier generations. According to Boulding, “the heritage of human knowledge, including science, involves the replication of information and knowledge structures by such techniques as printing, xeroxing, and recording... and also through the transmission of knowledge structures from the minds of one generation to the next by a 71

72

Danah Zohar and Ian Marshal, 2004. Spiritual Capital: Wealth we can live buy. Berrett-Koehler Publishers, Inc., San Fransisco. See Herbert Simon, 1957. Administrative Behavior. 2nd. The Free Press, New York.

73

See G.L. Johnson, 1986. Research Methodology for Economist: Philosophy and Practice. Macmillan , New York.

74

See F. Hayek, ”The Use of Knowledge in Society”, The American Economic Review, 35 (1945): 519-30.

75

See James M. Buchanan, 1979. What Should Economist Do ?, Liberty Press, Indianapolis.

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learning process.” Even though science as a product of noogenetic evolution, “learning began long before science.”76 The rate of increase of knowledge of both scientific knowledge and knowledge of technology has been very rapidly in recent years. At present, farm community becomes so opened and so dependent upon its outside systems. The intensive interaction between farmers and their outside world calls for higher sophistication of farmers in both decision making processes, taking actions, and bearing the consequences of those. The problem of society is not merely a problem of how to allocate given resources efficiently but rather a problem of how to secure the best use of resources to any member of society where their relative importance only these individuals know. The meaning of knowledge here more than scientific knowledge or “conscious, explicit knowledge of individual the knowledge, which enables us to state that this or that is so and so. The interpretation of knowledge is “to include all human adaptations to environment in the past experience has been incorporated.”77 This understanding enables us to see the correlation between the growth of knowledge and the growth of civilization. Our central problem is how to build individuals’ and communities’ capabilities based upon knowledge endowed by them to reach their development objectives through sustainable processes. Sustainable development by itself explicitly accepts that the planning horizon is infinite. In this regard, sustainability calls for examination of the basic conceptual framework that will demand tremendous changes in the way we conceive the problems and in the way to find the solutions. What we need to be aware is that agricultural development in a policy context is not equivalent to economic analysis even though economics usually plays a major role in providing a conceptual framework. As a framework of thought, economics provides a conception or an image of a public policy problem to the decision-makers so that it will change their perception and conception of the problem. As a result, it will create a dramatic effect on the policies chosen and on the actions proposed and taken. Therefore, knowledge of both the limitations and the potentials of economics in providing an analytical framework in policy analysis such as undertaken in this volume are thus important. The objective or goal in economic analysis usually is assumed or predetermined, for example, to maximize utility or to minimize cost. The mainstream economic thought gives too much emphasize on optimization, which has led the economic analysis bias toward computational sort and has neglected the problems of exchange. In Chapter two of the Wealth of Nations, Adam Smith (Buchanan, 1979) 78 stated that the principle, which leads to the division of labor, which generates so many advantages “is not originally the effects of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.” “The propensity to carry, barter, and exchange” that has been given serious attention by Adam Smith is surprisingly given less attention in current thinking in the areas of agricultural development and policies. The theories of resource allocation have been at the core, not the theory of exchange (Buchanan, 1979)79. Other assumption underlying economic optimization that is very crucial to be addressed in agricultural development is that the decision-maker is assumed to have a complete information or perfect knowledge. This assumption is very critical to be examined because of the crucial roles of knowledge in agricultural development. In decision-making processes, what should be collected first is information or knowledge, not something else. Before announced to the public, knowledge is very private in the sense that only one who has

76 77

See K. Boulding, 1961. The Image. Knowledge in Life and Society. The University of Michigan Press, Ann Arbor. See F. Hayek, ”The Use of Knowledge in Society”, The American Economic Review, 35 (1945): 519-30.

78

See James M. Buchanan, 1979. What Should Economist Do ?, Liberty Press, Indianapolis.

79

See James M. Buchanan, 1979. What Should Economist Do ?, Liberty Press, Indianapolis.

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knowledge that knew it. Once certain knowledge is announced to the public, knowledge becomes a public good. However, how far an individual in the community is able to internalize knowledge correctly is determined by the sophistication of him or her to acquire and understand such knowledge. A specialization reflects of such sophistication. We see the interrelation between man as human resources and knowledge as a product of brain that belongs to a man. Therefore, sustainable development is the product of knowledge acquisition, which is a function of quality of human mind. To develop is not only to continue doing some thing but more important is to improve or to create a new thing, e.g., innovation. Growth and development is induced and revitalized by knowledge generation and utilization, and vice versa. Therefore, education in a broadest term is one of the most important social institutions. In an interdependent world, transactions are a core of social interactions. Exchange is a part of transaction, and economic progress is function of transactions. Market involves exchange but exchanges not only involve market. Without exchange, we will live in the subsistence economies and the world will become the Robinson Crusoe’s world. Using transactions as the unit of analysis, then we can imagine millions of players, which have their own interests, endowments, hopes, and expectations to conduct transactions among them for increasing their own welfare. Transaction involves market exchange, grant, and administrative transactions80. Transactions that imply interdependencies across individuals or groups through an agreed upon common bound are structure of social systems. Changes in technology, human capital, values, and other elements of a society will change the community’s structure of interdependencies, and such changes will cause disequilibria. Disequilibria do not always mean instability, but it will be better interpreted as a process toward social progress. Progress in an interdependent world is a function of mutualistic exchanges, which make both parties better off. Development as a source of progress is then necessary to create mutualistic advantage transactions. However, there are also opportunities to have negative relations such as cheating each other, which will cause negative sum games for the society. Development as a societal process will produce something better if the social institutions such as markets, government, school, banking, family and others can have more mutualistic advantage transactions rather than parasitic destructive transactions. This means that progress is determined by the degree of cooperation among community members and between different communities to choose not to cheat and to conduct similar behavior. This situation suggests that development cannot avoid moral or ethical issues because, such as mentioned above, development is not an individual matter but a social one. Development can be interpreted as an accelerated evolutionary process through improving adjustment capability of community on variety of changes toward societal progress. The adjustments are not in forms of genetic, biological or physical adjustments of human species. The most important adjustment capability owned by human species is mental and social adjustments. Mental adjustments are adjustments made through brain. Brain produces ideas, knowledge, feelings, sensations, hallucinations, and so on. People are able to materialize or to make that real. For example, the complicated computer program or an airplane is the materialization of the brain-action of its inventor. Everything man-made product is always related to the different degrees of power of brain. It means those men or human are the prime mover of progress through their rapid capability of adjustments. Boulding called it as noogenetic revolution, namely, revolution in knowledge and information as a central means for making successful adjustments or adaptations. What make fast progress is not one mind or some person’s brain. Social progress is a product of civilization where civilization is determined or influenced by mass adjustment capability. Number of people who are able to adjust successfully is an important determinant factor. In the process, there should be contact or conflict of ideas, preferences, or power. Civilization will also determined by the capability of society to resolve such conflicts. It is also a form of social adjustment capability. 80

See A.A. Schmid, 1986. Property, Power and Public Choice. Praeger, New York.

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Development is an action plan toward progress. What is a progress is a matter of interpretation of people minds. Progress is, in short, movement toward what some individuals or group “thinks” is in the “right direction.” Intensive communications or interactions among groups of people who have different background or interest will perform more homogenous perception or understanding of what is good (bad) and what is right (wrong) thing to do. This is first necessary step for harvesting social energy in order to be able to perform anti-entropy process. Based upon the above long discussion, we finally conclude that the determinant of sustainability is development that purposely designed to promote capabilities of both individuals and societies. Capabilities are function of spirit, knowledge, skills, and other resources. The utilization of capabilities is also determined by the spirit to reach valuable states of being. The generations of valuable state of beings are conducted through democratic processes to ensure full participation of societies to solve problems in an interdependent world, including interdependent between present and future generations. Therefore, sustainable agriculture development is just an application of this definition in agriculture. Where is a locus of freedom? The loci of freedom start from the beginning up to the end. Freedom is basic condition that should be an integral part of all humankind because freedom is an essential part of humankind life. It is started from freeing ourselves from unfreedom. It is not a matter of knowledge or skills; it is also not a matter of rich or poor. It is a matter of do we have spiritual values to know what we are and what for is our life. It is a matter of spiritual capital that is endowed by our societies, particularly farmers’ societies. How to sow the seeds of this spiritual value? There is no unique answer to this question. However, everybody must try hard if we want to have our freedom. The obvious second locus is in decision-making process and in disciplining organization decisions. In earlier discussions it had been mentioned about the role of Farmers Freedom House (FFH). This FFH is our “class room” for increasing our knowledge and skills in decision making processes and in disciplining ourselves to commit in promoting freedom for our and next generation better future life. We will make further exploration of the above issues in Chapter VI and Chapter VII. The most essential thing here is that we have notice that freedom is basic values for increasing capabilities and capabilities are determinant for agricultural sustainable development. Summary Why when farmers have been contributing to civilization farmers’ life becoming suffering? Why agriculture is good for humanity but bad for farmers? The basic reason is that after more than 7000 years agriculture evolving, farmers have not been able to free themselves from “the cage” that have been created by the worlds above them. Almost all kind of institutions, locally, nationally and globally have been playing in the name of helping farmers but in realities they are against farmers’ interests. Increasing food production made by farmers to feed the world have given progressive civilization that is enjoyed by consumers, manufactures and traders, but not given sufficient contribution to farmers’ life, especially farmers in developing countries. Green Revolution, for example, just make the world above farmers having broader opportunities but restraining farmers life in almost all aspects of life. The meaning of development, in term of farmers’ point of view, is just how to put more burdens to farmers. Globalization can be interpreted just another way to colonialize not only farmers in developing countries but also farmers in developed countries. Therefore, farmers’ freedom is basic value that should be taken care in present and future development of agriculture. Consumers’ interest in having food security must be paid by giving proportional income to farmers. Market price doest not serve a good indicator of both opportunity cost and values that contained inside food that are sold and bought in the market. The world cannot continue the way to develop agricultural global trade that make farmers in developing countries, which is composed of 97 % of the world’s total agricultural population, extinct because of they are dying due to cannot compete with the world food’ subsidized market. In fact, now we cannot differentiate between competition and exploitation in global markets.

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Farmers should be catalyzed or facilitated to create their own organizations. The way to organize farmers in the past should not be continued. They should be free to choose what they want, and government and credible international agencies such as the World Bank or Asian Development Bank, should be able to unlearn their old habits that had made farmers in a low status or position. Freeing farmers from the cage is a must, but it should be followed by rights decisions and supports to catalyse them to evolve.

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CHAPTER THREE A CASE STUDY: EVOLUTIONARY PROCESS IN AGRICULTURAL DEVELOPMENT PLANNING IN INDONESIA

Economic policies are not neutral, but ideological—and populist resistance to them is a rational response Joseph Stiglitz

Development has at least three-dimensional problems of thought: an ideological, theoretical, and a practical dimension. All those dimensions are important aspects of thought. Ideological dimensions have an important role in building what is common to all and what is a common denominator in conducting development affairs. Ideological dimensions guide what is a good thing to attain and what is a right thing to be done by people in a community. In this context we can say that capitalism is ideological, and the same thing with socialism. A theoretical dimension is a scientific base of development. The most important role of theory is simplifying a problem into a manageable one. A theory is a model, so competitive market is only a model, and the same thing with centralized planned resources allocation model. A theory provides a meaning of empirical fact because fact cannot tell us it’s meaning by itself. Of course, there is no single theory of agricultural development that claims general truth. The strength or weakness of a theory is embodied in its capacity to describe the real world and to make prediction about causalities. Therefore, realizing the strength and weakness of a theory will be very important in practicing development. Development in terms of a practical problem of thought involves the following necessary condition. First, there must be decision-makers that have a problem. Second, there is a relevant decision-maker’s objective. Third, there are more than one possible courses of action. And, fourth the context, i.e., those aspects of the problem environment which, though not subject to the decision-maker’s control but may affect the outcome of the decision-maker’s action. This includes acts of nature and acts of other decision-makers (reactions or counteractions)81. Therefore according to act of thought, development simply means how to solve a practical problem such as how to eliminate poverty, reduce pollution, increase income, build a democratic society, and so on, not just explaining them. One of the most important acts of thought in the area of development in developing countries is development planning. The simplest meaning of planning is organizing action of thought. Based on this planning collective acts is developed to pursue certain goals. Therefore, planning means interventions to shape certain behavior in order to achieve certain goals and agricultural development planning can be viewed as one of the most important policy interventions, which largely determines resource allocation done by government, farmers, and others. This chapter discusses the evolutionary process of agricultural development planning in Indonesia from Repelita 82I (1969/70) to Repelita VI (1994/95-1998/99). The main objective of this chapter is to gain general 81

See R.L. Ackoff. 1984. Scientific Method. Optimizing applied research decisions. Robert E. Krieger Publishing Company Inc., Malabar, Florida.

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Repelita stands for Rencana Pembangunan Lima Tahun (Five Years Development Planning) which is produced by National Development Planning Agency (BAPPENAS). BAPPENAS and Ministry of Finance allocate development budget based upon Repelitas .

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knowledge of the evolutionary process of act of thoughts in the area of agricultural development planning in Indonesia. This knowledge will be very important as a background in constructing visions and making necessary adjustments for future agricultural development design, planning, policy, and strategy. In this volume, we treated agricultural development within the context of national development planning. Chapter IV will describe Indonesia’ agricultural performance. Based upon some important agricultural development indicators we will have insights whether our action of thoughts that has been reflected in those Repelitas were in line with our goals. We concluded in this chapter that agricultural development action of thought has evolved toward lesser degree of centralization and toward broader scopes. Evolution of National Policy on Agricultural Development Planning in Indonesia: Repelita I – Repelita VI Historical Background Every nation may have different traditions on how to organize scarce resources into use for development. One of the main reasons for this is that society is not indifferent about the way to organize its resources. This fact largely explains why there are variations across societies as to how they organize their scarce resources. For example, in one area land resources are privately owned, but in other areas are commonly or owned by government. In the United States of America, there is two water resources utilization doctrine, namely, appropriation and riparian doctrines. In Indonesia, natural resources, which determine the welfare of the people, are controlled by the State. The variations of how resources are organized across societies represent that people are not indifferent in organizing inter-relationships among people-resources. After having experienced Dutch colonialism for approximately 3.5 centuries, Indonesia proclaimed her independence in August 17, 1945. This marks the starting point for Indonesia as a new independent nation to deal with her own problems. In order to develop the Indonesian economy, President Soekarno on April 12, 1947 formed Panitia Pemikir Siasat Ekonomi83 (the Committee for Economic Development Strategy) where the Vice President, Mr. Mohammad Hatta was appointed as the head of the committee. The product of this committee was “Dasar Pokok Dari Pada Plan Mengatur Ekonomi Indonesia” (Basic Plan for Indonesia Economic Development). This plan is the oldest plan in the history of Indonesian national development planning84. In July 1947, I.J. Kasimo’s committee developed sectoral development planning (agriculture, animal husbandry, industry and forestry). Kasimo’s plan was well known as “Plan Produksi Tiga Tahun RI” (Three Years Production Plan), namely 1948, 1949, and 195085. During the federation era, “Rencana Kesejahteraan” (Welfare Plan) followed Kasimo’s plan. Based upon the Kasimo plan and Rencana Kesejahteraan, Rencana Kesejahteraan Istimewa (Special Welfare Plan) 1950-1951 was formulated, particularly for agriculture (food). Furthermore, in order to develop the industry sector, under the head of Dr. Sumitro Djojohadikusumo, “Rencana Urgensi untuk Perkembangan Industry (Urgent Industrial Development Plan) 1951-1952,” was formulated86. Since 1952, a more comprehensive development planning was initiated through enacting “Dewan Perancang Negara” (State Planning Commission). “Biro Perancang Negara”(State Bureau Planning), under the auspices of Dewan Perancang Negara, developed “Rencana Pembangunan Lima Tahun (RPLT) (Five Years 83

The thoughts of Panitia Pemikir Siasat Ekonomi Indonesia (1947) were classified into (1) Sosial Ekonomi Umum (Generel SocioEconomic Review), (2) Hal Ikhwal Perkebunan (Plantations), (3) Industri Tambang dan Minyak (Industry, Mining and Oil), (4) Harta Benda Asing (Foreign Owneship), (5) Hal Ikhwal Keuangan (Finance), (6) Listrik, Kereta Api dan Tram (Electricity, Train and Tram), (7) Hal Ikhwal Perburuhan (Labor), and (8) Hal Ikhwal Daerah Pendudukan Belanda (The Dutch Occupied Region) (Kunarjo, 1996).

84

G. Kartasasmita. 1994, “Perencanaan Pembangunan Nasional.” Keynote Address delivered at Studium General, Brawijaya

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G. Kartasasmita, 1994, “Perencanaan Pembangunan Nasional”. Keynote Address delivered at Studium General, Brawijaya University, Malang, December 2, 1994. G. Kartasasmita. 1994, “Perencanaan Pembangunan Nasional”. Keynote Address delivered at Studium General, Brawijaya University, Malang.

86

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Development Plan) 1956-1960. Before RPLT implemented, Rencana-Pembangunan Nasional Semesta Berencana (RPNSB) (Comprehensive National Development Plan) 1961-1969 replaced it87. The political situation in the 1950s and 1960s in Indonesia was not suitable for development purposes. Too high transaction costs88 due to different political orientations or manifestations had proven too costly for conducting economic development. As a result, instead of experiencing economic progress, the Indonesian economy as a whole had been declining. Income per capita in 1969 was only US $ 70, about 60 percent of the Indonesian population was poor, and inflation was about 650 percent (in 1966). National development which basically involves high level political decisions calls for appropriate basic rules for making decisions or choices regarding: (a) the establishment of rights and obligations, or rules and regulations, which govern the members of the State (legislators, government, people, etc) to use the resources; (b) the collective acquisition through various mechanisms of goods and services for the best purpose of both the State and the people; and (c) the collective decisions regarding collective production of goods and services for both purposes of the State and the people. These are not products of market processes, but products of political processes, which include the question of how economy should be organized. The above basic rules are not theoretical rules that can be assumed, but they are the rules, which are made and accepted by the people. According to the 1945 Constitution, the highest institution in Indonesia is the People’s Consultative Assembly (MPR) that has a mandate to formulate State Basic Guidelines (Garis-Garis Besar Haluan Negara, GBHN). (At the present amended constitution, MPR has no mandate to formulate GBHN). The basic massages of GBHN in principle are the basic philosophy and direction for putting development into practice that was formulated in the Repelita. Repelita has legal status as a Presidential Decision. Therefore, Repelita has a legal base to be enacted as a development format, not just a development plan a resulting from of an academic exercise. Agricultural Development Planning Repelita I to Repelita VI89 Analysis of the path of agricultural development planning in the past 30 years may give knowledge of what has been thought and what thought has been transferred into a plan of action. Furthermore, such analysis will also provide insights, which can be used as important lessons for the next 25 years of agricultural development in Indonesia. Through such analysis, better understanding of processes of agricultural development, policies, instruments, constraints, and interplay among them can be gained. Following is the presentation of some important points contained in the Repelitas’ documents. Such description is important in order to know the processes of change in act of thoughts in agricultural development planning. The major objective here is limited to knowing general trends in acts of thoughts and acts of plan in agricultural development planning in national development planning’s context. Repelita I (1969/70­1973/74) The Repelita I is the first Repelita of the First Long Term Development Planning in Indonesia. Agriculture was the largest sector in the Indonesian economy where this sector composed about 55 percent of GDP and about 75 percent of the people’s live depended on the agricultural sector. More than 60 percent of foreign exchanges were from agricultural commodities. As the largest sector in the economy, agricultural development played a very strategic role. There were three fundamental problems associated with agriculture at the time the Repelita I was formulated, 87

G. Kartasasmita. 1994, “Perencanaan Pembangunan Nasional.” Keynote Address delivered at Studium General, Brawijaya University, Malang. December 2, 1994.

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Transaction costs are the idea of costs, which occur in all types of social interactions. In general transaction costs include information costs, negotiation costs, and policing costs. Therefore, the idea of transaction costs is not only applicable to economic transaction but also to all social interactions.

89

The main sources of this section are Chapters of Agricultural Development Planning in Repelita Documents since Repelita I to Repelita VI.

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namely: • Declining agricultural production per capita, particularly food, which induced a large amount of rice being imported; • Weakening sources of foreign exchange earnings from agriculture, particularly from estate commodities; • Lack of capacity of agriculture to offer productive employment in rural areas. Agricultural development had been organized according to commodities and resources such as irrigation and efforts had been focused on increasing production through utilization of high yielding varieties, chemical fertilizer, pesticides, and intensive use of irrigation. The following commodities were taken as commodities in the planning programs: • Rice • Secondary crops such as corn, soybeans, peanuts, green peas, and roots and tubers such as cassava and sweet potatoes • Horticulture such as vegetables and fruits • Estate crops such as rubber, palm oil, tea, coffee, sugar cane, tobacco, coconut • Fisheries • Animal husbandry • Forestry The agricultural development programs in Repelita I was classified into five development programs, namely: • Food Production Increase Program, • Estate Crops Production Increase Program, • Fisheries Production Increase Program, • Animal Husbandry Production Increase Program, • Forest Products and Forestry Development Increase Program. Increasing rice production was the highest priority. The end of Repelita I rice production was targeted to achieve 15.42 million tons, increased by 4.9 million tons from the 1969/70-production target. At this time, it had been planned to increase rice production at an increasing rate, namely, 7.34 percent, 8.65 percent, 9.50 percent, 10.30 percent, and 11.6 percent by 1969/70, 1970/71, 1971/72, 1972/73, 1973/74, respectively. To achieve the above goal, and other goals described below, there was allocated Rp. 27 billion for rice production side (out of Rp. 319 billion of development budget) and Rp. 236 billion for irrigation rehabilitation and expansion, for five years. In addition, in this Repelita, it was also expected that Rp. 76 million, which came from other sources, to be invested. The policies on how to increase rice production had been outlined in a very detailed and clear format. These included the following: • Adoption of new technology policies • Rehabilitation and expansion of irrigation policies • Extension, education and research policies • Marketing for agricultural products and agricultural inputs policies • Price policies • Credit policies • Institutional development policies Adoption and diffusion of new technologies had included the followings:

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• Utilization and development of a new high yield or new high yield varieties of rice (PB5 and PB8); • Application of fertilizer and pesticides; • Application of agricultural tools and machinery. The development targets for estate crops development were also set according to commodities. The target of rehabilitation, conversion and expansions of rubber areas in 1969 were 10 thousand ha, 1.4 thousand and 2.4 thousand ha, respectively. In 1973/4, the targets for rehabilitation, conversion, and area expansions, were 9 thousand ha, 1.9 thousand ha, and 0.6 thousand ha, respectively. Other targets for estate crops development can be seen in Repelita I document. Major policies in estate crops development in general were similar to policies undertaken in food crops development, namely policies, which tried to increase productive capacity. The following were major policies applied in estate crops development: • Renewal of Plantations • Extensive area planting of high yielding varieties • Rehabilitation or renovation of processing facilities • Conversion of unprofitable estate crops plantation to other alternative use • Restructuring the organization and management in the planters company • Improvement in commodity taxation • Encouraging private investors to engage in the processing of estate products • Providing intensive extensions to small-holders Fisheries were considered a part of agricultural development. The policies to increase fisheries production were the following: • Increasing the capacity to catch fish through expanding and increasing facilities such as tools, methods or number of facilities in marine fisheries • Improvement and extension of fisheries infrastructure and marketing supporting systems • Improvement and expansion of credit volumes and facilities • Expansion and development of seed stock production capacity • Protection of fish habitat from toxic materials • Increasing research and development in fisheries • Improvement in fisheries educational systems Animal husbandry production increase programs were based on the following policies: • Synchronize and balance between protection, disease control, supply of new high breeding potentials, expansion and improvement of credit, and extension • Increase research and development in this area, including searching for antibiotics and better methods to control diseases • Develop incentives for market expansion • Redistribution of animals from high populated to less populated ones

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Box 3.1. Food Crops Production Increase Program Repelita I agricultural development programs were further supported by development projects. Government spending was allocated to finance development activities in the form of development projects. For illustration, in the Food Crops Production Increase Program there were 22 projects. Among these projects, 15 projects were to support rice production. 1. Mass Guidance (BIMAS) Project 2. Rice Plant Protection Project 3. Sang Hyang Sri Development Project 4. Seed Improvement Champaign Project 5. Rice Seed Garden Center Development Project 6. Rehabilitation Seed Garden Project 7. Gogo Rancah Rice Production Project 8. Dry land Rice Project 9. Rice Swamp Expansion Project 10. Rice Production Competition/Demonstration Project 11. Agricultural Mechanization Project 12. Agricultural Area Expansion Project 13. Agricultural Crops Research Project 14. Extension Mobility Project 15. Agricultural Extension/Training Project The above number of projects implicitly showed the importance of rice for Indonesians at the beginning of the First 25 Years Development Plan. Rice was the priority sector of development in this era. Forestry development, which was a part of agricultural development, was undertaken through the following policies: • Forest inventory, forest planning and forest area legal determination (pengukuhan kawasan hutan) • Forest land use policy • Production forest, forest products processing, and in forest planting efficiency • Multipurpose forest development • Forestry extension to rural communities In Repelita I, irrigation was prioritized to support rice production. As such, irrigation was a part of agricultural development planning. Grand policies in irrigation development in Repelita I was: • Rehabilitation of irrigation • Erosion and flood control • Improvement in water management • Expansion of irrigated areas

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What we learn from Repelita I is obvious, namely, almost all efforts in agricultural development was to increase rice production. In this period, what we mean agricultural development was similar to actions that conducted by government. We can imagine how busy were farmers to follow guidance that have given by the government. The situations in rice villages were very busy with visitors that came from outside the villages. They were government officials, researchers, extension workers, and others. The political situation was focus to increase food production, particularly rice. Repelita II (1974/75­1978/79) In this stage of development planning, agriculture was still the priority sector of development. Unlike Repelita I, State Basic Policy Guidelines (GBHN) guided the formulation of Repelita II. According to GBHN 1974, agricultural development should increase agricultural production. There was a new concern in this stage, namely, the issue of equality (pemerataan) and expansion of employment generation. The emergence of those issues were not surprising because in January 15, 1974, there was a student demonstration that demand for increasing equality of development and uprising movement against foreign investment. This movement was called MALARI. Furthermore, since farmers were the largest part of the Indonesian population, then increasing farmers’ income was viewed as a very strategic instrument to increase income equality. Increasing crops’ productivity was considered a priority in order to increase farmers’ income. To what extent farmers income will have positive correlation with increasing production is an empirical question. However, because price of rice was tightly control by government when government applied cheap food price policy to support industrialization, then increasing farmers’ income .was constrained by that policy. The format of the Repelita II was slightly different from that of Repelita I. the Repelita II was composed of the following elements: • Description of agricultural development achievement in Repelita I, which was composed of elaboration of production trend of food crops, exported crops, and farmers’ income and employment opportunities generation; the problems or constraints associated with agricultural development efforts; agricultural policies and their instruments. • Development program and project • Development budget Agricultural development objectives in the Repelita II were stated in a broader context than in the Repelita I, namely: • To increase farmer and fishermen production capability in order to increase their participation in development. • To maintain a continuation of food production increases particularly rice. • To increase production of exportable agricultural commodities. • To reduce both disguised and open unemployment in rural areas • To increase production of raw materials for industries • To increase natural resource utilization and to maintain their sustainability. Increasing food production, particularly rice, was conducted through extending intensification by applying Panca Usaha Lengkap (Complete Five Farming Package) in well-irrigated areas including those newly irrigated ones. Furthermore, intensification was also applied in not well-developed irrigation areas such as gogo rancah areas, tidal swamp areas, dry land rice areas, and transmigration areas. Increasing farmers’ capability to use production technologies was also applied in production of secondary crops and horticulture. Increasing the availability of high yielding varieties, improvement of credit schemes, and increasing availability of production infrastructures (both social and physical infrastructures) were also exercised.

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The annual average growth of rice production in Repelita I was 4.4 percent. At the end of the Repelita II, the targets of rice production was 18 million tons, corn 4.15 million tons, sorghum 0.24 million tons, cassava 12.75 million tons, soybeans 0.67 million tons, peanuts 0.35 million tons, and green peas 0.09 million tons. The quantitative targets for horticulture production were not stated. The main policies for increasing estate crops production were differentiated between policies for estate planters companies and those for small holders. Main policies for Smallholder plantation were: • Increasing extension for farmers • Providing credits for farmers • Pest controls • Diversifying estate crops • Extending processing facilities for farmers Furthermore, Nucleus Estate Smallholders (Perusahaan Inti Rakyat, PIR) were developed. Policies for planter companies included: • Rehabilitation and expansion. • Intensifying control on neglected land of estate private companies, particularly on environmentally critical land. For state owned companies, the policies were directed to: • Increasing yield and efficiency of the business operation • Development and increasing the efficiency of product processing • Extending export market areas • Reformation of organization from PNPs to PTPs. Estate crops commodities included in the programs were rubber, palm oil, tea, sugarcane, coffee, coconut, others (tobacco, pepper, clove, nutmeg, Rosella, cacao, cassiavera, and kapok). Animal husbandry development was implemented through the application of the following policies: • Increasing extension to farmers and small and medium firms. • Protection of the animal population through protection and eradication of animal pests and diseases. • Increasing availability and distribution of animal breeds. • Accelerating the development of production and distribution of feeds and medicine. • Improvement of processing and marketing facilities. • Credit development schemes and development animal cooperative of animal husbandry. Fisheries development in the Repelita II explicitly acknowledged small fishermen (perikanan rakyat). Direct policies to increase the number of small fishermen/small fish farmers were: • Increasing rehabilitation and development of production and marketing infrastructure. • Increasing extension and research. • Increasing credits and other production inputs, which were affordable to fishermen. • Developing fishery cooperatives. Fisheries were classified into inland fisheries and marine fisheries. Forestry policies were directed to achieve the following goals, namely: • Increase timber production and other forest products. • Increase exports of processed forest products. • Increase government revenue.

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• Increase employment opportunity. • Maintain natural resources potential sustainability. Two basic policies to achieve the above goals were: • To increase forest control on forest exploitation. • To increase forestation, rehabilitation, and re-greening. In Repelita II Land Use Control (Tata Guna Tanah) and Landed Property Rights (Hak Penggunaan Atas Tanah) had been treated as a specific issue in agricultural development. Accordingly, food crops production should not increase the rate of natural resource degradation. On agricultural land use, focus has been given on how to design agriculture based on some dimensions of space variables such as population density, topography, climate, and geology. The basic concern here is the urgency for establishment of regional lands use planning. Furthermore, land ownership inequality had also been a concern in Repelita II. The focus here was on the need for establishing a legal framework to avoid transfer of land ownership from farmers to nonfarmers and to establish efficient and just land tenure in both dense and sparsely populated areas, particularly in transmigration areas. Credit was also treated as a specific issue in Repelita II. Bank Rakyat Indonesia served farmers’ need for capital through BIMAS. Credit was given to an individual regardless at his land tenure status and credit was delivered through the BIMAS package. Other types of credit for small enterprise, such as Kredit Investasi Kecil (Small Credit Investment Scheme) up to Rp. 5 million, were also developed. The term irrigation in the Repelita I replaced by Water Resource Development in the Repelita II. The latter term was considered better since it reflected the real activities conducted in irrigation development, namely, soil and water conservation, and river and lake development. There were five main policies in water resource development: • Continuing rehabilitation and improvement of existing irrigation. • Continuing and increasing development of new irrigation where priority was given to simple irrigation, which accounted about 470 thousand ha, and swamp irrigation development. • Developing intensive protection on production center areas from natural disasters such as flood, volcano eruption, and others. • Developing intensive integrated development plans of water resources systems to obtain a development pattern for supporting industries. • Intensifying research and investigation on water resource development problems Agricultural development programs in the Repelita II were organized into: • Rice, Secondary Crops, and Horticulture Production Increase Program. • Estate Crops Production Increase Program. • Animal Husbandry Production Increase Program. • Fisheries Production Increase Program. • Forestry Production Increase Program. • Forest, Soil and Water Conservation Program. • Agricultural Education Program. • Agricultural Research Program. Furthermore, water resources development programs were organized into: • Rehabilitation and Improvement Irrigation Program. • New Irrigation Development Program. • River and Swamp Control and development Program.

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• Research, Survey, Investigation and Development Planning of Water Resources systems. Repelita III (1979/80 – 1983/84). Agriculture was still considered to play a strategic role in national development. The main goals of agricultural development in Repelita III were still similar to those in Repelita II. The results obtained in Repelita II were taken as sources of information or lessons in formulating Repelita III. There were considered five major problems associated with agricultural development in Repelita III, namely, problems associated with: • Food production and nutrition. • Raw materials from agricultural production export. • Agricultural products and input marketing. • Sustainability of natural and environmental resources • Agricultural infrastructure and institutions In line with the above problems, the main objectives of agricultural development in Repelita III were: • Increasing food production toward food self-sufficiency and increasing protein, nutrient, and vitamin availability. • Increasing export and reducing import of agricultural commodities. • Increasing production of raw materials for industry. • Increasing utilization and conservation of natural and environmental resources. • Increasing growth of rural development within the framework of regional development. Four major strategies had been formulated to achieve the above objectives. The strategies were well known as intensification, extensification, diversification and rehabilitation. Intensification was to increase productivity of resources such as forests, irrigation, and agricultural land by utilizing appropriate technology after considering natural and environmental resources sustainability constraints. Agricultural extensification was an effort to increase rice field (sawah) area through development of new irrigation, tidal swamp, and other new areas of agricultural converted from Imperata cylindrica, shrubs, forests, and others. Agricultural extensification was integrated with transmigration and resettlement programs. Diversification was defined as an effort to increase varieties of farming or commodities in a given region based on natural resource potentials and environmental constraints. Diversification strategy also considered regional development aspects in order to maintain balanced socio-economic performance across regions. Rehabilitation was designed to restore or to revitalize productivity of natural resources such as neglected, critical, and other areas, which threatened environmental quality. Furthermore, rehabilitation was also to restore farming productivity in such critical lands. Agricultural development policy in Repelita III was well known as Integrated Farming Policy (Kebijaksanaan Usaha Tani Terpadu). Integrated farming was conceptualized based upon the assumption that farming has many different activities. Integrated farming was intended to be a policy which directed toward optimal utilization of agricultural resources to increase farmers’ or other producers’ welfare. In its application, intensification, extensification, and diversification of integrated farming. Small farmers were considered as the group within the community whose ability to gain more income should be increased by the government. Technology, credit, transmigration, and conservation were some policy instruments to be applied in the Repelita III. Agricultural development and policies in the period of Repelita III were organized around commodities and

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subject matters, namely: • Food crops • Animal husbandry • Fisheries • Estate crops • Forestry • Agricultural research and development • Education and training • Agribusiness development • Land use control and land tenure Rice production in 1983 was targeted at 20.5 million ton of rice. Therefore, the growth rate of production of rice in Repelita III was targeted 4.28 percent a year. To achieve that target, harvested areas were planned to reach 9.9 million ha, and yield of rice 2.0 t/ha. Furthermore, corn production was targeted to increase by 5.1 percent. The targeted growth of other secondary crops: cassava 4.6 percent, sweet potatoes 8 percent, peanut 3.2 percent, soybeans 4.1 percent. The yield of corn, peanuts, and soybeans were targeted to increase by 1.5 percent 3.9 percent, and 0.9 percent, respectively. On the other hand, the yield of cassava and sweet potatoes were predicted to decline by 0.2 percent and 0.7 percent a year. Animal husbandry development was organized according to: • Large livestock such as cows and caribou • Small livestock such as goats, sheep and pigs • Poultry • Milk In this period of development, it was expected that the population of cow and caribou did not decline. The population of sheep, goats and pigs was planned to increase by 2 percent a year; the population of dairy cows and domestic chickens was planned to increase by 5.5 percept a year, and the imported poultry population was planned to increase by 20 percent a year. Due to these population increases, meat production was planned to increase by 4.7 percent, eggs by 6.6 percent and fresh milk by 9.6 percent. Fisheries development was organized around: • Marine fisheries • Inland fisheries • Common water fisheries • Paddy-fish farming (mina padi) Fisheries development was expected to increase marine fisheries production by 5.8 percent, common water fisheries production by 4.3 percent, and inland fisheries production by 8.5 percent a year. Estate crops production was expected to grow by 1.6 percent for coffee, 2.0 percent for coconut, 11.3 percent for palm oil, 3.9 percent for tea, 3.3 percent for coffee, 18.3 percent for clove, and 11.0 percent for pepper. These production increase were made possible due to an increase in estate crop area by 925 thousand ha, namely, rubber 269 thousand ha, coconut 101 thousand ha, palm oil 96 thousand ha, tea 15 thousand ha, coffee 26 thousand ha, nutmeg 15 thousand ha, sugarcane 90 thousand ha, and cotton 27 thousand ha. In addition, estate crops area intended rehabilitation were 230 thousand ha for rubber and 185 thousand ha for coconut. Forestry policies were organized around forest utilization and forest resources conservation, including watershed development and management.

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In the Repelita III wood process, exports were expected to increase by 4.64 percent a year. Timber wood export was expected to increase by 25.51 percent a year and veneer/plywood export was to increase by 117.10 percent a year. On the other hand, log exporting was targeted to decline by 2.00 percent a year. Rehabilitation of critical lands were expected to reach 1 million ha composed of 0.3 million ha forestation area and 0.7 million ha of regreening area. In addition, in 1983, 9.75 million ha of forestland were plotted as nature reserve conservation.

Agricultural research included varieties improvement, socio-economic research, natural resource inventory, mapping, natural resource management, forest products processing and agricultural germ plasma research. The above goals were intended through implementing the following agricultural development programs: • Food Crops Production Increase Program • Animal Husbandry Production Increase Program • Fisheries Production Increase Program • Estate Crops Production Increase Program • Forestry Production Increase Program The above main program in agricultural development were supported by: • Transmigration program • Rural development Program • Agricultural Education and Training Program • Youth Development Program • Roles of Women Program • National Law Development Program • Agricultural and Water Resources Research Program • Small Scale Business Development Program • Forest, Soil and Water Conservation Program • Natural Resources and Environment Development Program • Government Apparatus Efficiency Increase Program. Water resources development was treated as an integral part of agricultural development in Repelita III because the major activity was still irrigation. Three important problems in the area of water resources development were: • Problems associated with tertiary/quarter irrigation channels • New sawah land development • Exploitation and maintenance problems. Major policies in water resource development have not been changed from the earlier Repelita, namely, rehabilitation and improvement of irrigation systems, new irrigation development, swamps area development, and forest, soil and water conservation. Development programs in water resources development were organized into: • Rehabilitation and Improvement of Irrigation Systems • New Irrigation System Development • Swamp Development Program The above major programs were supported by:

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• Forest, Soil and Water Conversation Program • Natural Resources and Environment Development Program • Research and Planning on Water Resources Development • Education and Training and Youth Development Program • Increasing Government Apparatus Efficiency Program • Improvement of Government Physical Infrastructure Program

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Repelita IV (1984/1985­1988/1989) The main objective of agricultural development were to increase agricultural production in order to fulfil the need for food, raw materials for domestic industries and increasing exports. In addition, agricultural development was directed toward increasing farmers’ welfare, increasing employment opportunities, promoting more equal opportunities in business, supporting regional development, and increasing transmigration. The scope of agricultural development included food crops, fisheries, animal husbandry, estate crops, and forestry. Intensification, extensifiaction, diversification, and rehabilitation were the modes of operation in agricultural development. Those were viewed in the context of integrated development. The main issues of agricultural development discussed in the Repelita IV were: • How to sustain rice production increases and how to increase other food crops production; • How to increase agricultural production for industry, export and import substitution; • How to sustain natural and environmental resources; • How to develop better markets for agricultural products and agricultural inputs; • How to improve the employment situation in agricultural sector and rural areas; • How to build effective and efficient institutions The main issues discussed in water resources development in the Repelita IV were:

• Coordination problems between expansion of the irrigation system and expansion of building new sawah land • The need for adequate resources to maintain sufficient exploitation and maintenance of irrigation systems, and the needs for farmers participation • Issues of technical and non-technical criteria for choosing location for developing irrigation systems such as land property rights, land condition, availability of farmers, and coordination problems • Integrated water resources use across different sectors. As a continuing and broadening process of development, agricultural development in Repelita IV was focused and directed toward areas, which were lagging behind such as secondary crops and horticulture on dry land farms. However, rice production was planned to continuously increase. Economic Exclusive Zone (EEZ) was treated as an integrated part of fisheries development. Other broadening efforts were conversion of Imperata cylindrica land into more productive agricultural land through development of Nucleus Estate Small Holders (NES). Conservation of natural and environmental resources were continued and intensified. Intensification, diversification, rehabilitation, and extensification were the main modes of agricultural development. Those efforts were an integrated part of the development of agricultural production factors, marketing, processing, and agricultural credits with incorporation of cooperatives and the agricultural business sector.

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Box 3.2. Estate Crops Development Schemes (Repelita II – V)90 Since Repelita II, government of Indonesia launched Nucleus Estate Smallholder (NES), Selfhelp, Service and Development Unit, and Large Private-Owned Estate Crops Schemes. The NES scheme integrated a large estate company, as a nucleus, and farmers as plasma. This scheme was applied in a new rural area. The components of the scheme were production, production, processing, marketing, and infrastructures components. The source of financing comes from government and banking institutions. The fund was originated from foreign loan or purely government fund. The fund from bank was provided as credit component, whereas the government fund can be allocated as credit or non-credit components. The participated farmers of this scheme were transmigrants and/or local farmers. This scheme covers most of the main estate commodities, namely natural rubber, oil palm, coconut, sugar cane, tea, and cocoa. The Service and Development Unit Scheme is characterized with its integration, multi-function, and centralized planned. The participants of this scheme are smallholders who own estate crop farms. The area of those farms was necessarily to be located in a compact area. This requirement was aimed to meet the economies of size of the project. Participants of this scheme are supported with full production inputs in the form of credit. Therefore, participants will have to repay the credit after certain period. The fund of this scheme was coming from the government of Indonesia or from foreign loan. Unlike in the NES scheme, this scheme covers only some of the main estate crops namely natural rubber, coconut, tea, and cocoa. Agricultural extension was major input of Self-help scheme. The targeted participants of this scheme were farmers-owned-operators whose mostly smallholders who are not been able to be included in by the NES and Service and Development Unit Schemes. The fund of this scheme was provided from government budget. The fund was given to smallholders in the form of limited inputs, which was expected to stimulate the small holders. Unlike in the other two schemes, the partial inputs, which were given to the participants, are not considered as debt. This scheme covers various estate crops, such as natural rubber, coconut, pepper, coffee, and others. The large private-owned estate scheme was solely a scheme to develop private estate plantation. The government launches credit, called liquidity credit of the Indonesia Central Bank. In this credit scheme, the interest of the loan was highly subsidized. This scheme covers limited commodities, i.e., cocoa and palm oil. Expected average growth of the agricultural sector during Repelita IV was 3 percent a year, to support 5 percent annual national economic growth. Food crops intensification was planned by: • Broadening and increasing quality and special area intensification (INSUS) • Applying intensification, diversification, and rehabilitation through special operations (OPSUS) on marginal lands • Broadening and increasing quality and areas of intensification and diversification as well as rain fed and dry land • Broadening and increasing quality and areas of intensification of rice, secondary crops, and horticulture at newly development areas. 90

Directorate General for Estate Crops (1995)

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In the Repelita IV, intensification of animal husbandry was planned across animals through Panca Usaha Ternak, particularly at production centres. To increase the current stock of animal, animal breeds were to be imported. Artificial insemination and distribution of high quality male animal were to be increased. Management, availability of feed, size of livestock farms, and production capabilities were increased through credits and extension. Extensification was to be developed on Imperata cylindrica fields in the outer islands, which were integrated with animal distribution through NES development, transmigration areas, resettlement, and extensification of food crops. Rehabilitation of animal husbandry was to be conducted at infected areas where transmitted diseases or other natural disasters had caused the declining of a regional capability. Rehabilitation was planned to revitalize farmers or a region in livestock production. Fisheries development was organized into marine fisheries and inland fisheries. Exploitation of some over fishing zones was planned for limitation of small and traditional fishermen. Modernization and motorization of efforts for traditional fishermen were to be undertaken. Offshore fisheries were directed to the north, west, and east of Sumatra, south and north of Java, and all fishing grounds in eastern Indonesia. Ships, tools, fishing ports, and other infrastructures were to be developed and improved. Inland fisheries were to be developed through intensification where new technology, breeds, fertilizer, pesticides, and water management were applied. In inland common water (lakes, rivers, and others) of which experience over fishing, was planned to be developed through re-stocking and improving fish habitat. Estate crops development was planned to increase production to fulfil the industrial demand for raw materials and to increase exports. Efforts planned to be undertaken were extensification, rehabilitation, intensification, and diversification. Extensification for estate crops particularly rubber, palm oil, coconut, and sugar cane were planned to be undertaken at Imperata cylindrica areas, unproductive forests, transmigration and resettlement areas. Intensification was to be practiced on existing plants such as sugar cane in Java, cotton in Java, West Nusa Tenggara, East Nusa Tenggara, South East Sulawesi, and South Sulawesi, tobacco in Java, and cloves at production centres all over the country. Rehabilitation of estate crops particularly rubber and coconut was increased and broadened by utilizing high yielding clove. Farmers were encouraged to build farmer groups through cooperation systems. NES was to be developed to integrate small and large planters or corporations. Major forestry policies in the Repelita IV were: • Development of forest land use planning for certain forestry businesses; • Development of “hutan rakyat” (people forests) outside state owned forest areas; • Increasing forestry production through rehabilitation of forest areas, intensification of forest management, and increasing efficiency in forest utilization and forest products processing; • Increasing processed forest product exports and a ban in log exports;

• Development of non-timber products such as rattan, tengkawang, silk and medicinal plants; • Development of raw material for industry and domestic demands; • Development social forestry for communities surrounding forest areas; • Supplying biomass energy for rural communities;

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• Development of science and technology in utilizing and sustaining tropical forests; • Increasing environmental resources production and tourism in forest areas • Forest resources conservation. Agricultural research and development, agricultural education and training, and agribusiness development were planned to be hand in hand with the above activities. Water resources development was an inseparable part of agricultural development. As a continuation of Repelita III, water resource development in Repelita IV in principle was an effort to supply irrigation water for both agriculture in new and existing agricultural areas; to protect human settlement such as housing and industries from flood, volcano eruption; and to supply water for other community needs such as industry and energy. The policies in water resources development were planned to balance the increasing demand from various development sectors. To support food production policies, water resources development was prioritized on the completion of activities expected to increase cropping intensity and area expansion. Water resources development in Java was to be more focused on rehabilitation and increasing irrigation systems capability toward higher cropping intensity, and on rain fed areas. In the outer islands, expansion of swamp irrigation reclamation was integrated with transmigration. Dry areas were to be supported by ground water. Irrigation development was also planned to increase non-rice production such as fisheries and secondary crops. To increase the benefits of irrigation, farmer’s participation was encouraged, particularly in irrigation exploitation and maintenance. Agricultural development activities were organized into the following programs: • Food Crop Production Increase Program • Animal Husbandry Production Increase Program • Fisheries Production Increase Program • Estate Crops Production Increase Program • Forestry Production Increase Program. The food crop production increase program was planned to increase rice production up to 28.6 million ton by the end of Repelita IV through expanding the harvested area up to 9.7 million ha and the yield 2.94 t/ha. Growth of secondary crops and horticulture production in Repelita IV were estimated at about 3.0 percent annually. The animal husbandry production increase program was planned to increase the population of cow and buffalo production by 1.2 percent and 1.0 percent per year, respectively. The populations of sheep and goats were expected to increase by 3.0 percent a year. The populations of domestic chickens and ducks were expected to increase by 5.2 percent and 6.4 percent annually, respectively, and population of breed chickens was exploited to increase by 7.1 percent a year. With the above population growth, the livestock sub-sector was expected to grow by 2.1 percent a year. The fisheries sub-sector was expected to grow by 2.4 percent a year and the growth of the estate crops subsector was expected to grow at a rate higher than that of the growth achieved at Repelita III, namely 3.7 percent a year. The above major programs were supported by: • Agricultural education and training program • Agricultural and water resources development research program

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• Transmigration program. Repelita V (1989/1990­1993/1994) According to GBHN 1989, the priority of development was economic development with agriculture and industry as the priority sectors. National development was directed toward a balanced economic structure between industry and agriculture. Agricultural development was directed toward strengthening food selfsufficiency and increasing production of other agricultural products. The scope of the agricultural sector included crops, estate crops, fisheries, animal husbandry, and forestry. The desired nature of the agricultural sector was too modern, efficient, and resilient. To reach this goal, diversification, intensification, extensification, and rehabilitation were to be continually applied and intensified. In Repelita V, the considered basic issues or problems in agricultural development were: • How to sustain and strengthen food self-sufficiency while increasing other agricultural commodities production • How to increase the production of agricultural products for industry, export and import substitution • How to keep sustainability of natural and environmental resources • How to improve agricultural products and input marketing • How to expand employment opportunities • How to develop or to institutionalize an efficient and just institution. Furthermore, the main issues in water resources development, particularly in the area of irrigation, were: • How to increase community participation in maintenance and operation of the irrigation systems • How to increase benefits from newly built irrigation systems • How to integrate irrigation building activities and the building of new sawah land • How to develop an integrated water resources development policy able to achieve balance between its economic, ecological, and hydrologic aspects. Basic issues in forestry development were: • How to control forest destruction from many destructive factors such as logging, encroachment and forest fire • How to achieve balance between logging and forest potential where current log production in all forest areas, except Irian Jaya, has exceeded the sustainable allowable cut potential • How to increase the welfare of communities who live within and around forest areas. The basic policy of agricultural development in Repelita V was to increase the efficiency and productivity of agricultural resources, namely, terrestrial land and water resources. Technical, economic, and institutional constraints, which hindered optimal utilization of resources, were relaxed. Diversification, intensification, extensification, rehabilitation, deregulation, debirocratization, appropriate price policies, infrastructure development to support agriculture, research and development of technology and extensions were planned to be continued and intensified.

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Box 3.3 Policy Bias Indonesia is still dominated by agriculture, especially in term of employment and income opportunities available to most Indonesian labor force. Recently, Indonesia is also well known as a non-skilled labor exporting country, mainly to Malaysia and the Middle East countries such as Arab Saudi. Therefore, in term of political statements, government of Indonesia has given a relatively high priority to the development of agricultural sector. This policy has been expressed in the each Repelitas as a guideline of the economic development of Indonesia. Since the beginning of the 1990’s, the government policies toward agriculture sector have raised criticisms. Some have argued that the current policies have been inconsistent with former policies to promote the development of agricultural sector. This policy change has been attributed by what has been known as triple-biased policies, namely urban biased, commercial sector biased and big corporation biased. The first policy bias has been indicated by the developments of infrastructure, such as transportation and communication facilities that have been focused in urban areas. This implies that the infrastructure will only support rapid development of commercial sector, not agriculture sector mostly in rural areas. The commercial sector bias has been indicated by the government policies, which tend to sacrifice agriculture sector for the sake of the development of commercial sector. Various government policies, such as fiscal, monetary, investment, trade policies have been bias toward commercial/industrial sectors. The government policy of imposing export tax on CPO in 1998 was a well-known example, namely in order to protect and speed up the development of CPO downstream industries, the government has imposed an export tax on CPO. Using this policy, the government has an instrument to control the domestic CPO supply and to suppress the domestic CPO price. This situation has been expected to accelerate CPO downstream industries, although the government realizes that this has deteriorated farmers’ income (agricultural sector). The imposition of the CPO export tax has caused severe loss for CPO producers. A Study by Susila (1999) 91 indicated that this policy in 1994-1999 has caused a decrease in farm income by 13.35%. Moreover, this policy has caused the declining palm oil area and export by 2.56% and 6.20%, respectively. On the other hand, such policy had caused a 7.7% decrease in the domestic price of cocking oil that was perceived as a basic need in Indonesia. Another example of this policy bias is the imposition of import tariff, which is far below the Indonesia binding tariff as mention in the Uruguay Round of GATT. For example, a 30% import tariff of rice and 25% that of sugar was far below Indonesia binding tariff for rice and sugar, which are 110% and 98%, respectively. Most sugar producing countries have protected their industries by using various instruments such as input subsidy, price guarantee, export subsidy, and relatively high import tariff (more than 75%). These relatively lower tariff imports imposed by Indonesia and high protective policies of other countries, have placed Indonesian agriculture into the unfair playing ground. The third policy bias was that the government policies tend to give a higher priority on the development of big corporation than that of small and medium business. Various government policies, such as credit and trade policies, have been biased toward big corporation, instead of small business enterprises, which dominated agriculture sector. As a result, the agriculture sector could not achieve its optimum level of development. The magnitude of credit allocated for agriculture could be also used as an indicator of the bias. At the beginning of 1980s, total credit allocated for agriculture was less than 10% of the total credit. Most credit was allocated for industry and mining, which absorbed more than 60% of total credit. Following this period, credit for agriculture had steadily increased and by the end of 1990s credit allocated for agriculture was around 17%. On the contrary, total credit allocated for industry and service sector that are mostly located in urban area and capital intensive, were found more than 80%. When Indonesia has faced a multi-dimensional crisis since 1997, agriculture sector has showed its strengths and its flexibility in coping with the crisis. However, there were no significant changes in the government policies on how to recapitalize and to revitalize agriculture.

Strengthening food self-sufficiency was approached by improvement of quality and quantities of intensification. Furthermore, diversification was more developed particularly in irrigated land, dry land, and estate land and coastal areas as well. Developing agricultural processing industries, technology development, and extension and credit availability also supported the above modes of operation. Agricultural production activities were also synchronized with regional development, which agricultural product development was place within the context of spatial development planning and natural and 91

Susila, W.R. (1999): Impacts of CPO export tax on several aspects of Indonesian’s CPO Industry. APPI.

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environmental resource management policies. Irrigated land conversion for non-agricultural purposes were limited and land tenure was to be improved. To be able to support 5 percent average national economic growth per year, 3.6 percent annual agricultural sector growth was targeted and 2 percent annual growth of employment opportunity was targeted. Agricultural development activities were organized into the following programs: • Food Crops Production Increase Program • Animal Husbandry Production Increase Program • Fisheries production Increase Program • Estate Crops Production Increase Program • Food Diversification and Nutrition Program. Notice that the forestry development program was not a part of the agricultural development program anymore. Forestry development became a part of environmental sector development. The following supported these main programs: • Agriculture and Water Resources Education Program • Agricultural and Water Resources Research Program • Transmigration Program • Coastal Fisheries Development Program • Forest, Soil and Water Conservation Program. Rice, corn, and soybeans were food crop commodities, which were prioritized in order to strengthen food selfsufficiency, particularly rice self-sufficiency. In Repelita V, food crop production was targeted to increase about 2.5 percent annually. Within this target, rice production was targeted to increase about 3.2 percent a year. This growth rate was expected to increase employment opportunities by 1.4 percent a year. Intermediate targets were harvested areas planned to grow 1.0 percent a year and yield, which was planned to grow 2.2 percent a year. The average annual growth of corn and soybean production was targeted as follows: corn 3.0 percent and soybeans 3.3 percent. The targets of average annual growth of corn and soybean harvested areas were 1.0 percent and 1.2 percent, respectively, and the targets of average annual growth of yield were 2.0 percent and 2.1 percent, respectively. The average annual growth target of animal husbandry production was 5.0 percent. This growth level was expected to induce an annual growth in employment of 3.8 percent. The commodities that were prioritized to be developed were poultry, cows caribou, dairy, pigs, goats, and sheep. The average annual growth population targets for animal husbandry development were: cow 2.2 percent, caribou 1.5 percent, sheep 3.0 percent, goats 2.9 percent, dairy 12.4 percent, domestic chickens 1.9 percent, ducks 3.9 percent, highbred chicken layers 4.8 percent, and broiler 6.0 percent. Accordingly, production of meat, eggs, and milk were predicted to grow on the average by 6.2 percent, 5.2 percent, and 2.9 percent a year respectively. The average annual growth of fisheries production was 5.5 percent. Due to this growth, employment opportunity expected to grow by 4.3 percent a year. Fisheries commodities, which were to be developed for export included tuna, cakalang, and shrimp. The average annual growth of production from marine fisheries and common water were targeted at 4.3 percent and 2.4 percent, respectively; and the growth of fish culture was 9.1 percent a year. Estate crops development was targeted to increase the production by about 6.7 percent a year. This growth was expected to increase employment opportunity in smallholder plantations by 5.8 percent a year, and by 3.9

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percent in estate crops from large corporations: Estate crops commodities included in the development plan were oil palm, rubber, coconut, cacao, tea, cotton, and sugarcane. Rubber production was targeted to increase 5.4 percent a year. For other crops the average annual production growth targets were: coconut 5.0 percent, palm oil 19.3 percent, kernel 19.0 percent, coffee 2.8 percent, tea 4.0 percent, pepper 2.3 percent, clove 5.6 percent, cacao 21.1 percent, sugarcane 5.0 percent, tobacco 7.8 percent and cotton 22.3 percent. Repelita VI (1994/1995 – 1998/1999) Repelita VI was the first Repelita in the Second Long term Development phase (Second 25 year Development) of Indonesia. Therefore, this Repelita was the stepping-stone for the next series of development plans. The agricultural sector was still considered as a strategic sector of development where it still played a dominant role in labor force absorption and food production. Furthermore, the agricultural sector also played crucial roles in raw material production for industry, sources of income, sources of foreign exchange earnings, and in sustaining environmental resources. The scope of agricultural development included food crops, estate crops, fisheries, livestock, and horticulture. Note that forestry and water resources development have been excluded from the agricultural sector. GBHN 1993 stated that agriculture should continuously be developed in order to have an efficient and advanced agricultural sector. Diversification, intensification, extensification, rehabilitation were continuously applied with the support of science and technology. These efforts were directed to increase the quality and quantity of agricultural production, as well as agricultural product diversification. Repelita VI identified the following challenges, constraints, and opportunities in agricultural development. Major challenges in agricultural development are: • How to increase and extend food self-sufficiency with a reasonable degree (high) of efficiency • How to increase labor productivity and to broaden employment opportunities in the agricultural sector. • How to increase competitiveness of agricultural export commodities, among others, how to increase the quality and added values of agricultural products of Indonesia. • How to develop agricultural institutions, which are able to promote renovation that supports agricultural development in rural areas. • How to help alleviate rural poverty through agricultural development. Corresponding to the above challenges, the main constraints in agricultural development in the Repelita VI were: • Declining terms of trade in agriculture • Low farmers income • Low efficiency in transportation systems, trade and distribution of agricultural products • Low educational level, skill and formal knowledge of farmers • Lack of technology, especially non-rice technology such as soybeans, horticulture, fisheries and animal husbandry • Reduction of agricultural area in Java in one hand, and less fertile soils, lack of labor and lack of infrastructure in outer islands on the other • Lack of efficient and innovative agricultural institutions which support the growth of agribusiness • Strongly existing social attitudes that inhibit the process of renovation in agricultural development. Opportunities in agricultural development are due to the results of enrichment in both internal process and external change. Experiences in agricultural development are assets for the next development era. The

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achievement of rice self-sufficiency has laid a strong foundation for building strong food systems including food security and food safety. Success in animal husbandry, fisheries, and estate crops development provide broader opportunities for diversification. The availability of natural resources, particularly germ plasmas, which are large in number and in kind, also provides broad agricultural development opportunities. Economic stability will promote greater investment opportunity in agriculture by both domestic and foreign investment. In addition, economic stability also increases opportunities for international cooperation. Indonesia’s geographical location also provides opportunities to utilize fast economic development experience with in the Asia-Pacific region. The population of Indonesia which reached more than 200 million people at the end of Repelita VI created a large market opportunities for agriculture. Income increase from the past period of development will also increase agricultural development opportunities in the future. Increasing income and other welfare variable will also increase demand for quality and processed products. This trend will create opportunities for agro industrial development. The growth of science and technology in Indonesia will also open opportunities for utilization, development and increased efficiency and productivity of agricultural development. The attainment of advanced, efficient, and resilient agriculture was considered the goal of agricultural development in the Second Long Term Development (ended by 2018). This goal was characterized by the increasing role of the agricultural sector in supporting high economic growth, fulfilment of people’s need for food, increasing people’s purchasing power, and availability of raw materials for industry. In addition, other goals were to increase the quality of human resources and the quality of the agricultural community, the increase of science and technology capability; the development of agricultural institutions; stronger linkages and increased integration between agriculture, industry, and services sectors, and the development of productive agribusiness i.e., the agro industry sector. The average annual production growth of the agriculture sector during the Second Long Term Development was targeted 3.5 percent. Within this growth target, the agricultural sector was expected to increase employment opportunities by about 2.8 million persons. The total labor force engaged in agricultural sector at the end of Second Long Term Development will be 40.8 million persons or 27.6 percent out of total labor force. The qualitative targets of agricultural development of the Repelita Six were: increase income and living standards of farmers and fishermen, diversification of farming and agricultural products, and to increase of agricultural intensification and extensification supported by agricultural industries. Furthermore, the targets of agricultural development were an increasing agricultural labor productivity and agricultural employment opportunity, availability of more diversity of food varieties, quality of agricultural and agricultural processed products, and number of roles of agriculture in regional development. In addition, there were also targets including sustainability of food self-sufficiency, increase in farmers’ skill and knowledge of agricultural technologies, in farm productivity, competitiveness and share of agricultural products in domestic and international markets, and in the capability of agricultural institutions to develop agribusiness. In Repelita VI the average annual growth target for the agricultural sector was 3.4 percent. Moreover, the average annual growth targets for food crops were 2.5 percent, livestock 6.4 percent, estate crops 4.2 percent, fisheries 5.2 percent, and forestry 0.5 percent (forestry is still included in the agricultural sector in the model for growth estimation). The average annual growth of employment opportunity in agriculture was 1.0 percent, excluding forestry. Based upon this growth target, agriculture was expected to increase employment opportunities, by 1.89 million persons. Productivity of agricultural labor was expected to grow about 2.4 percent. At the end of Repelita VI, labor engaged in agriculture was expected to number about 38.4 million persons. The growth target of employment opportunities in food crops was 0.2 percent a year, which was equivalent to

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331 thousands of labor. The productivity growth of labor in food crops was 2.3 percent annually. Moreover, the growth of employment opportunities in estate crops, fisheries, and animal husbandry were about 872 thousand persons, 236 thousand persons, 456 thousand persons, respectively. The growth target of labor productivity in estate crops was 1.1 percent, fisheries 3.1 percent, animal husbandry 2.9 percent. The target of average annual production for the growth of rice was 2.01 percent. According to this growth target, the target of rice production was 34.6 million ton in 1998, which is 3.3 million tons larger than rice production in 1993. The growth targets for other agricultural commodities were: corn 3.77 percent, soybeans 3.17 percent, cassava 0.17 percent, sweet potatoes 1.96 percent, peanuts 3.64 percent, green peas 5.00 percent, vegetables 5.10 percent, fruits 4.10 percent, meat 5.48 percent, eggs 5.35 percent, milk 5.67 percent, fish 4.92 percent, sugar 4.72 percent, coconut 2.14 percent, and palm oil 8.08 percent. Agricultural development policies in Repelita VI were classified into two broad categories, namely, general policies and specific policies. The general and specific policies were required in order to achieve the above targets. Box 3.4. Food Policies, Goals, and Programs in Repelita VI92 The goals of food policy in Repelita VI are the achievement of more resilience of food security of the nation. The meaning of food security was interpreted as not only in term of rice availability but also in other kinds of food that provides carbohydrate, protein, fat, and micronutrients. At the end of Repelita VI, it was expected food availability in term of energy reached 72.0 unit, with average availability of energy per capita 2,500 calories per day. Other goals of food policy in Indonesia were: (1) food safety that free consumers from unhealthy and toxic food and from contamination of food from substances that unsuitable with certain people’s belief (pangan halal), (2) improvement in food institutions, which is, among others, characterized by the existence of laws and regulations to support this aim. The policy instruments to achieve the above goals were: (1) increasing food security through increasing food production, community purchasing power, and improvement in food distribution, (2) setting food price policy, (3) spurring food consumption diversification, (4) increasing food safety, (5) strengthening institutions related with food affairs and management. The above policies have been implemented through the following main programs: (1) increasing food selfsufficiency, and (2) food diversification. These two programs have been supported by: (1) food education, training, and extension program, (2) food research and development program, (3) food institution development program, and (4) nutrition improvement program agricultural specific policies include:

Basic policies in agricultural development in the Repelita VI were: • Strengthening food self-sufficiency • Increasing employment opportunities and increasing agricultural labor productivity • Increasing exports of agricultural products • Renovation and development of institutions • Rural poverty alleviation. Agricultural development activities are organized into the following programs: • Food production increase program • Employment opportunity and agricultural productivity increase program • Agricultural export development program • Agricultural institution development program • Production and diversification increase program.

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Government of Indonesia. Repelita VI.

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The above main program are supported by the following: • Agricultural education, training and extension program • Agricultural research and development program • Transmigration development program. Agricultural Planning After Economic Crisis Indonesia economic crisis, which began at 1997, has changed almost all dimensions of aspects of nation life. It was for the first time Indonesia has new president after President Soeharto took power in 1967. Since Soeharto resigned from the presidency in 1997, as a marked of the end of the New Order government, Indonesia has four Presidents: B.J. Habibie, K.H. Aburachman Wahid (Gus Dur), Megawati Soekarnoputri, and Susilo Bambang Yudhoyono. Therefore, within seven years Indonesia has four Presidents. It implies that the political environment has changed dramatically. In the area of development planning, the roles of BAPPENAS have also changed significantly. In the era of “Government Reform” (Pemerintahan Reformasi), BAPPENAS’ roles were minimal. BAPPENAS has no more roles in budgeting and in allocating and controlling the national budgets. On the other hand, the role of legislative body, i.e., parliament (Dewan Perwakilan Rakyat) has significantly increased, including in government budget allocation and control. As a consequence of declining roles of BAPPENAS, the planning tradition that has been practiced since 1970s, has changed. Each department or ministries in the Presidential Cabinets developed its own sectoral development planning. Under the President Abdurachman Wahid, the name of Repelita was changed to Propenas (Program Pembangunan Nasional, National Development Program). Rencana Pembangunan Jangka Menengah (RPJM) (Medium Term Development Planning) which is now under preparation will change Propenas. The law, which supports RPJM, is Undang-undang Sistem Perencanaan Pembangunan Nasional (National Development Planning Law) that defines the vision, mission, agenda, and program of the President. The Long Term Development Planning will also be developed and be used to guide the medium term planning process. Economic crisis, which severely hit Indonesia, has changed the way Indonesia to organize resources in development process. The drastic shift took place due to many causes. However, one of the most important things is that a demand for more participatory development process is increasing. Decentralization and provision of autonomy to local government have contributed significantly to the shift of planning process from central government to local government. However, it is showed by the fact that without national planning, there were some difficulties in harmonizing conflicting interests across sectors or across regions. Limited resources of government such as budget create a situation that potentially produces lower performance than that of if there is a plan. The key lesson here is that development planning is called for. However, at the same time the old problem is faced: How to make a better development planning. Interpretative Summary A summary of background, policies, and program shown above indicates that agricultural development planning in Indonesia has been a long process of evolution in knowledge, aspirations, and ideals toward more sustainable agriculture development. During the post independence era, the process was started after Kasimo’s plan. Repelita I was the starting point of a systematic series of actions where strong commitment and consistent support starting from central to local levels of government were initiated and sustained. The agricultural sector was given a high priority in the development planning processes. However, the crisis of Indonesian economy, which leads into multidimensional crisis of Indonesia, has changed the belief of political communities. The new belief is that centrally development planning such as conducted by BAPPENAS in the past and be guided by GBHN should not be continued. The most important lesson agricultural development is

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determined by political power or political environment. Planning as an action of thought has been viewed as a very important way of knowledge production, accumulation, and utilization. After having experience “without development planning” for more than five years, the emerging belief has been revised. Even though the terminology is changed and the ways to make a plan is changed, the essential thing will continue, namely the process of action of thought will guide the underlining the process of physical actions, namely implementation. Of course, the capability of creating the national development plan should be improved significantly. The new environments calls for not only academic excellence or powerful institution such as BAPPENAS in the past, but the successful planning institutions which is suitable with future challenges are the institutions which is filled by high moral characters of the planners including his/her ability to be a civic real planner. The inclusion of farmers’ interest in the process of policy making is crucial. Sectorization is a critical part of development planning. As an aggregation process, sectorization of agriculture in Indonesia seemed quite straightforward, namely, an aggregation has been made according to the homogeneity or similarity of certain characteristic of a product. In general, agriculture has been understood as a sector, which produces primary products resulting from biological processes by utilizing solar energy, water, minerals, and other sources of growth and development of plants and animals. At this level of aggregation, agriculture can be differentiated from mining, which is also harvesting a stock of available energy but is geologically determined. At a more detailed level, aggregation has been conducted based upon more detail characteristic, namely, among others, plant and animal characteristics. Domesticated animals are called livestock and domesticated plants were called food or estate agriculture. Fisheries in Indonesia are composed of both domesticated and non-domesticated fishes. The borders among activities seem to be biological characteristics and domestication. Non-domesticated plants and animals in general have been classified under forestry. The above notion has been purposely taken in order to emphasize that agricultural development planning has been designed and based upon commodity oriented planning. Therefore, commodity production increase programs, such as food crops, estate crops, livestock and fisheries production increase programs have been the theme of agricultural development since Repelita I up to Repelita V. Therefore, the development target was commodity, not for example, farmers’ welfare. Of course, farmer income and other similar aspects have been considered in the planning processes but it was assumed that those would be fulfilled if an agricultural production increase could be achieved. In other words, post production activities such as agro-processing, agro-finance, marketing, trade, and agricultural cooperatives have been treated beyond agriculture and they were called only supporting systems, and their planning processes undertaken by separate entities. The attainment of rice self-sufficiency in 1984 changed the planning perspective in agricultural development. Even though agricultural development programs remained, the same, agricultural diversification was a prime strategy in Repelita V. This is important to note because diversification was not to mean that rice was becoming unimportant. However, diversification indicated that there were growing concerns about how to broaden agriculture. In fact, from a broader point of view, agricultural diversification will support rice selfsufficiency. A significant shift of thought regarding agricultural development planning took place in Repelita VI. First, a big shift in sectorization occurred. Irrigation, which had been an integral part of agricultural development planning, was separated from agriculture in Repelita VI. Now, irrigation is a part of water resources development, which is becoming exogenous to the agricultural sector. Second, the orientation of agricultural development planning was no longer commodity production increase but more focused on incentive generation and problem areas. To repeat for convenience, the agricultural development programs under Repelita VI are the food production increase programs, employment opportunity and agricultural productivity increase program. Here emphasis is not on land productivity as in the earlier Repelita but on farmer (labor) productivity, the agricultural export development program, the agricultural institution development program, and the production and diversification increase program. Participation of the private sector is encouraged to

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implement those programs. This significant shift in agricultural development planning and policies will have far reaching implications for future Indonesian agriculture. A significant shift in action of thought, which is revealed in development planning tradition, has occurred at the end era of New Order Government. Such a shift does not only reflect the change in power structure of government but also in socio-economic and political environments as well. What is future direction of agricultural development in Indonesia will be determined by a complex interplay of many factors in recent and future development of thinking in Indonesia and by present and future global situation. We can say that the inclusion of farmers in agricultural development planning is minimum. Social distance between planners and policy makers is still wide and still unabridged. Farmers are let alone to survive. The influence of thinking that free market or free trade become very strong, including the intervention made by IMF during the economic crisis. We do not against market or trade but we do against unfair trade that worsen farmers’ welfare.

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CHAPTER FOUR A CASE STUDY: THE EVOLUTION INDONESIAN AGRICULTURE Being new, nameless, hard to understand, we premature births of an as yet unproven future, we need for a new goal also a new means.

Nietzsche In Chapter III, the evolutionary process of agricultural development planning has been described. Such a process reflects a series of thoughts regarding plans of action, which were believed by policy makers (government) to be right answers for solving problems associated with each period of development planning. Therefore, from Chapter III, we learned the evolution of government’s action of thoughts as plans of action in dealing with agricultural development. Since the plans of actions are not the acts by themselves, then our understanding of agricultural development will be incomplete without knowledge of agriculture itself. In addition, better knowledge of agriculture over a certain period is also important for understanding why particular actions have been undertaken. This chapter describes and analyzes the evolution of a part of agricultural realities. The major objective of this chapter is to gain knowledge of the evolution of the agricultural system in Indonesia. The meaning of evolution used in this chapter is loosely interpreted; namely it is process of change from a lower, simpler to a higher, more complex, or better state. Just like the evolutionary process of organism, human thoughts and actions play a very important role in the development process of agriculture. Since there is a possibility for men to make wrong actions toward nature, and therefore, nature reacts badly toward human welfare. Therefore, understanding the trend of knowledge of men toward nature and vice versa is very important for reaching sustainable development. Since agriculture is the largest sector using natural resources as main production factors, then agriculture becomes a very crucial sector in the context of sustainable development. The meaning of sustainable development has been discussed in Chapter II. This volume takes the position that natural and environmental resources degradation is consequences of human actions. Therefore, the human factor is the prime mover for sustainable development. Low productivity growth of agriculture relative to the need for food and other agricultural products provides little opportunity for people to be dependent on anything other than nature. This is one of the most important factors that cause natural and environmental resource degradation. We will start the discussion of this chapter with an examination of agricultural production and its growth in Indonesia. Evolutionary Process of Rice Production As we are all aware, one of the most important agricultural products is food. The degree of importance of food will increase, as the society becomes poorer. The right to food is a matter of the right to live whenever the society is living in shortage of food. Therefore, food and a good life are very closely related. According to this point of view, food is not a private good, but a collective one, just like security. That is why we have food security terminology. Knowledge to produce a certain kind of food is a cultural endowment of a society. The meaning what is food is also a product of a society’s culture. Therefore, food reflects the result of the adaptation process of society toward nature. In addition, food is also an instrument of nature in order to balance between the

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ecological carrying capacity of a region and the population that must be carried by a certain region. Social evolution will take place as a region can produce sufficient food for the people. The meaning of a region should be interpreted in its very broadest term. A region can be a village or even smaller if it is isolated state. Alternatively, a region can be a globe if there are interdependencies among nations. The point is sufficient food availability should be in place if the human population wants to evolve. Individual choice, which creates a collective consequences decision on what kind of food is to be produced, reflects an implicit or explicit representation of community preferences toward food consumption. Right decision on a choice of a certain kind of food reveals the evolutionary process of mankind. This is important to be noted because production of food will involve large investment, particularly investment in social institutions and land resources development, which will call for a large amount of resources. Even though there are many choices of food production available to society, the state of knowledge of technology, institutions, and biophysical and human resources can be taken as both constraints and opportunities, which depend upon capabilities of the individuals and the societies with which we deal. The dimension of quantity of food is very important where the food-community relationship is in a deficit situation. Therefore, the choice about what kind of food should be produced should consider economies of scale as a first priority in weighing the alternatives. To be successful in capturing the benefits of economies of scale, food production should avoid large transaction costs between production and consumption decisions. Therefore, consideration of food habits becomes a very crucial variable in determining what kind of food should be produced. The relationships between food and population can be explained as follows. According to the 1961 National Population Census, the Indonesian population in 1961 was 97 million. Ten year later, the population of Indonesia was 119 million, a 32 million increase in 10 years. In 1990, the Indonesian population became 179 million or 32 million higher than the population in 1980. In 1995, the population of Indonesia reached 195 million or 16 million more than the population in 1990. In 2002, the population of Indonesia reached 212 million people, or 17 million higher than population in 1995. The projections of population of Indonesia show that the population of Indonesia at the end of 2018 will reach 258 million. Therefore, between periods of 1961-2002, or after 41 years (less than a half of century), the population of Indonesia increased by 115 million people. Therefore, the state of Indonesian population in 2002 was more than a double of the population in 196193. We observed that even though the annual growth rate of population has declined from 1.97 % in the period of 1980-1990 to 1.49 % in the period of 1990-2000, the magnitude of population increase is still high. For comparisons, we can examine the population size of Malaysia, Thailand, and Australia. In 2002, population size of Malaysia, Thailand, and Australia were 23.9 million, 62.2 million and 19.5 million, respectively (World Bank, 2004). We see that the population increase of Indonesia between 1961-2002 is still larger than the sum of total population of all those countries. The proportion of the population of Java out of the total population of Indonesia in the last three decades in general, remained unchanged, namely, about 60 percent of Indonesian population are located in Java. This means that 60 percent of food consumers are in Java, even though Java is only composed of less than 7 percent of the land area in Indonesia. On the other hand, about 60 percent food production is also located in Java, and it has remained unchanged after more than 30 years of development. This situation reflects that the evolution of food production in Indonesia is still largely dependent on Java’s agriculture. This large dependency on Java’s agriculture will have far-reaching implications. First, Java as a fast growing economy of the nation will demand more and more land for non-agricultural purposes. The rate of irrigated land conversion in the period of 1980 – 1990 is about 40.000 hectares a year. Most of the irrigated land had been converted for housing and industrial location.

The demographic-land relationship in Indonesia implies a unique characteristic. Population in Java concentrated in agriculture. We will examine the implications of this demographic-spatial relationship in 93

See several publications of Central Statistical Agency

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greater in the next chapter. In this chapter, we just use this information as one of the explanatory variables necessary to understand the initial path of the agricultural evolutionary process in Indonesia. Repelita I, at the forefront of non-marginal changes of Indonesia, not only responded to changes, but also shifted the path of the national economy. In 1969, Indonesia imported about 238 thousand tons of milled rice and reached its peak of 4.8 million tons in 1999. To import that milled rice, the country spent US$ 45 thousand and US$ 1,328 million in foreign exchange in 1969 and 1999, respectively. It would be more beneficial if the funds were used to buy capital goods (3.4% out of export value, excluding oil and liquid natural gas in 1999)94 rather than consumption goods. Rice production in Indonesia in 1968 was 17.1 million tons where 10.3 million tons (or 60.2 percent) were produced in Java and 6.8 million tons were produced in the outer islands. This situation, in general remained unchanged, for instance, the contribution of Java rice production in Indonesia was 55.3 percent in 1999. Rice production in 1999 reached 50.4 million tons. This was 12.3 million tons higher than rice production in 1984, namely, 38.1 million tons, where 1984 was known as the year that Indonesia reaching her rice self-sufficiency. In 1984, Indonesia only imported milled rice, about 0.42 million tons, or 22.12 percent of total food imports. Furthermore, in 2002, rice production reached 51.4 million ton and Java contributed 28.6 million ton or 55.6 % out of total rice production. Therefore, since 1968 the reduction of proportion of rice production from Java relative to outer islands only declined by 4.6 % or just declined by 0.13 % per year (BPS, 2003)95. However, there was a new trend in food imports, namely, the increasing proportion of wheat (wheat flour and other wheat) and soybeans. Wheat imports in 1969 reached 37.83 percent of total food crops imports and declined up to 10.6 percent in 1972. In 1999, wheat imports reached 19.7 percent of total of food crops import (367 thousand tons of wheat flour and 2.7 million tons of wheat). Up to 1971, soybeans were not been imported. Moreover, the soybean import increased from 4.2 percent of total food crops imported in 1977 and increased with an increasing rate reaching 12.6 percent of total food crops import in 1999. Therefore, wheat and soybean import in 1999 comprised 32.3 percent of total food crops imports. The total values of the food crop import in 1999 were US$ 2,518 million. This import spending was equivalent to 6.2 percent of total export revenue excluding oil and natural gas in 1999, namely, US$ 38,873 million (BPS, 2003)96. The significant increase of rice production in Indonesia was due to various reasons. Those reasons, among others, were farmer’s participation, strong commitment, and national stability. The strong commitment of political and administrative leaders has been shown by both central government, regional and local leaders. Furthermore, national stability provides the condition for continued assurance for enacting development processes over time97. However, none of them will have meaning without the cooperation and participation of farmers. Strong commitment has been reflected by strong institutional support, which was able to coordinate all necessary inputs for the rice production increase. At the national planning level, activities, budget, and power have been integrated. This pattern has also been built at the regional and local levels. Since rice production is principally a product of harvested area and all efforts were organized toward increasing rice yield and areas. Through agricultural research and development, irrigation, marketing, credit, price, extension and training, and institutional policies as well as other related policies, rice yield and harvested areas of rice have significantly increased during the First Long Term Development. As an illustration, the harvested area of wetland rice has increased from 6.8 million hectares in 1971 to 10.7 million hectares in 1999. However, wetland rice harvested area in 2002 declined to 10.4 million hectares. This expansion of area was mainly due to the rehabilitation of irrigation systems, which enabled the increased cropping intensity of rice. In the last seven years, economic crisis has caused lack of capacity of the nation to recover and to maintain infrastructure 94

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See Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta.

See Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta. See Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta 97 Ministry of Agriculture, 1994. Indonesian Agriculture. The Experience in Achieving and Sustaining Rice Self-sufficiency. Ministry of 96

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such as irrigation. The results were, among others, the reduction of rice-harvested area. Total production of rice in 2002 was lower than the rice production in 2000 (BPS, 2003)98. The average yield of rice has increased from 3.2 ton/hectare in 1971 to 4.3 ton/hectare in 1999. The yield gap between Java and the outer islands, however, is still wide, namely, the average yields of wetland rice in Java was 5.0 tons/hectare and in the outer islands was 3.9 tons/hectare. Therefore, there was 1.1 tons yield difference for a hectare of wetland in Java and in the outer islands. The average yield of rice in the outer islands was also lower than the national average yield of rice, namely, 0.6 ton/hectare lower than national yield average. Moreover, the average yield of rice was 4.4 ton/hectare in 2002, which was 0.1 ton/ha higher than that of in 1999. The average rice yield in Java in 2002 was 5.1 ton/hectare, compared to 3.8 ton/ha in outer islands (BPS, 2003)99. An exposition of a part of the evolutionary process of rice production increase is depicted in Figure 4.1. Rice production has fluctuated but its trend has been increasing. The innovation of high yielding varieties (HYV) in the early 60s has increased rice production significantly during the late sixties. Without innovation of HYV the decline of rice production would be continued such as directed by the first arrow. The source of growth in the early 70s was the expansion of BIMAS (Mass Guidance). The main function of BIMAS was to establish a strong coordination among input suppliers in both policy and operational levels. Through BIMAS new production technologies packages have been internalized into practice by farmers at the field level and through BIMAS, policies at the national and regional levels were coordinated as well. The impact was significant, namely, the production of rice has continually increased. 55,000,000

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Figure 4.1.

Rice Production 1969-1999

Ideas, thought and studies on technology and institutional innovation developed continually. INSUS was developed and applied to accommodate innovation in technology, particularly new HYVs, and water management. Bad experience with brown plant hopper biotype 1 and biotype 2 had ended with IR 26 and IR36. Experience with those pests also opened the practice to integrated pest management (IPM). The ideas of IPM have developed into a more complicated form, which will be discussed in a later Chapter. Repelita II was the Repelita where heavy chemical application, such as pesticides and fertilizer resulted in a dangerous reaction of nature, namely, the outbreak of brown plant hopper. Integrated pest management was an innovation, which increased new path of the adaptive capacity of the agricultural system to increase rice 98

99

Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta. Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta

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production, without hampering natural and environmental sustainability. Repelita III was the path of OPSUS (Special Operation) where a special effort had been given to specific target areas. In addition to IR36, Cisadane was introduced and cropping systems have been developed. The result was significant, namely, the growth rate of production in this period was quite substantive, i.e. about 4 percent a year. The accumulated result of this productivity increase brought Indonesia to the achievement of rice self-sufficiency in 1984. It was possible to attain this achievement after 20 years of agricultural development in 1964 was taken as starting point where national improved varieties through BIMAS were taken as a mark for looking back at the evolutionary process of rice development in Indonesia. Let us mark 1984 as a starting point for the second of evolutionary process of rice production in Indonesia. The main problem here was not how to increase rice production, but how to maintain or to sustain and to broaden food self-sufficiency. The meaning of rice self-sufficiency has been interpreted in a different point of view. Policy makers in Indonesia has invented the concept of self-sufficiency for Indonesia which is known as “self-sufficiency on trend”, namely, the concept, which allows the importing of rice in a given point in time, but in the whole period, a minimum import is maintained. This view is by itself showed that sustaining rice self-sufficiency has been a very difficult task. This concept showed that Indonesia imported rice at about 34 thousand tons in 1985. Therefore, just one year after reaching self-sufficiency in 1984, in the following year Indonesia had to import rice in that amount. The next second year after rice self-sufficiency, 28 thousand tons was imported in 1986, and then 54 thousand tons in 1987, 32 thousand tons in 1988, 268 thousand tons in 1989 and 4,751 thousand tons in 1999100. As a comparison, in 1980, Indonesia still imported rice at about 2 million tons of milled rice or about 5-7 percent of wetland rice production in the same year. The problems associated with importing that large amount of rice were not merely how to finance such an import, but issues that are more important are how that import will displace Indonesian rice farmers out of work and how such dependency will reduce Indonesia’s freedom. Repelita IV was the era of SUPRA INSUS. SUPRA INSUS was the improvement of INSUS. If INSUS was based on a group dynamic approach, SUPRA INSUS was based upon an inter-group approach. Through the fusion, farmer groups cover wider areas, i.e. 5,000 to 25,000 hectares. Farming operations based upon this unit provided opportunities to increase the efficiency and effectiveness of distribution of inputs, and increased the farm management boundary so that the ability to internalize the external economies would increase. The work under SUPRA INSUS has provided an opportunity to capture the external economies generated by water, pest and disease management. The growth of wetland rice production in the period of 1984 – 1988 was 2.07 percent a year. This, growth was about a half of the growth of wetland rice production in an earlier period. This situation reflects that this high growth era of rice in the long run will be challenged by the law of diminishing returns, due to the existence of resource fixity, including the fixity of opportunity. In addition, one of the most important challenges was that of the credit subsidy for BIMAS was abolished. Since 1984, rice farmers faced 1.6 % monthly flat interest rate, which is equivalent to about 34 % of annual effective rate of interest. The elimination of credit subsidy for farmers was due to the implementation of government new policy that was recommended by international agencies such as donor’s institutions. It was a part of implementation of what is known by The Washington Consensus namely a belief that market is universally a right instrument to solve all socio-economic problems. The above situation has inspired policy makers to pick up agricultural diversification as a priority in agricultural development, which is combined with intensification, extensification, and rehabilitation programs. 100

Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta.

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So, the effort to sustain rice self-sufficiency is perceived as an integrated approach, which includes intensification, extensification, diversification, and rehabilitation. Repelita V paid more attention to diversification policy. The agricultural diversification policy includes vertical, horizontal, and regional diversification. Horizontal diversification is efforts to rearrange resource allocation toward a more flexible agricultural system and vertical diversification is efforts made toward more generation of added value on the whole spectrum between production, marketing and consumption. Furthermore, regional diversification is efforts toward regional specialization based upon regional comparative or competitive advantage. We will elaborate of the diversification policy in the next chapter. The annual average growth of rice production in the Repelita V was about 3 percent. This growth was higher than the growth that occurred during at Repelita IV. However, it was lower than the annual average growth of rice production between Repelita I and Repelita IV, namely, about 4.3 percent a year. This implies that the sources of growth of rice have become more and more limited, except if there is a breakthrough, such as what happened during the early seventies. Repelita VI was the early stage of the agribusiness system policy, especially the introduction of agroindustry policy. The development other- related industries were also supported in order to gain opportunities from domestic as well as international market, technology-generating added value and for business expansion, which could provide jobs for people seeking employment. In addition, policies to develop rural financial institutions and farmers’ organizations, as well as, the provision of agro inputs were also re-emphasized. All of these policies are aimed to increase farmers’ incomes and welfare. Unfortunately, this Repelita was known as the beginning of the drawback of food production. This is due to the fact that there was no breakthrough to increase rice production. Unlike the previous achievements, the annual growth rate of rice production was only 0.78 percent. This growth was the lowest level compared to those in the previous five Repelitas. Table 4.1 below tried to compare rice productivity among selected Asian countries. We observed that Indonesia’ rice productivity position was just below China’s productivity performance. Compared to Thailand, India, and the world average rice productivity, Indonesia’s performance was higher. China’s rice productivity performance was exceptionally high since at the beginning period. As already well known that Thailand, with productivity level such as indicated in Table 4.1, plays as a major rice exporting country. This situation is due to the level of rice consumption of Thailand has been much lower than that of its capacity to produce rice. Thailand harvested area in 2002 was 9.9 million hectares of rice field for supporting her 62 million people. On the contrary, Indonesia with 10.4 million hectares of harvested area should support 212 million people in 2002. Thailand produced 25.9 million ton and Indonesia produced 51.6 million ton, which resulted in rice production per capita: 418 kg for Thailand and 243 kg for Indonesia. Thus, even though rice productivity in Indonesia 1.7 times higher than that of Thailand, due to large size of population, rice availability per capita in Thailand is 1.72 times larger than that of in Indonesia.

85

Table 4.1. Rice productivity comparison (ton/ha) Year 1 961 1 962 1 963 1 964 1 965 1 966 1 967 1 968 1 969 1 970 1 971 1 972 1 973 1 974 1 975 1 976 1 977 1 978 1 979 1 980 1 981 1 982 1 983 1 984 1 985

World 1.87 1.89 2.05 2.10 2.03 2.08 2.17 2.23 2.25 2.38 2.36 2.32 2.45 2.42 2.51 2.45 2.57 2.68 2.66 2.74 2.82 2.98 3.13 3.22 3.25 3.24 3.26 3.33 3.45 3.53 3.54 3.59 3.63 3.66 3.66 3.79 3.82 3.82 3.99 3.92 3.95 3.92L

Indonesia China 1.76 1.79 1.72 1.76 1.77 1.77 1.76 2.14 2.25 2.38 2.43 2.46 2.56 2.64 2.63 2.78 2.79 2.89 2.99 3.29 3.49 3.74 3.85 3.91 3.94 3.98 4.04 4.11 4.25 4.30 4.35 4.34 4.38 4.35 4.35 4.42 4.43 4.20 4.25 4.40 4.39 4.43a

2.08 2.37 2.68 2.83 2.97 3.14 3.10 3.19 3.14 3.42 3.31 3.25 3.48 3.50 3.53 3.50 3.64 3.98 4.25 4.14 4.33 4.89 5.09 5.36 5.25 5.33 5.40 5.28 5.50 5.72 5.62 5.80 5.85 5.83 6.02 6.20 6.31 6.35 6.33 6.26 6.15 6.27

Thailan d 1.66 1.72 1.87 1.84 1.78 1.84 1.75 1.79 1.85 2.02 1.94 1.83 1.92 1.83 1.83 1.84 1.59 1.96 1.82 1.89 1.95 1.89 2.04 2.07 2.06 2.05 2.01 2.15 2.09 1.96 2.25 2.17 2.17 2.35 2.42 2.41 2.35 2.47 2.42 2.62 2.70 2.60h

India 1.54 1.40 1.55 1.62 1.29 1.30 1.55 1.61 1.61 1.68 1.71 1.60 1.73 1.57 1.86 1.64 1.96 1.99 1.61 2.00 1.96 1.85 2.18 2.13 2.33 2.21 2.20 2.55 2.62 2.61 2.63 2.61 2.83 2.86 2.70 2.82 2.85 2.88 3.24 2.94 3.13 2.91

86

1 986 1 987 1 988 1 989 1 990 1 991 1 992 1 993 1 994 1 995 1 996 1 997 1 998 1 999 2 000 2 001 2 002

Source: International Rice Research Institute (IRRI) Evolutionary Process of Non-Rice Production Secondary Crops. Cassava, corn, soybeans, sweet potatoes, peanuts, and other sources of food usually classified as secondary crops, are also important sources of food. Corn production in 1971 was 2.6 million tons. This production was 1.8 million tons in Java and 0.8 million tons in the outer islands. The yield of corn that year was about 1.0 ton/ha in Java and 0.8 ton/ha in the outer islands. Ten years later the total corn production in Indonesia was 4.5 million tons where 3.3 million tons was produced in Java and 1.2 million tons was produced in the outer islands. The corn yield in Indonesia was almost doubled within 10 years, namely, the corn yield in 1981 reached 1.5 ton/ha for Java and 1.2 ton/ha in the outer islands. Both yield level in Java and the outer islands have increased, namely, 1.6 ton/ha for Java and 1.2 ton/ha in the outer islands. Furthermore, corn production areas in Indonesia reached 2.9 million ha where 2.0 million ha in Java and 0.9 million ha in the outer islands. Production of corn in 1999 reached 9.2 million tons where Java contributed 5.3 million tons and the outer islands shared 3.9 million tons. The doubling of corn production was also followed by the increase of corn input. Statistics showed that a significant increase of corn production took place in 1976 where Indonesia imported about 68 thousand tons or US$ 9.2 thousand. Corn imports fluctuated over the years with maximum

87

import taking place in 1994, namely, 1109 thousand tons of corn imported. The value of such importing reached US$ 152 million or was equivalent to 14.1 percent of the total value of food crops imports in 1994. Measured by such proportion, just like the wheat import value, the corn import value also took a substantial part of foreign exchange earnings. In 2002 corn production just increased slightly, namely reached 9.5 million tons. Average corn yield has also increased from 1.0 ton/hectare (1971) to 2.8 ton/hectare (1999) for Java, and from 0.8 ton/hectare (1971) to 2.5 ton/hectare (1999) in the outer islands. The areas of corn production tended to increase, namely, from 2.6 million hectares in 1971 to 3.4 million hectares in 1999. One of the major reasons for increasing corn import is a significant increase in feed industries in Indonesia for which their inputs, particularly corn and soybeans, relied on imports. In 2002, area harvested and yield of corn were 3.1 million hectares and 3 ton/hectare, respectively Cassava is another secondary crop that plays a substantial role in Indonesian agriculture. Cassava has multipurpose ranges from food to industrial products. Cassava is also a very low input food crop and well adapted to wide ranges of soil fertility. Cassava production in 1999 reached 16.4 million tons where Java contributed 9.2 million tons. The areas of cassava production declined from 1.4 million hectares in 1971 to 1.2 million hectares in 1999. The reduction of cassava area took place in Java, namely, it declined from 1.1 million hectares in 1971 to 0.8 million hectares in 1999, or experienced a declining rate of about 1.1 percent a year. On the other hand, cassava production areas in the outer islands increased from 0.3 million hectares to 0.8 million hectares from 1971 to 1999. Furthermore, cassava yield was almost doubled in Java and was a significant increase of cassava yield in the outer islands. Even though the total areas decreased, such reduction has been compensated by yield increase. Therefore, the total effect on total production was still positive. Cassava is a major export commodity of the food crop group. In 1999, cassava exports was 340 thousand tons, which accounted for US$ 21.4 million or about 32.3 percent of the total value of food crop exports. However, cassava export value declined significantly in 2002, namely US$ 1.6 million, or declined about 55 %. Even though cassava also has a significant contribution on generating economic incentives, cassava also has a negative impact on soil erosion, nutrient reduction, soil compaction, and other negative impacts on environmental quality. Therefore, natural and environmental resources conservation is one important aspect that should be controlled in cassava production. Soybeans can be viewed as a new commodity for Indonesia. In 1972 the area of soybean production was only 7 thousand hectares and production was only 0.5 million tons. In 1999, the soybean area was almost doubled; namely, about 1.1 million hectares and its production reached 1.4 million tons. Java was the major area of soybean production where the soybean production are reached 0.7 million hectares in 1999. Soybean areas in the outer islands were only 0.4 million hectares. Soybean productivity, even though significantly increased, was far below the average of soybean production of temperate regions, such as the U.S.A. The average of soybean productivity in Indonesia was only 1.2 ton/hectare in 1999 where 1.3 ton/hectare was for Java and 1.1 ton/hectare for the outer islands. Soybean is a major of non-animal protein for the majority of Indonesians. Major processed products of soybeans are tofu and tempeh. Tofu and tempeh are very important foods for most Javanese, namely tofu or tempeh are an important part of the daily Javanese’ meal. Therefore, it is no wonder that soybeans are more developed in Java rather than in outer islands. As mentioned earlier, the demand for soybeans has been increasing since 1976 where 168 thousand tons were imported. The import of soybeans in 1999 reached 1,320 thousand tons. The production of soybeans in 1976, as a comparison was 507 thousand tons, and soybean production in 1999 was 1.4 million tons. Therefore, soybean imports in 1976 and 1999 were about 33 percent and 95 percent of soybean production in Indonesia, respectively. The trend of soybean imports will be increasing due to an increase in the feed industry and in human consumption.

88

Sweet potatoes are another important secondary crop in Indonesia. The production of sweet potatoes is relatively stagnant and the areas of production are declining in both Java and outer islands. The yield however is increasing which results in a positive total production effect. Sweet potatoes are a major foodstuff for some regions such as Papua. Sweet potatoes are also becoming important raw materials in food industries. The stage of sweet potato development in Indonesia is far behind other food crop commodities. Another food crops are peanuts. The production of peanuts in Indonesia in 1972 was only 271 thousand tons where Java contributed 212 thousand tons and the outer islands 59 thousand tons. In 1999, the production of peanuts reached 648 thousand tons where Java produced 437 thousand tons. In 1972, Java produced peanuts 3.6 times that of the outer islands. In 1999, Java only produced 2.0 times of that of the outer islands. This means that the contribution of the outer islands in peanut production has increased. The role of the peanut is increasing as Indonesian economies move toward industries. The detailed information about production, export, and import of secondary crops can be seen in Table 4.2, Table 4.3, and Table 4.4.

89

Table 4.2.

Production of corn, cassava, sweet potatoes, peanut, and soybeans (In thousand tons)101

101

Year

Corn

Cassava

1 968 1 971 1 972 1 978 1 979 1 980 1 981 1 982 1 983 1 984 1 985 1 986 1 987 1 988 1 989 1 990 1 991 1 992 1 993 1 994 1 995 1 996 1 997 1

3,166

Badan Pusat Statistik (1969-2003)

Peanut

Soybeans

11,356

Sweet Potatoes 2,364

287

420

2,607

10,690

2,211

284

516

2,254

10,385

2,066

282

518

4,029

12,902

2,029

446

617

3,606

13,751

2,194

424

680

3,994

13,774

2,078

470

653

4,509

13,301

2,094

475

704

3,235

12,988

1,676

437

521

5,087

12,103

2,213

460

536

5,288

14,167

2,157

535

769

4,330

14,057

2,162

528

869

5,920

13,312

2,091

642

1,227

5,156

14,356

2,013

533

1,161

6,652

15,471

2,159

589

1,270

6,193

17,117

2,224

620

1,315

6,734

15,830

1,972

651

1,487

6,255

15,955

2,039

652

1,555

7,995

16,516

2,171

739

1,870

6,460

17,285

2,088

639

1,709

6,869

15,729

1,845

632

1,565

8,246

15,442

2,171

760

1,680

9,307

17,003

2,018

738

1,517

8,771

15,134

1,848

688

1,357

10,17

14,696

1,935

692

1,306

90 998 1 999 2 000 2 001 2 002

0 9,172

16,347

1,627

648

1,372

9,677

16,089

1,828

736

1,018

9,347

17,055

1,749

710

827

9,654

16,913

1,772

718

673

91

Table 4.3. Year 1 988 1 989 1 990 1 991 1 992 1 993 1 994 1 995 1 998 1 999 2 000 2 001 2 002

Corn 000 Tons 37.5

000 US$ 4,719

Cassava 000 tons 000 US$ 1,086.2 126,21 7 1,179.7 82,203

Potatoes 000 000 Tons US$ 57.1 6,225

233. 9 141. 8 33.2

28,25 8 16,77 8 3,873

71.7

10,071

1,278.2

186. 5 52.1

17,28 8 6,772

870.2 517.0

143,10 9 107,29 2 109,74 4 98,265

76.9

10,292

98.2

13,932

96.5

15,555

126. 6 88.9

19,050

34.1

4,947

686.0

62,068

74.9

651.2

66,520

604. 6 81.0

10,40 0 61,50 4 8,559

18,115

20,402

102. 9 -

221.4 340.0

23,454

32.2

-

26.6

3,407

151,177

10,750

30.2

4,461

89.1

9,058

177,061

13,682

27.6

4,158

14.2

2,001

70,378

6,066

27.4

5,404

Table 4.4. Year 1 988 1 989 1 990 1 991 1 992

Export of main food crop commodities102

Corn 000 Tons 37.5

868.7

13,880

-

Import of main food crop commodities103 000 US$ 4,710

Wheat 000 tons 000 US$ 1,583. 225,38

Soybeans 000 000 Tons US$ 465.8 138,04

39.6

5,681

1,806.

286,88

390.5

128,22

9.1

1,701

1,724.

281,88

541.1

146,48

323.3

45,951

2,221.

366,36

672.8

183,97

55.5

7,687

2,456.

403,58

687.5

184,42

102

Badan Pusat Statistik (1969-2003)

103

Badan Pusat Statistik (1969-2003)

92

1 993 1 994 1 995 1 998 1 999 2 000 2 001 2 002

494.4

67,600

2,525.

442,00

700.1

190,18

1,109.

151,86

3,295.

579,06

628.2

184,62

969.1

152,76

4,054.

803,41

496.9

142,94

298.2

44,095

3,465.

630,29

343.2

98,693

591.1

71,589

2,712.

404,27

1,302 .

301,69

1236. 7 1031. 8 1149.8

150,02 3,576.6 500,31 1 2 121,99 2,706.6 397,99 0 3 132,56 4,216.9 609,50 2 3 Source: Badan Pusat Statistik 1998-2003

Horticulture. There are many kinds of horticultural products. Therefore, such aggregation should be understood only for simplification purposes. In general, horticulture in Indonesia was classified into two groups of commodities, namely, vegetables and fruits. Statistics showed that in 1968, the areas of vegetables and fruits in Indonesia were 660 and 488 thousand hectares, which produced 1.8 million tons and 2.2 million tons, respectively. The yield of vegetables and fruits at 1968 was about 0.3 ton/hectare and 0.5 ton/hectare, respectively. The trend of both vegetables and fruits areas of production seemed to be decreasing from 1989 to 1999. In 1989 production areas for vegetables and fruits were 1.4 million hectare and 0.6 million hectares, respectively. In 1999, production areas for vegetables and fruits were only 0.909 and 0.362 million hectares, respectively. The vegetables and fruits production increases were due to yield increase. Statistics showed that the vegetables yield increased from 3 ton/hectare in 1969 to 8.9 ton/hectare in 1999. The same thing was true for fruits, namely, the yields increased from 5 ton/hectare in 1968 to 20.8 ton/hectare in 1999. Livestock. Livestock production growth was indicated by the following characteristics: • In the group of large ruminants the population of beef cattle was almost doubled in 31 years, namely, the population was 6.5 million in 1968 and 11.9 million in 1999. The population of buffalo, however, remained relatively stagnant, namely, 2.8 million in 1968 and 2.8 million in 1999. • Population of goat has increased from 7.2 million in 1968 to 13.9 million in 1999. Even though, it was smaller in magnitude, the population of sheep was almost doubled, namely, 3.5 million in 1968 and 7.5 million in 1999. • The population of pigs has almost tripled, namely, 2.7 million in 1968 and 8.8 million in 1999. • A very significant population increase occurred in poultry. In 1968, the population of layers was only 250 thousand and there were no broilers. In 1999, the population of layers was 41.9 million and the population of broiler was 418 million. The population of free-range chickens was also increased, namely, 61 million in 1968 and 265 million in 1999. The population of ducks also increased from 7 million in 1968 to 26.3 million in 1999. • While other animal populations experienced a significant population increases, the horse population was tend to decrease. The horse population in 1968 was 612 thousand and in 1999, the population was only

93

544 thousand. Given the above populations, production of meat increased from 305 thousand ton in 1968 to 1.2 million ton in 1999. Furthermore, production of eggs increased from 51 thousand tons in 1968 to 640 thousand tons in 1999; and production of milk increased from 29 million litters in 1968 to 436 million litters in 1999. Even though populations of livestock, particularly poultry have experienced a significant increase, imports of animal husbandry products have also been increasing. In 1969, imports of meat, dairy product, butter, and cheese were 1.4 thousand tons, 8.2 thousand tons, 76 tons and 94 tons, respectively. In 1999, imports of meat, dairy products, butter and cheese were 15.2 thousand tons, 59.9 thousand tons 28.5 thousand tons, and 4.3 thousand tons, respectively. Fisheries. As an archipelago country, Indonesia is endowed with water resources, particularly oceans. In 1968, the total production of fisheries was 1,160 thousand tons, namely, 723 thousand tons of ocean fisheries and 437 thousand tons of inland fisheries. In 1999, ocean fisheries produced 3.5 million tons and inland fisheries produce 1.0 million tons. Shrimp and tuna are major fishery exported commodities. The export of shrimp and tuna has increased significantly in the last 30 years. In 1969, the shrimp export was 5.6 thousand tons and there was no tuna export. In 1999, the shrimp export reached 106 thousand tons (US$ 888 million) and the tuna export was 91 thousand ton (US$ 189 million). Total values of fisheries exports in 1999 were US$ 1.6 billion. Estate Crops. Estate crops production has been intended to increase foreign exchange earning. The export of estate crops has been a traditional source of foreign exchange income for Indonesia. In 1968, the rank of rubber export value was the first, coffee was second, tea was fourth, palm oil was fifth, tobacco was sixth, and pepper was ninth of total export value excluding oil and liquid natural gas. The total value of those commodities was about 62.8 percent of total export value (excluding oil and liquid natural gas) in 1988. In 1992/1993 the rank position of rubber, palm oil, coffee, tea, tobacco, and pepper were changed to the sixth, tenth, twelfth, fifteenth, eighteenth, and nineteenth. The contribution of those commodities to total foreign exchange earning excluding oil and natural gas declined from 62.8 percent in 1968 to 7.2 percent in 1999. The declining contribution of estate crops in foreign exchange earnings was particularly due to the rapid export expansion of other products. Such products include textiles (first ranked), plywood (second ranked), mining products other than tin and aluminium (third ranked), shrimp, fish and other animal products (fourth ranked), and logs, sawn-timber and wood processed products (fifth ranked). Those five commodities contributed about 52 percent of the foreign exchange earnings in 1992/1993 from non-oil and liquid natural gas exports. Among the agricultural commodities group, the contribution of estate crops also declined. In 1968, the contribution of estate crops in export earnings was 96 percent and the rest was due to food crops (0.8%), livestock (1.6%) and fisheries (0.8%). In 1990, the contribution of estate crops declined to 62.1 percent, and the rest were contributed to food crops (6.1%), animal husbandry (2.35%), and fisheries (29.4%). Significant increase has been experienced by the fisheries sub-sector. Even though the relative share of estate crops in exports has declined, the production of estate crops has increased in the last 30 years. Production of rubber, palm oil, coffee, peppers, and tobacco in 1968 was 735,216.72,150.47, and 54 thousand tons, respectively. In 1999, the production of rubber, palm oil, tea, coffee, pepper, and tobacco reached 1.7, 6.0, 0.2, 0.5, 0.06, and 0.1 million tons. Palm oil production has increased significantly. In addition to the above traditional commodities, cacao has become a new estate crops commodity in Indonesia. Integrative Picture of Indonesia Agricultural Production The above discussion has elaborated an evolution of agricultural performance in Indonesia. Information in the following Tables is assigned in order to draw general insights of evolution of

94

agricultural performance so that we will be able to draw some important implications. We see that the pattern of agricultural growth varied across commodities. However, there was a common trend that the rates of growth in terms of output, input, and productivity in the period of 19932000 were lower than that of in the period 1968-1992104. The growth of agricultural outputs (aggregated) has declined from 4 % p.a. to 1.0% p.a. This  growth declining was consistent with the declining growth of Total Factor Productivity (TFP) from 2.6 %  to –0.1 %. In addition, the growth rate of inputs also declined significantly. The highest declining rate in  input use was fertilizer per cropland area, namely the utilization of fertilizer per hectare of cropland was  declined from 13.6 % p.a. in the period of 1968­1992 to –2.0 % p.a. in the period of 1993­2000. The  declining rate of  use  of  machinery indicated that the declining rate of  utilization of capital,  and  the  declining rate of growth of irrigated land indicated the reduction of capacities of agricultural production  in Indonesia.  The issue is more crucial when we considered the growth of productivity. TFP measures changes  in technology and other improvements that are not specified in the explanatory variables in the production  function. An index reflects a ratio between total output and total inputs given a specified production  function. Therefore, the declining in TFP means the weakening of agricultural technology applied by  farmer  communities. Because one of the main sources of growth in the future agriculture is, among  others, productivity, so the significant declining rate of TFP should open new and strong spirit and effort  to overcome this problem.  Labor   productivity   growth   in   1993­2000   periods,   i.e.,   0.1   %   per   year   was   lower   than   labor  productivity growth in 1961­1967, i.e., 0.3 % per year. This situation is a reflection that we have to face a  difficult   case   generated   by   agricultural   labor   declining   productivity.   It   is   one   of   the   most   difficult  problems because agricultural labor market is not independent from other labor market sectors. Recent  economic crisis has caused increasing unemployment. It will induce the growing problems in rural areas.  With lowering agricultural output growth, then the ratio between declining outputs on the one hand and  increasing unemployment on the other hand will reduce labor productivity. The  declining rate of land productivity growth of agriculture has been realized. However,  the  negative productivity growth has not been comprehended by the policy makers or by the public. The rate  of growth of land productivity –0.9 % per year has far reaching implication. Realizing that the main  source of food is rice and the main area of rice production is in Java, so there is a strategic issue in dealing  with irrigated land use allocation policy.   This issue has been raised since more than 20 years ago but the problems are still not successfully  solved. There will be no farm if there is no land.  The size of Java which is only about 7 % of the total  land area but produces food almost 60 % of total food production. This figure suggests that it is not easy  to build irrigated land and produce food such as has been reinforced by our experience for more than 30  years.  It   means   that   opportunity  costs   to   convert   irrigated   land   into   other   land   uses   in   Java  will   be  extremely high if we include the intrinsic and instrumental values of Java to support the healthy life of  Indonesian people.  Irrigated land is not just a site for producing rice. Its roles and functions are more than  that of planting rice. Building houses or industrial sites have no requirement of soil fertility, which is  given by Mother Nature. In fact, the development of cities, housing and industrial sites in Indonesia,  particularly  in  Java, has been taking advantages of infrastructures, which is associated with irrigated  104

The information in this productivity aspect is mainly drawn from K.O. Fuglie, “Productivity Growth in Indonesian Agriculture, 19612000”, Bulletin of Indonesian Economic Studies, Vol. 40, No. 2, 2004: 209-25.

95

agricultural land. Therefore, they captured the land rents that have been made available by the existence of  irrigated agricultural land. Based   upon   information   provided   by   Fuglie   (2004),   among   others,   such   as   presented   in   the  following Tables, we may say that agricultural sustainability in Indonesia is under a serious threat. The  main threat is due to the declining of agricultural capacities to face the future demand for food and other  agricultural products. Such as has been mentioned in the earlier section, Indonesia will face a higher  population pressure in the near future. Lack of capacity to invest in the form of new agricultural land  suggests that we need to save, care, and protect the already available land resources especially irrigated  agricultural   land   in   Java.   An   implementation   of   a   right   combination   between   planning   and   market  mechanisms is necessary. 

Table 4.5. Selected agricultural production parameters by periods Items

I. Outputs Growth (% p.a)

1961-2000

1961-67

1968-92

1993-2000

96

Growth rate of agricultural outputs (all)

2.9

0.7

4.0

1.0

Growth of food crops outputs (all)

3.5

1.2

5.0

0.4

Rice Cassava Corn

3.9 1.2 6.9

1.7 -0.5 9.7

5.5 1.9 7.7

0.7 0.2 2.5

Growth of horticultural crops outputs (all)

3.5

2.7

3.5

4.2

Growth of non-food crops outputs (all)

3.4

0.6

4.3

2.7

  



Palm oil

10.7

2.6

12.7

10.2



Rubber

2.3

0.4

2.8

1.8



Cane sugar

2.9

1.4

5.6

-4.1

Animal products (all)

4.0

1.5

5.7

0.7

Fish Products

4.4

4.6

4.4

4.3

Crop land

2.0

0.3

2.3

2.1

Area harvested

1.7

1.1

2.1

0.8

Irrigated crop land

1.8

1.4

2.3

0.3

Labor

1.5

0.8

1.7

1.1

Fertilizer

10.6

1.7

16.6

0.1

Fertilizer/crop land

8.5

1.3

13.6

-2.0

Animals

2.3

-0.1

3.6

-0.3

Machinery

11.5

7.5

14.3

5.9

3.5

1.2

4.8

1.1

II. Inputs Growth (% p.a)

III. Productivity Growth (% p.a)

Total outputs

97

Total Inputs

1.8

0.5

2.2

1.2

Total Factor Productivity (TFP)

1.7

0.7

2.6

-0.1



Labor

2.0

0.3

2.9

0.1



Land

1.5

0.8

2.4

-0.9



Land/worker

0.5

-0.4

0.6

1.0

Food crop output/population

2.5

0.2

4.0

-0.4

Rice output/population

2.5

1.0

3.7

-0.3

IV. Food per Capita

Source: Fuglie (2004)

98

Evolutionary Process of Food Consumption Food Consumption per capita. Food consumption, one of the most important aspects of agricultural economies, is usually treated as a separate subject in agricultural development practices. A simple thought might suggest that there would not be sufficient resources to produce food if there is unlimited consumption. In this regard, increasing production will be meaningless if food consumption cannot be controlled. However, this is not to say that a quota should be applied to limit food consumption because food consumption is not strategically less important than production in agricultural development. All people are food consumers regardless of their age, sex, or occupation. People interact with food through quantity, quality, and diversity. Changes in population will have one or more impact on the above dimensions of food. Therefore, population characteristics will become a strategic variable. The trend of food consumption per capita can be seen in Table 4.4. It is assumed that the level of food availability per capita as an indicator of food consumption per capita.

99

Table 4.6. Year

Rice

Human consumption of major foods in Indonesia105

Maiz Whea Cassav Sweet e t a Potatoes

Soy bean

Peanut Suga Fruit Vegetable Fish Meat s r s

Kg/year 196870

107.6 21.48 3.11 9

57.40

17.96

3.38

1.78

11.12 19.47 30.64

8.96 3.43

197180

118.18 21.79 4.49

63.71

15.56

4.31

2.21

12.20 26.40 17.19

8.80 3.39

198190

143.1 25.87 6.77 3

55.02

11.11

7.02

3.17

13.75 25.99 18.78

11.61 3.61

8.99

10.70

3.60

15.41 31.94 32.94

15.6 4.94 6

1986- 152.1 34.03 11.70 56.64 88 5 Growth rates (% p.a) 1970s

1.92

3.43 10.93 3.76

-2.63

2.75

6.18

3.86 1.74 -6.41

1.26 1.50

1980s

1.47

5.18 1.22

-4.52

-1.74

11.51

1.85

1.86 2.18 8.17

2.71 0.48

1990s

1.24

4.24 5.15

4.38

-3.02

3.60

-0.10

3.62 2.43 3.45

4.00 1.09

Rice composes of the largest amount of food consumption in Indonesia. Rice consumption increased from about 108 kg/capita in 1968-1970 to 152 kg/capita in 1991-1999. However, the rate of increase in rice consumption declined from 1.92 percent per year in the 1970s to 1.24 percent per year in the 1990s. Sweet potatoes and peanuts have experienced the negative growth of consumption. If we use calorie as a common denominator, then we can compare the role of each food commodity according to its calorie intake. The share of cereals in calorie intake was the largest and was increasing from 62.4 percent in 1968-1970 to 65.68 percent in 1991-1981-1990 and then a bit decreasing to 64.31 percent in 1991-1999. Between 1968-1999, the largest calorie intake was from rice ranging from 50.44 percent- 54.38 percent. The share of road crops was declining whereas fruits, vegetables, and pulses were increasing. More information is depicted in Table 4.5. The translation of the food situation in Indonesia into food availability to households in the period of 1968 – 1999 is demonstrated in the following situations (Central Bureau of Statistics, 1977, 1998-1999): i) ii) iii)

105

In 1968, the availability of rice per capita was 96.5 kg, and reached 165.9 kg in 1999. In 1969 meat, eggs and milk availability per capita were 2.7; 0.2 and 1.5 kg respectively; in 1999, the availability of meat, eggs, and milk reached 4.1; 2.7 and 5.1 kg respectively; Fish consumption availability in 1968 was 8.9 kg/capita and reached 17.7 kg/capita in 1999.

Badan Pusat Statistik (2000).

100

Table 4.7. Year 19681970 19711980 19811990 19911999 19681970 19711980 19811990 19911999

Calorie intake by major food groups106

Cereal Rice Root Crops Meat & Fish Fruit, Veg. & Pulses Other Total . . . Calorie/person/day . . 1303 1062 217 42 108 419 2089 1429 1176 220

38

127

460

2274

1710 1416 199

45

161

489

2604

1915 1502 200

68

225

570

2978

62.40 50.8 6 62.83 51.7 0 65.68 54.3 8 64.31 50.4 4

10.39

Share in total calorie intake (%) 2.01 5.15

20.04

9.68

1.65

5.60

20.24

7.63

1.71

6.20

18.78

6.73

2.27

7.56

19.14

The domestic food production increase, particularly rice, has increased the average availability of food energy from 2.035 Calorie/capita/day at the (early stage) of the First Long Term development Period to 3.194 Calorie/capita/day in 1999. According to nutritionists, the average energy need for the Indonesian is 2.150 Calorie. Therefore, in terms of availability of energy, the food situation in Indonesia has exceeded the required normal diet. For world comparison of food energy, see Box 4.1 below. However, healthy food is not only dependent on energy, but also requires a sufficient amount of protein, fat, and macronutrients. Food availability has increased food consumption per capita in Indonesia. According to SUSENAS food, consumption increase has taken place in both the rural and urban populations. Carbohydrate consumption in the urban population was larger than that of rural areas, and conversely for protein. Rice consumption in 1968 was 96.5 kg/capita/year and it increased to 122.8 kg/capita/year in 1999. In that period, the per capita consumption of rice increased at rate of 0.85 percent a year. Almost 100 percent of rice was used for food. Corn is another food for Indonesians. Even though the rate of increase of corn consumption per capita was larger (1.82 percent/year) than the rate of increase of rice consumption in the past 31 years, the level of corn consumption was far lower than that of rice. In 1968, corn consumption per capita was only 26.2 kg/year, and in 1999, the level of corn consumption was only about 41.0 kg/capita/year. However, corn consumption was more diversified than that of rice, namely, about 14 percent of the total corn supply were used for feed, industry, and other uses. As a major food crop cassava has a variety of uses. Aside from being a staple food, cassava is also an important commodity in the agro-processing industry. Out of total cassava availability in 1968, 66 percent was used for food, 21.8 percent for industry raw material, 2.0 percent for fed, and 13 percent for other purposes. The situation in 1992 remained the same as in 1968, namely, 64,9 percent cassava was used for food, 20.1 percent for industry, 2 percent for feed, and 13 percent for other purposes, even though the absolute level increased. On the other hand, cassava per capita consumption declined from 64.5 kg/capita/year in 1968 to 57.4 kg/capita/year in 1992. There was relatively strong competition between industrial demand for 106

Badan Pusat Statistik (2000)

101

cassava and food demand for cassava. Subsequently, the situation in 1999 was different from the situation both in 1968 and 1992. More than 76 percent of total cassava availability was used for food, only 8.9 percent for industry 1.9 percent for feed and the rest of it (13.2 percent) for other purposes. Cassava consumption increased from 57.4 kg/capita/year in 1992 to 60.8 kg/capita/year in 1999. Even though the consumption level is low, the rate of soybean consumption increases was quite high, namely 8.21 percent during the 1968-1999 period. In 1968, soybean consumption capita/year as food was 3.3 kg and increased to 11.7 kg/capita/year in 1999. Soybean production was mostly for food, namely, 94.2 percent (1999) and for other purposes only 5.7 percent (in 1999). This figure almost remained the same as in 1968. Table 4.8. Per Caput Food Supplies for Direct Human Consumption107 Areas Calories/day Developing Countries Sub-Saharan Africa Near East & North Africa East Asia South Asia Latin America & Caribbean

1961-63

1969-71

1979-81

1990-92

2010

1.960

2.130

2.320

2.520

2.770

2.100

2.140

2.080

2.040

2.280

2.220 1.750 2.030

2.380 2.050 2.060

2.840 2.360 2.070

2.960 2.670 2.290

3.010 3.030 2.520

2.360

2.510

2.720

2.740

3.090

3.190

3.280

3.350

3.390

3.330

3.400

3.230

3.380

Developed Countries 3.020 Calories/day Former 3.130 CPEs Others

2.980

3.120

3.220

3.410

3.400

World

2.300

2.440

2.580

2.720

2.900

Source: F.A.O., 1996. Sugar is one of the most important agricultural commodities in Indonesia. Even though sugar expenditure is only a small fraction of household food expenditure, sugar is a strategic as rice in consumer expectation toward its availability. Sugar per capita consumption as part of food was 10.7 kg/capita/year in 1968 and increased to 17.6 kg/capita/year in 1999. The rate of increase of sugar consumption was 2.08 percent annually (1968-1999). About 57.58 percent sugar availability in 1999 (3.47 million tons) was imported. Food Share and Demand for Food Varieties Food consumption, which is reflected by its share in the household budget, is also a good indicator of household welfare. In addition, food expenditure shows a typical pattern, which is known as Working’s Law 107

F.A.O., 1996. “Food agriculture and food security: development since the World Food Conference and Prospects”‘ Technical Background Document 1, World Food Summit, Table 1.

102

(Working, 1943)108. Working stated that “the proportion of total expenditure devoted to different purposes tend to be about the same for the families differ with respect to income, size, and proportion of income saved”. Working also stated that, “the proportion of total expenditure that is devoted to food tends to decrease exactly in arithmetic progression as total expenditure increases in geometric progression.” The second result is very important as a foundation for both estimations of demand parameters and welfare analysis. The latter is associated with Engle’s law; namely, the percentage of income spent on food is inversely related to the level of income. According to Engle, the same food share of two households, irrespective of differences in size, must have the same level of income (Deaton and Muellbauer, 1980)109. It is very important to observe household food consumption behavior directly. Different sizes of households may have different consumption patterns. Furthermore, food commodities are numerous and thus it is impossible for a researcher to record consumption of each individual food commodity consumed by every individual. Therefore, even though the meaning of consumption and expenditure are different, utilizing expenditure as an approximation of food consumption has both theoretical and practical advantages as shown by Working’s law. The average food expenditure per capita in urban areas was larger than in rural areas. The gap (nominal) between food expenditure in urban and rural areas was increasing, namely, Rp. 2700/month, Rp 5350/month, Rp. 10700/month, and Rp. 24,540/month for 1981, 1987, 1993, and 1999 respectively. However, the food share in urban household expenditure was lower than that in rural areas. Both in rural and urban areas, the trend of food share in the household expenditure was declining, namely, from 53 percent to 50 percent in urban areas and from 66 percent to 64 percent in rural areas within the period of 1981 to 1993. The share of cereals, as expected, also declined in both urban and rural areas. The share of cereals in 1993 in urban areas reached 18.1 percent and in rural areas reached 29 percent. The share of cereals for urban households in 1993 was almost equal to the share of prepared food. On the other hand, the share of prepared food in rural areas was also increasing (Table 4.6). The declining share of cereals in household expenditure has far reaching implications since the largest portion of cereals is price. As mentioned earlier, diversification in food consumption is also important aspect in understanding consumer behavior toward food. The more diversity of food consumption, the less dependency of the consumer on certain kinds of food will be. An entropy index (EI) is an alternative measure of food consumption diversity. The value of EI for rural areas in 1981, 1987, and 1993 was 1.98, 2.11, and 2.33. The EI for urban household food consumption were 2.13, 2.23, and 2.42 in 1981, 1987, and 1993, respectively. The above trend of EI shows that food consumption tends to be more diversified, and urban household consumption was more diversified than that of rural household consumption. Increasing income was the major explanatory variables for increasing demand for food varieties (Pakpahan and Suhartini, 1990). Table 4.9.

Average per capita expenditures in urban and rural areas 1981-1999

Urban/Rural Urban

Units Rp/month

Food

Rp/month

1981 16,81 5 8,898

Non Food

Rp/month

7,917

Food Share Cereals Share Prepared Food Share Rural

% % % Rp/month

52,9 26,2 6,1 9,398

1987 33,41 3 17,49 4 15,91 9 52,4 22,3 11,4 18,07 3

1993 64,06 3 31,90 8 32,15 5 49,8 18,1 18,2 33,38 5

1999 180,500 101,394 79,106 56.2 21.1 20.2 109,523

108

Working, H. 1943. “Statistical Laws of Family Expenditure”, Journal America Statistic. Vol. 38(221), March 1943: 43-45.

109

See A. Deaton and J. Muellbauer. 1986. Economics and Consumer Behavior. Cambridge University Press, Cambridge.

103 Food

Rp/month

6,210

Non Food

Rp/month

3,188

12,41 7 5,926

Food Share Cereals Share Prepared Food Share

% % %

66,1 37,1 4,4

67,2 32,4 8,4

21,22 8 12,15 7 63,6 29,0 10,0

76,854 32,669 70.2 31.5 10.6

Source: Central Bureau of Statistics (1993). Furthermore, economic crisis, which hit Indonesia since 1997, has caused the decreasing in most of community expenditure. Although in total, average per capita expenditure increased to Rp 180 thousand (urban area) and Rp 110 thousand (rural area) in 1999, however, percentage of food expenditure level also increased both for urban and rural areas to 56.2 percent and 70.2 percent, respectively. The increase in food share was then followed by the decrease of entropy index for both urban and rural area to 2.35 and 2.26 respectively. Such figures suggest that the welfare of the Indonesian households have declined due to economic crisis. In fact, according to food share indicator, household welfare in both urban and rural areas more or less remained constant during 1981-1993 and then declined quite significant in 1999. Evolutionary Process in Resource Use in Indonesian Agriculture Land and Water Resources. The total land area of Indonesia is 1.9 million sq. km. Indonesian statistics disaggregate this area into six regions, namely, Sumatra, Java, Nusa Tenggara, Kalimantan, Sulawesi, and Maluku and Papua. Sumatra, Kalimantan, Maluku, and Papua comprise the largest part of Indonesia, namely 24.6 percent, 28.1 percent, and 25.8 percent, respectively. Java and NusaTenggara only comprise 6.8 percent and 4.6 percent, respectively. In addition to land area, Indonesia is also rich in water resources. In fact, as an archipelago country, which is composed of more than 13 thousand islands, Indonesia is surrounded by ocean water. After Economic Exclusive Zone (EEZ) ratification, the total water area of Indonesia expanded significantly, namely, enlarged by 7.9 million sq. km110. Total land and water resources are fixed in nature. In the case of agricultural land, economic surplus generated by land resources is due to differences in soil fertility or in land capability. In addition, economic surplus is also generated by differences in location of a parcel of land from a market. Investment in land resources for agricultural purposes means investment to increase both land capability and accessibility to market. Environment sustainability has been internalized in the land capability concept. As a tropical region, which spread across the equator, more than 50 percent of areas in Indonesia endow humid or wet climates with rainfall ranges from 1,500 to 3,000 mm/year. In fact, 90 percent of Sumatra, Java, Kalimantan, Sulawesi, and Maluku and Papua have rainfall ranging from 1,500 to 5,000 mm/year. On the other hand, about 41 percent of the islands of Nusa Tenggara have areas with rainfall less than 1,500 mm/year, which is dry, and 49 percent of the areas have rainfall ranging from 1,500 to 3,000 mm/year, which is quite humid. About 90 watersheds catch the rainfall, which yields approximately 2,563 billion. qu. m111. Irrigation, as an integral part of both water resources and agricultural development, is one of the most important investments in land resource development in Indonesia. Irrigation investment in Indonesia is almost directly understood as investment toward increasing capability to produce rice because the kind of irrigation designed was only suitable for irrigating rice. In 1968, the total paddy land in Indonesia was 3.3 million ha with the following composition: technical irrigation 43 percent, semi technical irrigation 37 percent, and not technical irrigation 19 percent. 110

See Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta.

111

See Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta

104

Ten years afterwards, namely, 1978 total paddy field in Indonesia reached 6.7 million ha with its composition such as follows: technical irrigation about 22 percent, semi technical irrigation 14 percent, and non technical irrigation still about 22 percent. Furthermore, paddy land in 1988 reached 8.1 million ha or 2.4 times larger than in 1968. The composition of paddy land, according to irrigation technology classification, was as follows: 21 percent of technical irrigation, 11 percent semi-technical irrigation, and 21 percent non-technical irrigation. The remaining percentages were assumed as rain-fed and others112. From the figures, it can be seen that within the first 10 year period (1968-1978) the average rate of growth of irrigated land was approximately 339 thousand ha per year and seemed to be giving more emphasis to non-technical irrigation. The average rate of increase of irrigated land in the second year period was much lower, namely, only about 138 thousand ha and seemed to be giving more emphasis on technical irrigation. Paddy fields in 1992 reached 8.4 million ha comprised of 23 percent technical irrigation, 11 percent semitechnical irrigation, and 20 percent non-technical irrigation. This evidence shows that in the last four-year period (1988-1992) the average annual increase was 73 thousand ha. This evidence suggests that the absolute magnitude of irrigation areas has increased more than twice within the period 1968-1992. However, the rate of increase has been declining. This implies that the availability of land resources, which are suitable for irrigation development, becomes more limited. This implication is also indicated by the accelerated rate of increase in the unit cost of irrigation development. For illustration, the unit cost (at 1975/76 constant price) for rehabilitation, new construction, swamp/tidal, and river and flood control in the Repelita I (1969-1973) were approximately Rp 74 thousand, Rp 200 thousand, Rp 280 thousand, and Rp 34 thousand per hectare, respectively. In Repelita IV, those unit costs became Rp 1,183 thousand, Rp 1,594 thousand, Rp 316 thousand, and Rp 842 thousand per hectare, respectively. These figures show that building irrigation becomes more and more expensive. Moreover, total area of paddy fields tent to decline to 8.1 million ha in 1999. This situation was mainly caused by the conversion of paddy fields in sub-urban areas to other land use form. Nevertheless, total area of irrigated paddy fields still increased. In 1999, total area of irrigated paddy field was 62.1 percent comprised of 27 percent technically irrigated, 13.2 percent semi technically irrigated, 21.3 percent non technically irrigated and the rest of it 37.9 percent non irrigated. Most irrigated areas were located in Java. In 1968, the total irrigated land in Java was 2.4 million ha or about 75 percent of total irrigated areas at that time. The spatial distribution of irrigated land changed to 41 percent in Java and the rest in the outer islands, after a 24 years period. However, the area of Java is only about 7 percent (132,186 sq. km) of total land area, which implies that the ratio of irrigated land to total land area was quite high, namely, 0.26, so every one hectare of land there will be 0.26 hectare of irrigated land in 1990. On the contrary, the ratio of irrigated land to total land area in the outer islands in 1990 was 0.03, which roughly indicated that for every one hectare of land in the outer islands, there would be about 0.03 hectare irrigated land. Of course, the above figures give only a rough approximation. However, such figures might provide some insights and probable explanation of current and future challenges, constraints and opportunities associated with surface irrigated development in particular and land use policies in general. In addition to surface irrigation, groundwater development has also occurred. Potential and identified groundwater resources conducted by Directorate General for Water Resource Development up to 1989 showed that groundwater resource potential in Indonesia is about 48,550 million qu. M. Out of those potentials have been identified 3,360 million qu. M. The irrigable areas that have been identified are 168 thousand ha with the following spatial distribution: Java 135 thousand ha, Bali 5 thousand ha, West Nusa Tenggara 5 thousand ha, and East Nusa Tenggara 5 thousand ha. Sulawesi was he second ranked, namely, 14.5 thousand ha, and Maluku for 3 thousand ha. In Java, the potential areas for groundwater irrigation is concentrated in East Java, namely, 108 thousand ha or about 80 percent. In addition, there is also farmers’ farm lift irrigation, which tap shallow groundwater and surface water. The main purpose of development of groundwater pump irrigation is also in line with development of surface water irrigation, namely, to support 112

See Badan Pusat Statistik. 2003. Statistik Indonesia 2002. Jakarta

105

the rice self-sufficiency goal. The concentration on investment in irrigation development probably has strong implication for the emerging problems in uplands and lowlands, as well as a part of unidirectional externalities from degradation of upland agriculture, such as erosion. Furthermore, the concentration of agricultural development in Java as partly reflected by the larger ratio of irrigated land in Java relative to the outer islands, has been facing stronger and stronger competition from housing, industry, and other alternative uses of land resources as a consequence of economic development and population growth. Therefore, in terms of the evolution of land resource uses, Indonesia is facing a paradox situation, namely, the present agricultural capacities, particularly food, are available in Java, where this area carries about 60 percent of Indonesian population. This is called a paradox because every in the world, agriculture calls for large areas of land to be able to capture sufficient solar energy for maintaining the growth and development of plant and animal. The issue then becomes more than whether land and water are allocated through the market process, but how we ascertain that we will be able to have sufficient food in the future. Table 4.7 shows general picture of a situation of agricultural development in Indonesia with particularly attention on its relation with water resources potentials in Indonesia. It is important because water is an essential part of living organism such as plants and animals then increasing water scarcity will be a serious factor in agricultural sustainable development. Information depicted in Table 4.8 and Table 4.9 suggest that future agricultural development will face a serious challenge due to increasing rate of water scarcity, particularly in Java that is now has been in the deficit situation.

106

Table 4.10. Land size, agricultural land, water resources, and population of Indonesia (2002) National Land Size (Ha) 190,457,000 Population 212,092,000 Average rainfall (1961-90) (mm/year)

Agricultural land and permanent agricultural land (ha) 33,546,000 Rural Population 125,266,000 Water resource availability Km3/year)

Agricultural Land (Ha)

Permanent agricultural land (Ha)

20,500,000 Urban population 86,826,000 Groundwater (km3/year)

13,046,000 ---Surface water (km3/year)

2,702 --

2,838.00 --

2,793.00 --

410.00 --

-Water used by agriculture (km3/year) 75.60 Water used by industry (km3/year) 0.56

-Water used by agriculture (%)

455.00 Water resources per capita actual (renewable) (m3/capita/year) 13,381 Domestic water use (km3/year)

-Domestic water used (%) 8

---

91 Water used by industry (%) 1

6.62 Total water use (km3/year)

Surface and groundwater: overlap (km3/year

82.77

Source: F.A.O. on line data. Table 4.11. Water resources demand and availability in dry season by islands, 2003 Islands

Demand Share of Total national demand (%) 17.5

Balance

Sumatra Java-Bali

38.4

57.8

25.3

5.2

DEFICIT

Kalimantan

2.9

4.3

167.0

34.6

SURPLUS

Nusa Tenggara Sulawesi

4.3

6.5

4.2

0.9

DEFICIT

9.0

13.6

14.4

3.0

SURPLUS

Maluku

0.1

0.2

12.4

2.6

SURPLUS

Papua

0.1

0.1

163.6

33.9

SURPLUS

Source: Bappenas, 2004. Unpublished paper.

Quantity (Billion m3) 96.2

Availability Share of Total national availability (%) 19.9

Quantity (Billion m3) 11.6

SURPLUS

107

Table 4.12. Projection of water demand and supply in Indonesia, 2020 Island

Sumatra

Demand Quantity Share of (Billion National m3) Demand (%) 13.3 17.6

Java-Bali

44.1

Kalimantan

Supply Quantity Share of (Billion m3) National Supply (%)

Balance

96.2

19.9

SURPLUS

58.4

25.3

5.2

3.5

4.6

167.0

34.6

SURPLUS

Nusa Tenggara

4.7

6.2

4.2

0.9

DEFICIT

Sulawesi

9.7

12.8

14.4

3.0

SURPLUS

Maluku

0.1

0.2

12.4

2.6

SURPLUS

Papua

0.2

0.2

163.6

33.9

SURPLUS

DEFICIT

Source: Bappenas, unpublished paper. The immediate observable evidence that shows how land uses competition becomes a major issue in Indonesia, particularly in Java, is the increasing rate of irrigated land conversion. The rate of paddy land conversion in Java reached about 23 thousand ha/year. The highest rate of paddy land conversion was in East Java, namely about 8.8 thousand ha/year (1987-1991), with a total cumulative area 44 thousand ha. In West Java, within the period of 1987-1991, the annual rate of paddy land conversion reached 7.4 thousand ha a year, with a total cumulative area of 37 thousand ha. Within the period of 1981-1986, the annual paddy land conversion in Central Java was 6.7 thousand ha, with a total cumulative area of 40 thousand ha. A survey conducted by the Center for Agro-Socio-economic Research (1994) shows that paddy land conversion in East Java (period 1982-1992) occurred from technical irrigation (73 percent). In West Java, a sample survey shows that even though most paddy land conversion took place on rain fed land (63 percent), conversion of technical irrigation was quite high also, namely about 23 percent. Forty-six percent-converted paddy land in West Java was used for housing (9 percent), industry (8 percent), infrastructure (8 percent), and other uses (2 percent). In West Java, paddy land conversion to non-paddy agriculture, such as brackish water fisheries and dry-land agriculture was also quite high, namely, 23 percent, where the earlier and the latter uses comprised 27 percent and 7 percent, respectively. The pattern of paddy land conversion in Central Java and Yogyakarta is similar to the conversion pattern in West Java. In Central Java and Yogyakarta, about 41 percent and 67 percent of converted land has been used for housing. In East java, more paddy land was converted to non-rice based agriculture, namely, 30 percent of paddy land became dry-land farming, and 27 percent of paddy land became brackish water fisheries. In East Java, housing only used about 20 percent of the converted paddy land. Overall, converted land in Java, however, has been used for non-agriculture purposes, namely, about 56 percent. The total annual rate of paddy land conversion in Java, as much as 23 thousand ha/year, should be considered as a high rate of conversion since Java is a granary for food, particularly rice, for Indonesia. On the other hand, as mentioned earlier, Java is also a center of industrialization in Indonesia. Manufacturing and other similar industries are not compatible with agriculture in terms of land use. This land use conflict will have far reaching implications not only to food and agricultural economies, but also to overall human affairs in the region.

108

Evolutionary of Public Spending in Agricultural Development The existence of public spending in agricultural development in Indonesia is obvious. The major questions are in what areas, to what extent, and to what size government spending will spur agricultural development effectively, and at the same time to what extent that spending encourages private sector participation in the agricultural sector in a broader term. Therefore, the real question is not government versus private spending in development, but how to use private and public spending according to their own roles in agricultural development. At the time of Repelita I, the total development budget was Rp 1,232.8 billion. About 22 percent of this budget was spent for agriculture and irrigation. The absolute magnitude of development budget for agriculture and irrigation have been increasing over time since Repelita I, as follows: Rp 1,745.3 billion in Repelita II, Rp 4,235.2 billion in Repelita III, Rp 7,277.6 billion in Repelita IV, finally reached Rp 13,392.4 billion in Repelita V. In relative terms, however, the development budget spent for agriculture continuously declined, namely, 19.12 percent in Repelita II, 12,41 percent in Repelita III, 14.30 percent in Repelita IV, and 13.27 percent in Repelita V. Furthermore, the total planned allocated budget for agriculture, forestry, and irrigation in the Repelita VI are Rp 12,420.8 billion and it was only about 7.06 percent out of the total planned development budget. Even though in absolute term’s government spending on agricultural development tended to increase, the trend shows that the development budget for agriculture development tended to decline in relative terms. According to the World Bank (1992), the average public expenditure in forty developing countries between 1984-1988 was 7.5 percent of the total budgetary expenditure. In addition, the World Bank also showed that an expenditure ratio, namely, the ratio of (agricultural expenditures/total expenditures) to (agricultural GDP/total GDP) for Indonesia was 0.4, compared with 0.3 for countries sampled as a whole according to the World Bank. However, for the case of Indonesia, in a time perspective, like the trend of proportion of agricultural development budget, the trend of expenditure ratio also tended to decline. In 1982/83, the expenditure ratio was 0.46, and it became 0.32 in 1990/91. This figure also showed that public expenditure for agricultural development has been prioritized according to commodity program; on the other hand, the commodities have been abstracted in the budget. It was indicated by budget allocation categorization: Integrated Small Farming Development Program Rp 161.6 billion, Farming Business Development Program Rp 52.3 billion, Food and Nutrition Diversification Program Rp 18.4 billion, and Agricultural Resources and Infrastructure Development Program Rp 271.8 billion. As programmed in the previous Repelitas, other related budgets with agricultural development were allocated within other related sectors. It should be noted that the above excluded any foreign assistance budgets. Agricultural research and development is included in the science, technology, and research sector. The programming process in this area of activities is more complex because several agencies are involved. Research manpower and facilities are under the jurisdiction of the Ministry of Agriculture, i.e., Agricultural Agency for Research and Development. The State Minister for Research, Science, and Technology coordinates the research process in collaboration with the National Research Council. In BAPPENAS, there is the Bureau of Ocean, Space, Environment, Science, and Technology (now is called Directorate of Culture and Science and Technology) and the Bureau of Agriculture, Food, and Forestry (now is named Directorate of Food and Agriculture). The former is responsible for the budget and the latter is interested in integrating agricultural research and development into the process of agricultural development. This organizational landscape makes the research process complicated. The above evidence provides us at least the following lessons: (1) in the past decade, the budget allocated to the agricultural sector, including irrigation, had been quite high, namely, above the average expenditure ratio of other countries. However, even though the magnitude of agricultural development expenditures has been increasing, the relative values have been declining; (2) agricultural development expenditures have relied heavily on foreign assistance, especially for irrigation, estate crops, and research and development; (3) agricultural production subsidies have declined and the pesticides subsidy ahs been

109

abolished; (4) the budget program structure has been renewed as well as the development activities financed by public spending; (5) new budget programs seem to put more emphasis on agricultural resource and infrastructure development and less on commodities; and (6) agricultural research and development, which will become a critical factor for sustaining future agricultural growth and productivity faces a very complicated administrative and managerial process. Table 4.13. Government development expenditures for agriculture since 1970 Year

Total development expenditures

Total development expend. for agric. and nat. resources

Agriculture and forestry

Irrigation

Fertiliz-er subsidy

Environment

Ag expend. (% of total Gov. expend.)

Ag expend. (% of Ag GDP)

Ag GDP (% of total GDP)

1 970 1 971 1 972 1 973 1 974 1 975 1 976 1 977 1 978 1 979 1 980 1 981 1 982 1 983 1 984 1 985 1 986 1 987 1 988 1 989 1 990 1 991 1 992 1 993 1 994 1 995 1 996 1 997 1 998 1 999

3,485 4,886 4,890 5,516 5,699 10,933 13,765 17,863 17,133 15,195 18,217 24,311 26,889 24,960 30,675 29,523 31,305 20,951 21,936 25,781 27,025 29,125 34,070 35,851 36,625 40,549 34,991 38,828 22,859 35,864 37,275

955 1,164 1,246 1,240 1,671 5,986 3,865 4,027 3,460 3,166 3,967 6,199 6,569 5,898 5,443 8,575 6,049 4,282 7,159 4,764 6,400 5,310 5,883 5,497 5,453 5,211 4,627 4,765 3,195 8,014 4,290

486 849 777 635 952 3,089 2,013 2,454 2,090 1,997 1,952 3,546 3,395 2,835 2,581 4,343 2,574 2,072 4,062 2,761 3,944 2,906 3,171 2,909 2,846 1,308 1,342 1,398 902 3,955 2,196

400 300 395 347 286 344 518 640 928 679 902 880 1,018 980 846 1,379 1,402 601 884 1,109 987 1,388 1,629 1,715 1,629 2,229 2,483 2,502 1,559 2,523 1,650

69 14 73 259 433 2,554 1,335 933 441 491 567 1,165 1,439 1,425 1,418 2,170 1,373 1,174 1,750 421 543 476 515 274 385 1,077 174 201 326 1,123 0

545 608 717 658 598 682 700 435 463 473 926 540 569 599 594 597 629 664 409 412 444

27.4 23.8 25.5 22.5 29.3 54.8 28.1 22.5 20.2 20.8 21.8 25.5 24.4 23.6 17.7 29.0 19.3 20.4 32.6 18.5 23.7 18.2 17.3 15.3 14.9 12.9 13.2 12.3 14.0 22.3 11.5

2.1 2.5 2.7 2.5 3.8 13.2 8.2 7.8 6.5 5.9 7.7 11.1 10.8 9.3 8.6 12.9 8.5 5.9 9.0 5.7 7.8 6.6 6.8 6.3 5.7 5.1 4.3 4.4 3.0 7.1 4.1

47.2 44.8 40.2 40.1 32.7 31.7 31.1 31.1 30.5 28.1 24.8 25.3 26.3 26.4 22.7 23.1 24.1 23.3 24.1 23.6 21.5 19.7 19.5 18.5 17.3 17.1 16.7 16.1 18.1 19.4 19.4

110 2 000

Sources: Expenditures for 1970-1992 from August 15 Presidential Address to the Republic of Indonesia (1974, 1979, 1984, 1989, 1995); Expenditures for 1993-2000 from Statistical Year Book of Indonesia; GDP deflator and PPP exchange rate from World Bank and IMF.

Interpretative Summary Agriculture in Indonesia has been understood in a narrow sense. This situation confirms with the act of thought of past agricultural development planning. Commodity has been used as a unit of development. Of course, agricultural realties are much more complex than the aggregation of commodities. A sectoral way of thinking seems to cause sectoral actions, which assumes interdependencies among agents that could be human, animal, plant, or even water and other a biotic things. However, interacting processes among element in the agricultural systems in the processes of adaptation and learning had been given less attention. In irrigated rice production, for example, the interaction among crops within the irrigated areas might be largely dependent on water supply. The results show that agricultural sustainability is under threat. Declining rate of productivity growth of TFP and declining rate of productivity growth of labor, land, and capital implies that Indonesian agriculture facing very difficult challenges in the future. Growing resources scarcity and declining support of governments and changes in socio-economic-political environments, especially since Indonesia’s crisis provide very important lessons. In the agricultural production side, Indonesia must learn on how to solve declining rate of production and productivity growth. In addition, on the consumption side, increasing food budget share of both rural and urban households suggest that household’s welfare have declined. Within the context of declining capacity of government budget power and given more unfriendly world environment, Indonesia should be able to find a way how to sustain agriculture in particular and all aspects of development in general. The performance of Indonesian agriculture outlined in this chapter shows that our action of thoughts that presented in agricultural development planning such as described in Chapter III has not given sustainable agriculture performance. This suggests that the way we think, feel, and believe should be renewed. In production side, one of the most important issues is how to increase our capability in innovation that bring our farmers can perform the best adaptation in their farming practices. The rate of decline of agricultural

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productivity should be reversed. In consumption side, we have to revolutionize changing our consumption pattern from depending on a few crops and livestock to broader spectrum of commodities that are available locally. Food technology should be developed particularly the development of flours based food processing technology. By developing flours based food technology we will be able to mix varieties of food sources that are available locally. It will directly increase our stock of food because resources are already available. Freedom of farmers will be a central issue in the next generation of agriculture. Increasing farmers poor population due to lowering income from agriculture will reduce capacity of farmers to increase food production. The issue of food security should be shifted from consumers’ protection to farmers’ income promotion in order to make farmers more energy to produce food. Poor consumers should be taken care by increasing food availability for them without declining farmers’ income. Food assistance and food trade should be substituted by increasing varieties of domestic food. Government and international donors should change the way their approach and solve agriculture and food problems by including farmers first in the decision making processes.

112 /var/www/apps/pdfcoke/pdfcoke/tmp/scratch2/10377128.doc

CHAPTER FIVE

THE CASE STUDY: GLOBAL PICTURE OF AGRICULTURE: REINFORCING PERSPECTIVES You I dare ask with confidence whether it is Your Imperial will: that the Havelaars be spattered with the mud of Slymerings and Droogstoppels? and that yonder Your more than thirty million subjects be MALTREATED AND EXPLOITED IN YOUR NAME?

Multatuli In the last two previous chapters have been elaborated the evolution of act of thought (planning) and the evolution of some agricultural performance indicators. It is believed that our understanding will be improved if we are also understood what have been happening in the other parts of the world. Therefore, major objective of this chapter is to discuss the global picture of agriculture that is hoped will be useful for better understanding on what has been happening in a global context. We hope that this understanding will improve our capabilities to build better future of agriculture. Agriculture has evolved for more than 7000 years. The world is inherited by varieties of amazing ancient agriculture such as found, in the Mayan’s, Aztec’s, Mesopotamia’s, and Asian’s agricultural systems. Agriculture is a mother of civilizations. No agriculture means any civilization. Therefore, if we believe that no agriculture means no civilization, then declining of agriculture in one region of the globe will affect the civilization of the whole globe. It implies that to overcome the problems which is associated with agriculture in one region should be viewed as a global problem. One of the clearest pictures of the global problem, which is associated with agriculture, is famine and poverty113. Famine is by itself reflecting the lack of capacity of people to feed themselves whether it is caused by lack of purchasing power (income) or lack of food availability in the community, or both is another matter. At the beginning of the 21st century, after evolving for more than 7000 years, the world shows that we still face 1.25 billion people live on less than $1 per day; 70% of them are rural, and most of these depend on farming, forestry or fishing for the source incomes, 3 billion (half of the world’s population) live on less than $2 per day, 700 million people suffer under-nutrition or hunger (World Bank, 2003)114. Most of the poor are living in the developing countries in Asia, Africa, and Latin America. In Indonesia, the number of population below the poverty line in 2002 were 38.4 million people (BPS, 2003), or about 5 % out of 700 million people who suffered under nutrition or hunger in a global figure115. The persistence of poverty, malnutrition or famine of high magnitude numbers such as indicated above suggest that, even though agriculture has been evolving for more than 7000 years, human species are still necessary to build the capability of how to solve the very basic problems of human society. 113

See among others, A. Sen, 1981. Poverty and Famines. Clarendon Press, Oxford. For the case of China where there were about 27 million of people dead due to famine see R.J. Rummel UNDERSTANDING CONFLICT AND WAR: VOL. 1: THE DYNAMIC PSYCHOLOGICAL FIELD, http://www.mega.nu:8080/ampp/rummel/dpf.chap13.htm. Sen’s “Food and Freedom” paper explained why such huge famine in China was not early detected. One of Sen’s findings is that it was due to lack of democracy and has no opposition of the government. 114

115

World Bank. “World Bank Development Report 2003”. Washington, D.C. See, among others, S. Chen and M. Ravallion, “How Have the World’s Poorest Fared since the Early 1980s?”, The World Bank

113

Because of its characters, one of them is interdependency among nations that will be increasing at an accelerating rate over time; poverty or famine in one country will affect the rest of the global life. “THE POOR ARE COMING TO YOUR TOWN,” wrote James Van Hise (1992), http://www.fragmentsweb.org/, has been proved by histories. There are many institutions working in the areas of international development, poverty alleviation, agricultural development, and other related issues. Governments of developed countries have also been paying attention on agricultural development in developing countries. There are some assistance in variety of forms including loans and grants in both monetary and non-monetary forms. The perceptions of impact of such assistance are mixed. However, the fact is that there is a widening gap between developed and developing countries wealth in one hand, and there are some dissatisfactions of people in developing countries to see what have been evolving in this region. In the area of food and agriculture, Food and Agriculture Organization (FAO) is one of the most important organizations that have been erected by the United Nations Organization. FAO has provided very intensive information regarding the situation of agriculture in a global scale. This chapter started with the utilization of information produced by FAO, particularly of “Compendium of Agricultural Environmental Indicators (1989-91 to 2000).” Pressure Indicators FAO categorized five variables indicators that reflecting the pressure on agriculture in the globe. They are: (1) Net export of agricultural and food products at base year price, (2) Per caput net export of agricultural and food products, (3) Agricultural land per agricultural worker, (4) Number of live animals per hectare of permanent pastures, (5) Number of live animal per hectare of agricultural land. Net export. In the 1989-1991 period, the world reached the net export of agricultural and food products by negative US$ 6.9 billions. At this period, developing countries’ net export agricultural and food products was still in a positive sign, namely US$ 28 millions. In this period, trade deficit was experienced by the developed countries with the net exports of agricultural and food products was negative US$ 9.0 billions. (Table 5.1).

114

Table 5.1. Comparisons of pressure indicators of developed, developing and world agriculture, 1989-1991 Items Pressure Indicators:

Unit

World

Developed

1. Net export of MLN US$ -6876 -6905 agricultural and food products 2. Per caput net US$/No -7.44 -9.42 export of agricultural and food products 3. Agricultural Ha per 4.0 29.9 land per worker agricultural worker 4. Number of LU/Ha 0.48 0.44 live animals per hectare of permanent pastures 5. Number of LU/Ha 0.31 0.29 live animal per hectare of agricultural land Source: http://www.fao.org/es/ess/os/envi_indi/

Developing

28 0.01

2.6

0.46

0.33

Negative sign of net export value showed that the world’s import was larger than the world’s export agricultural and food products in the global markets. Within this period, the developing countries, which were mostly producing such kinds of products, still had positive net export. However, the world changed so fast. In the period of 1994-1996, the developing countries received a comparable negative value of net export of agriculture and food products. In this period, the net export of the developing and developed countries was –US$ 8.6 billions and –US$ 9.0 billions, respectively. The total world’s net export was –US$ 17.6 billion. (Table 5.2). The world agricultural and food products trade in the next period, i.e., 1998-2000, put more pressure on the developing countries such as indicated by increasing negative net export values of such products from –US 8.59 billions to –US$ 8.64 billions. On the other hand, the net exports values of the developed countries increased by almost one billion dollars. (Table 5.3). Therefore, within approximately the last 10 years at the end of the 20th century, we may imply that the developing countries’ agriculture faced more pressures than that of the agriculture in the developed world. Similar story was also indicated by per caput next export indicator.

115

Table 5.2. Comparisons of pressure indicators of developed, developing and world agriculture, 1994-1996 Items Pressure Indicators:

Unit

World

Developed

1. Net export of MLN US$ -17623 -9031 agricultural and food products at base year price 2. Per caput net US$/No -3.34 -9.42 export of agricultural and food products 3. Agricultural Ha per 3.9 34.2 land per worker agricultural worker 4. Number of LU/Ha 0.47 0.44 live animals per hectare of permanent pastures 5. Number of LU/Ha 0.33 0.29 live animal per hectare of agricultural land Source: http://www.fao.org/es/ess/os/envi_indi/

Developing

-8592

-1.99

2.6

0.49

0.36

116

Table 5.3. Comparisons of pressure indicators of developed, developing and world agriculture, 1998-2000 Items Pressure Indicators:

Unit

World

Developed

Net export of MLN US$ -16724 -8081 agricultural and food products Per caput net US$/No -3.34 -8.25 export of agricultural and food products Agricultural Ha per 3.9 37.6 land per worker agricultural worker Number of live LU/Ha 0.47 0.41 animals per hectare of permanent pastures Number of live LU/Ha 0.33 0.27 animal per hectare of agricultural land Source: http://www.fao.org/es/ess/os/envi_indi/

Developing

-8643 -1.88

2.5

0.51

0.37

One of the most important information from the above tables is that world market is not a solution  for developing countries to gain wealth. Negative sign of net export of both developing and developed  countries suggest that there must be over supply of agricultural primary products in general and this  surplus has become a significant pressure for having negative income of agricultural communities in a  global context. However, the impact of the above situation is different for farmers in developed countries  because government in these countries has no capacity to subsidize their farmers. In developed countries,  farmers received significant amount of income transfer received by farmers. Issue   of   developed  countries  subsidizing  farmers’  communities  in  the  developed  countries,  of  course, is a central issue for the global economy, especially for developing countries’ farmers because at  the  end  farmers  in developing countries must face the reality of  continuing declining of  agricultural  primary products. Declining price for primary products will be followed by farmer’s income. Prebisch and  Singer  have  put  prices  of   primary products  as  major  world’s  concern since  more  than  50 years   ago  because of they have seen its declining trend. Table 5.4 provide insights of to what extent 

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Table 5.4. Trend of agricultural primary products in world market, 1960­2000 Agricultural Prices

Commodity

Unit

1 960

1 965

1 970

1 975

1 980

1 985

1 990

1 995

1 998

1 999

2 000

Agriculture (aggregate)

1990=100

208

193

182

179

192

146

100

110

102

90

87

Beverages

1990=100

234

213

227

180

252

239

100

127

132

104

88

Food Raw materials Commodity (1990$)

1990=100 1990=100 Unit

184 220

197 174

186 145

223 121

193 145

126 103

100 100

98 114

99 82

85 86

84 91

Cotton Rubber Tobacco

Cents/kg Cents/kg $/mt

Cocoa Coffee (Robusta) Coffee (Arabica)

Cents/kg Cents/kg Cents/kg Cents/kg

314 377 8 390 285 270 446 497

290 234 5 858 169 323 464 463

252 162 4 287 269 369 457 333

257 124 4 075 276 298 319 253

284 198 3 161 362 450 481 230

192 111 3 807 329 386 471 255

182 86 3 392 127 118 197 206

179 133 2 223 120 233 280 125

136 68 3 143 158 172 281 193

113 61 2 944 110 144 222 178

129 68 2 960 90 90 190 186

1 507 1102

1 610 1 262 1 250 550 22

1 583 1 036 1141

871

936

860

336

563

620

713

446

961

810

730

290

528

632

422

307

1 246 755 100

830

834

447

526

590

414

335

570 88

287 13

271 28

270 25

287 19

240 13

201 18

Prices

in

Tea Coconut oil

$/mt

Palm Oil

$/mt

Soybean Oil

$/mt

Rice Sugar

$/mt Cents/kg

1 082 519 33

503 33

Source: The World Bank, 2002.  It is obvious from Table 5.4 that all agricultural commodities’ prices in the world market have  continuously declined. The cost of production, on the other hand has not been declining. Therefore, it is  not surprising if net world’s export values have been negative such as showed in Table 5.1­Table 5.3. What  is interesting is that if we observed what have been done by developed countries and developing countries.  Table 5.5 below shows how developed countries support their farmers.

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Table 5.5. Government supports for farmers in developed countries

Country OECD Members Australia Canada Czech Republic European Union Hungary Iceland Japan Korea Mexico New Zealand Norway Poland Slovakia Switzerland Turkey United States All OECDs

Average (million US$) 1986-88 1191 5714 4601 97062 3015 194 64441 12545 1395 481 2612 4164 4991 3541 41890

Average (million US$) 1999-01 947 3930 655 99343 881 136 51980 18170 5695 67 2274 1676 292 4480 6522 51256

247835

248303

% Share of Total 1986-88 0.48 2.31 1.86 39.16 1.22 0.08 26.00 5.06 0.56 0.19 1.05 1.68 2.01 1.43 16.90 100.00

119

Source: OECD, PSE/CSE database 2004. Note: Total subsidy of OECD countries in 2001 was US $ 311 billion, which was equivalent to 1.3 % of GDP. See Table 3.1. Trends in subsidy levels in OECD countries in OECD, 2002. Working together towards sustainable development. OECD, France.

Table 5.5 shows that government supports of OECD countries to their farmers have not changed,  within   period   of   1986­88   and   1999­2001.   In   fact,   government   supports   have   slightly   increased   from  average US$ 247.8 billion in 1986­88 to US$ 248.3 billion in 1999­2001.   Among OECDs countries,  European Union (EU), Japan, and USA are countries that spent largest amount of agricultural supports,  namely 39 %, 26 %, and 16.9 % out of total value of agricultural supports of OECD countries. Except  Japan, EU and USA are countries that are very strong in the world’s agriculture. This situation is real  pressure for agriculture in developing countries and all developing countries are facing the same fate. Population and Land Pressure116. One of the most important factors of agricultural production is land resource, and land pressure cannot be separated from the population pressure. Economic transformation make the trend of pressure on the land by growing population is declining. Therefore, the most significant influence on the demand for agricultural land is reflected in the general structure of the economy. The successful economic transformation from agriculture to more industrialized economy will absorb more labor to work in non-agricultural sector. The pressure on the land will decline as a more and more labor move to non-agricultural sector. 116

According to FAO: land is defined as a physical entity which includes natural resources: the soils, minerals, agriculture and forests. These components are essential to maintaining the productive capacity of an economically sustainable environment. Many problems which are now being recognized in natural and agricultural land systems have arisen because of inadequate technologies for assessing and monitoring land resources, preventing land pollution and rehabilitating contaminated lands It should be borne in mind that definitions used by reporting countries vary considerably and items classified under the same category often relate to greatly differing kinds of land. Definitions of land use (land cover) categories are as follows: Total Area: The total area of the country, including area under inland water bodies. Data in this category are obtained mainly from the United Nations Statistical Division, New York. Possible variations in the data may be due to updating and revisions of the country data and not necessarily to any change of area. Land Area: Total area excludes area under inland water bodies. The definition of inland water bodies generally includes major rivers and lakes. Data in this category are obtained mainly from the United Nations Statistical Division, New York. Possible variations in the data may be due to updating and revisions of the country data and not necessarily to any change of area. Agricultural land: The sum of area under ”Arable land,” ”Permanent crops” and ”Permanent pastures.” Arable Land: Land under temporary crops (double-cropped areas are counted only once), temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow (less than five years). The abandoned land resulting from shifting cultivation is not included in this category. Data for arable land are not meant to indicate the amount of land that is potentially cultivable. Permanent Crops: Land cultivated with crops that occupy the land for long periods and need not be replanted after each harvest, such as cocoa, coffee and rubber; this category includes land under flowering shrubs, fruit trees, nut trees and vines, but excludes land under trees grown for wood or timber. Permanent Pasture: Land used permanently (five years or more) for herbaceous forage crops, either cultivated or growing wild (wild prairie or grazing land). The dividing line between this category and the category "Forests and woodland"; is rather indefinite, especially in the case of shrubs, savannah, etc., which may have been reported under either of these two categories. Forests and Woodland: Land under natural or planted stands of trees, whether productive or not. This category includes land from which forests have been cleared but that will be reforested in the foreseeable future, but it excludes woodland or forest used only for recreation purposes. The question of shrub land, savannah, etc. raises the same problem as in the category "Permanent meadows and pastures.” In the year 1995 and onward there will be no data for this category. Data relating to forest area can be obtained from the FAO Forest Resources Division. Non arable and permanent crops: From 1995 this element includes any other land not specifically listed under arable land and land under permanent crops, permanent pastures, forests and woodland, built on areas, roads, barren lands, etc. Irrigated Area: Data on irrigation relate to areas equipped to provide water to the crops. These include areas equipped for full and partial control irrigation, spate irrigation areas, and equipped wetland or inland valley bottoms.

120

Data showed that the global trend of agricultural land per agricultural worker is determined by the situation of the economy where the subject of the land being discussed. In the period of 1989-1991, the world’s average agricultural land per agricultural worker was 4.0 ha. It was about 1.5 larger of the average agricultural land per agricultural worker in the developing countries, i.e., 2.6 hectare. However, the most intriguing figure is that the average agricultural land per agricultural worker in the developed countries, is 29.9 hectares or 11.5 times larger than that of the land per agricultural worker in the developing countries. In the period of 1998-2000, the agricultural land per agricultural worker in the developing countries was lower than that of it in the period of 1989-1990. There was only 2.5 hectare of the agricultural land per agricultural workers in the developing countries in the period of 1998-2000. On the contrary, agricultural land per agricultural workers in the developed countries has increased. In the period of 1989-1991, the average agricultural land per agricultural workers in developed countries was 29.9 hectare and it increased to 37.6 hectare in 1998-2000. The above figures have far reaching implications. First is the movement of direction of pressure indicators between developing countries and developed countries. The movement of such indicators in the developing countries reflected that the situation in the developing countries was much more severer than that of previous situation. Such issue will be elaborated in the next sections. In Table 5.6, it is clearly pictured that agricultural land per agricultural worker in the developing countries is significantly lower than that of in the develop countries. With majority of population reside in Asia; so, the lowest ratio of land per agricultural population or agricultural worker is in Asia. This situation has induced the “Green Revolution” in Asia by using land saving technology in increasing food production. The key is seed—miracle seeds that doubling or even more of agricultural productivity. However, as the Nobel Peace Prize in 1970, Norman E. Borlaug--Green Revolution architect, reminded the world that advances in agricultural technology had produced only a "temporary success" that solve a temporally problem with the range of for about 30 years to slow dramatically the growth of world population.117 It was stated in 1970, now after about 30 years passed by, the world, mostly the developing countries such as Indonesia, are still struggling with the issue how to feed their people. In the Indonesian case, the annual growth of agricultural productivity, such as described in the previous chapter, has reached at a low and stagnant rate of growth or, in fact, experiencing negative growth. In the 1970s, the world’s growth of population was more than 2 % a year. With the size of world’s population at that time reached at the level of 3.7 billions. Now, the world’s population is about 6 billion people and it will reach about 8 billion people in 2020 118. This 2 billions additional population size will not only need sufficient food but also need rooms for supporting their life. Therefore, we need more than just “Green Revolution” to overcoming the next 50 years or more the world’s problems. Population pressure on the land will increase and it will induce more conflicts among people in the world. Reduction of agricultural capacities to produce sufficient food, fibers, energies, and other products originated from agriculture primary products for supporting the future world’s inhabitants will tend to increase world’s conflicts. It means that population control is necessary in order to be able to manage our future. Just for reinforcing our mind of how civilization was vanished because of land resources degradation, we can learn from the ancients’ experiences. A study conducted by C.W. Lowdermilk (1948)119 “Conquest of the Land Through Seven Thousand Years,” showed how soil erosion and deforestation had disappeared the cities, people and human habitats in general in East Asia, Middle East, 117

118

119

Norman Borlaug. "The Green Revolution, Peace and Humanity." Lecture on the occasion of the award of the Nobel Peace Prize, Oslo, Norway, December 11, 1970. John H. Tanton, “End of the Migration Epoch” reprinted by the Social Contract, Vol. IV, No. 3 and Vol. 5 No. 1, 1995. See W.C. Lowdermilk,1948. “Conquest of the land through seven thousand years”. U.S. Department of Agriculture, Soil Conservation Service, February 1948.

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Africa, Europe, and America. Furthermore, Sara L. O’Hara, et al. (1993) 120 in "Accelerated soil erosion around a Mexican highland lake caused by prehispanic agriculture” indicated that land degradation contributed to the downfall of a number of ancient civilizations such as shown by the Sumerians in the Fertile Crescent to the Anasazi in the North American Southwest. The major course of land degradation either erosion or salinization of irrigated land have relation with farming intensities. The latter is related with population pressure on the land. The higher the man-land ratio, there will be more intensive demand for land utilization, given the economic structure which is still dominated by agricultural economy. The shorter period of farming rotation or the declining practices of fallowing land is an indicator of increasing pressure on the land resources. Shifting cultivation such as practiced by farmers in Kalimantan or other areas is a form of social tacit knowledge that indigenous farmers practicing a natural process of soil fertility recovering and ecological maintenance. By 25 years of fallowing the land, farmers, when they return to that fallowed site, they will find the restored land resources by nature. As population grows, given other factors remained constant, the pressure on the land resources is heightening. The pressure of land on agriculture is mostly due to the increasing pressure of population on the  land resources. The increasing population has varieties of impacts on sustainability of civilization. One of  the most readily seen is its impact of significant growth of food demand. Vaclav Smil121, based upon his research on historical cases of ancients agricultural communities in eastern Asia, the Nile River basin, and the Netherlands found that the minimum size of land of 0.07 hectare. Farming on this size of land will be able to feed an essentially vegetarian diet to 12 or 13 persons per hectare of farmland through a closed system namely maintaining soil fertility by mixing crops and recycling crop, animal and human wastes. However, such a scale is impracticable if farming is a main source or earning and then the farming size must be much larger. Table 5.6 shows that agriculture in developing countries is facing serious land resources constraints with land resources per agricultural worker declining trend. On the other hand, agriculture in developed countries will have less constraint such as indicated by increasing trends of the size of agricultural land per agricultural worker. With the worlds average agricultural land per agricultural worker 3.8 hectare/worker it suggests that there are great numbers of small size of land compared to the number of large farmland size. In addition, almost all of those small sizes of farms are in developing countries. Indonesian farmers’ are one of them. Table 5.6. Agricultural land per agricultural worker (hectare per worker) Region

1989-1991

1994-1996

1998-2000

World

4.0

3.9

3.8

Developed

29.9

34.2

37.6

Developing

2.6

2.6

2.5

Source: F.A.O. http://www.fao.org/es/ess/os/envi_indi/part_221.asp

Table 5.7. Share of agricultural land in total areas by regions (%) 120

121

Sara L. O’Hara, et al. 1993. "Accelerated soil erosion around a Mexican highland lake caused by prehispanic agriculture." Nature. Vol. 362. (March 4). Vaclav Smil. 1993. Global Ecology: Environmental change and social flexibility. Routledge, London.

122 Region

1989-1991

1994-1996

1998-2000

World

36.6

37.2

37.3

Developed

33.0

33.2

32.8

Developing

39.2

40.1

40.5

Source: http://www.fao.org/es/ess/os/envi_indi/ Table 5.7 expresses how agricultural lands in developed countries are dominating the world’s agriculture. If Table 5.6 shows agricultural land per agricultural worker, Table 5.7 indicates shares of agricultural land in total area of world agriculture. The world’s share of agricultural land is 37.3 % and the share of developed countries and developing countries of the land in each region are 32.8 % and 40.5 % in 1998-2000, respectively. This situation is interesting because there are only about 30 developed countries. On the other hand, numbers of developing countries are more than 100 countries with huge number of population. For more illustration, see Table 5.8 that shows agricultural land use composition in OECD countries. We see that more than a half of OECD countries have agricultural land more than 50 % of total national land area, and only seven countries (25 %) have agricultural land less than 25 % of their national land. The position of countries according to share of agricultural land in their national land use are indicated by rank such as presented in the table. The main lesson of Table 5.8 is that industrialization does not mean reducing land resources—in fact, the reversal trend mostly have taken place. Industrial revolution in UK, for example, does not mean UK has been becoming lack of agricultural land. We see the opposite situation; UK has the largest proportion of agricultural land in OECD countries. One of the most important lessons from the case of majority of OECD countries such as indicated in Table 5.8 is that conversion of fertile land such as what is the case in Java is a wrong path of development. The pressure of agricultural land is actually the case in developing countries, which cannot usually be imagined by common people. People in developing countries are usually percept that situation in developed countries are very densely populated such as what usually they see in a movie that show how the situation in Chicago, New York, or Tokyo. On the other hand, common people in developed countries are also percept the opposite way. They think the situation in developing countries is mostly open space with large forestland. A question such as why people in developing countries cannot produce food for themselves is an expression that is very logical without knowing empirical evidence that one from developed countries can find. Box 5.1 and Box 5.2 try to express future trend of relationship between land and population as a pressure for agriculture. Table 5.8. Share of agricultural land use in the total national land area 1995-1997 Rank/Country 1. United Kingdom 2. Greece 3. Hungary 4. Denmark 5. Iceland 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

New Zealand Poland Spain Australia Netherlands Mexico Czech Republic France Turkey Italy Germany

Share (%) 50
123 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

United States Belgium Portugal Switzerland Austria Iceland Korea Japan Canada Sweden Finland Norway

25
Source: OECD, 2001122.

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See OECD, 2001. Improving the Environmental Performance of Agriculture: Policy Options and Market Approaches. OECD, France. Chart 1.

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Box 5.1. The arable land and the future of agriculture There will be no agriculture if there is no land. Land cannot be created. The land is given by nature. The fertile land gives more food and fibers and other kinds of products that people need. Uncontrolled population growth will cause more pressure on the land resources, and then it will spring the roots of agricultural problems. The study conducted by Robert Engelman and Pamela LeRoy (1995)123 “Conserving Land: Population and Sustainable Food Production” gives us the following insights: o There were 33 countries with the least arable land per capita had an average self-sufficiency ratio of 83 percent from 1988 to 1992. This means that on average these countries needed to import 17 percent of their food needs. o The middle 32 countries produced 95 percent of their consumed food. o The 33 countries with the most arable land per capita produced average food surpluses equal to 6 percent of their consumption. o Four countries were experiencing arable land scarcity in the early 1960s: Kuwait, Singapore, Oman, and Japan. All could afford the agricultural inputs and technology needed to approach food self-sufficiency with less than 0.07 hectares of land per capita or could trade oil income for imported food. o There were four of the five nations that had joined the arable land scarcity category by 1990: the United Arab Emirates, South Korea, Switzerland, and the Netherlands. With the exception of the Netherlands, all of these nine countries produced less food than they consumed from 1990 to 1992. o Under the medium UN population projection, countries added to the category by 2025 include Kenya, Yemen, Bangladesh, Somalia, Jordan, Lebanon, Haiti, and Sierra Leone. o By 2050, Indonesia, the Philippines, Mozambique, Guatemala, El Salvador, and 16 other nations would be added to the category. The challenge for spurring agriculture is tremendously high. o Reliance on food imports also requires countries to give up a measure of their independence. o Relying the basic needs such as food is also put us in a gambling that may not prove to be a winning bet. o There will be 21.6 billion people living with global arable land scarcity early in the 22nd century, if it is assumed that population growth are under the UN’s high projection and the amount of arable land relatively constant. o The 0.07-hectare benchmark serves as a warning sign of per capita natural resource decline, especially for nations with limited capacities for intensive food production. Land saving technology should be developed. Farmers should practice sustainable agricultural practices.

123

R. Engelman and Pamela LeRoy, 1995. “Conserving Land: Population and Sustainable Food Production”, Population and Environment Program, Population Action International, Washington, D.C.

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Box 5.2. Africa: The Old Continent-The Oldest Problem Africa   is   a   large   continent.   Africa   is   also   the   closest   continent   to   Europe,   which   is  separated   by   an   ocean.   Africa   is   also   reminding   us   with   the   ancient   socio­economic  advance such as found in the Nile delta or in Ethiopia. In short, Africa contained an old  ancient of socio­economic progress. However, why do a large number of African people  cannot have sufficient food intake? Can we imagine that the continent in general has  experienced   very   vulnerable   food   insecurity,   which   is   associated   with   the   lowest   per  capita income and the fastest growing massive environmental deterioration?  Kendal and Pimentel (1994)124 stated that about one fifth Africa’s food depends on the rest  of the world. Furthermore, Altadi and Sala­i­Martin (2003)125 called what have happened  in Africa as the economic tragedy of the 20th century. The tragedy is the tragically low of  economic performance that had significant consequences on human welfare. `` In Africa, 46.30 % of people living in households that consume less than US$ 1/day in  1998.   In   Africa,   there   was   also   the   highest   share   of   undernourished   people,   namely  reached 34 %. What we mean by Africa here is Sub­Saharan Africa. 126  If the trend of  current production and consumption pattern continue, the continent’s annual gap between  food consumption and production will grow from present gap 10 to 12 million tons to  about 250 million tons by 2020.  Economic Pressure on Agriculture: Slow growth and poverty The pressure on agriculture is implied by the structure of the economy. Structural economic changes due to economic transformation, as said earlier, lessen the pressure of the economy on the agriculture. The case that only few countries that have been able to evolve into higher stages of development indicates that in the past 30 years or more most countries in the world cannot adapt to continuing world’s changes. As a result, the capacity of agriculture in all developing countries in general tends to decline. Negative net export earning from agriculture received by developing countries indicates that agriculture, which is major developing countries’ source of income, has not been able to provide what has been expected. Therefore, investment in agricultural export crops, especially investments that have been supported by international loans cannot repay its investment loans. Lack of incentives in agriculture will be reflected by the low or declining productivity of agriculture in general. However, there are no other alternatives for developing countries except starting 124

Henry Kendall and David Pimentel. 1994. "Constraints on the Expansion of the Global Food Supply." Ambio. Vol. 23, No. 3. (May). 125

Elsa V. Artadi and X. Sala-i-Martin, 2003, “The Economic Tragedy of the XXth Century : Growth in Africa”, Columbia University and NBER.

126

R.B. Singh, 2002. “The State of Food and Agriculture in Asia and The Pacific: Challenges and Opportunities. IFA and FAO, France.

126

the development process with increasing the roles of agriculture. The basic reason is that that almost all labor force engages in agriculture. Therefore, increasing agricultural productivity will have far implications because it will affect almost all people in a country. Increasing productivity of agriculture that are able to compensate the impact of declining agricultural products’ prices will still give a chance for members of agricultural households or farmers to invest in other economic activities such as education which is expected to be able to expand a safer employment opportunities in the next generations of the family. However, if agricultural productivity is weakening and there is lack of employment opportunities in other sectors, then all economic activity will also be weakening. Based upon the above argument, we can say that high productivity of agriculture is a foundation for opening and expanding all human activities within a nation. Therefore, a country that has been successful in evolving economic transformation is indicated by higher productivity growth of agriculture at the beginning of development and this high agricultural productivity has been maintained over time. The economic pressure on agriculture will arrive when a country start to neglect agriculture and allow agricultural productivity growth to decline. Table 5.9. Growth Rates in GDP and in Agriculture (%) Region/countries E. Asia/Pacific Indonesia Malaysia Philippines Thailand Vietnam China S. Asia India Euro/Cent Asia Latin America MiddleE/N Africa Sub-Saharan Africa All DCs

GDP 1980-90

1990-2001

Agriculture 1980-90

1990-2001

7.5 6.1 5.3 1.0 7.6 4.6 10.3 5.6 5.7 2.1 1.7 2.0 1.6 3.2

7.5 3.8 6.5 3.3 3.8 7.7 10.0 5.5 5.9 -1.0 3.2 3.0 2.6 3.4

4.6 3.6 3.4 1.0 3.9 2.8 5.9 3.2 3.1 …. 2.3 4.0 2.2 3.3

3.2 1.9 0.3 1.8 1.7 4.2 4.0 3.1 3.0 -1.9 2.4 3.0 2.8 2.2

Source: Rick Barichello, 2004. Agricultural Development and Poverty Reduction in East Asia: The Impact of OECD Agricultural Policies. Paper presented to OECD Experts’ Seminar on “The Impact and Coherence of OECD Country Policies on Asian Developing Economies,” Paris, 1011 June 2004. In Table 5.9, we see that there is a systematic relation between a growth rate of GDP in general and a growth rate of agriculture. East Asia/Pacific has experienced high economic growth. In 1980-90, the growth of GDP and of agriculture in these regions was 7.5 % and 4.6 %, respectively. Compared to other region, those were the highest economic growth. Within E. Asia/Pacific region, there is China that experienced an economic growth, which is higher than the average of all countries in the region. This high China’s economic growth is maintained up to 1990-2001, and up to present time. We should be notice that China is also a country that reached the highest agricultural growth in 1980-1990 periods. In addition, its high agricultural growth is maintained in 1990-2001 period. Furthermore, another interesting case is shown by Vietnam. Vietnam’s economic growth increased from 4.6 % in 1980-90 to 7.7 % in 1990-2001, so the additional increase of economic growth of Vietnam is 3.1 %. Vietnam’s agricultural growth was also increased by a significant rate, namely from 2.8 % in 1980-1990 to 4.2 % in 1990-2001. Therefore, the growth of agriculture has contributed about 74 % of any one percent increase in Vietnam’s GDP growth. Vietnam and China agricultural growth have shifted upward of E. Asia/Pacific’s

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agricultural growth in 1990-2001 to 3.3 % since the rest of countries in this region experiencing agricultural growth which is less than that level. On the other way around, slow growth of the economy is one of the most important elements in pressing the life of agriculture. In the period of 1980-1990, the average economic growth of Asia/ Pacific economy was 7.5 % and its associated average growth of agriculture was 4.6 %. It was a high growth that made the world called East Asian’ economy as “Asian Economic Miracle”. In this period, the average economic growth of China was even higher, namely, 10.3 %. As a comparison, the world observed that the average economic growth of all developing countries was just 3.2 %, or was just 31.2 % of the growth experienced by Asia/Pacific countries. In fact, the Sub-Saharan Africa and Latin America were just able to grow with the rate of less than 2 % per year. High economic growth has made South Korea, for sample, reaching status of developed countries and being able to join OECD country member at the end of the 20th century. In this period, Indonesia was also enjoyed high economic growth and was a member of Asian Tigers countries as well. In the period of 1990-2001, the average all developing countries growth was only slightly higher than that of its previous period (1980-1990). Even though the average growth of E. Asia/Pacific countries was remained constant around 7.5 %, the growth of agriculture declined from 4.6% per year to 3.2 % per year. The main cause of declining growth was the East Asian economic crisis. Due to economic crisis, agricultural growth of countries like Indonesia, Malaysia, Philippines, and Thailand fall to the rate of agricultural growth less than 2 % per year. In this Chapter, we would like to take a perspective according to evolutionary point of view in order to decide a circle between “chicken and egg” and to develop a framework of thought for solving our agricultural problems. This issue will be further elaborated in the next chapter. We consider it now just to make explicit what is underlying argument for further analysis. Evolutionary point of view suggests that economy has been started from a simpler one and it evolved further into a more complex structure. Furthermore, there is no assurance that in the evolutionary perspectives that an economy will always evolve into higher states of complexities such as this case has been shown by the extinctions of some ancient’s economy127. However, there is always a way invented or innovated by human mind to overcome societal problems. It is already become common knowledge that economy evolved from ancient pre-agriculture to agriculture, industry, and to information or knowledge base economies. It implies that the growth of economies in general is determined by the growth of productivity or capability in agriculture to serve the growth of the whole systems of life in which economy is a part of our system of life. However, sustainability of agriculture will be determined by feed back from the whole system of life, particularly the economic systems within which agricultural economy alive. It is necessary because sustainability is determined by exchange. Agriculture provide “energy” for the rest of the systems and to be able to sustain the whole systems, the whole systems should provide sufficient “energy” to agriculture. Economic transformation from agriculture to industry and to the next other steps will be determined not only by the “energy” flowing from agriculture but also by the positive feedback from the whole economy to agriculture.

127

See M.I. Finley, 1985. The Ancient Economy. (2nd). The Hogarth Press, London.

128

Table 5.10. Sources of Productivity Growth in East Asian Economies, 1960-90. Country

NonAgricultural Productivity Growth

Agricultural Fraction of Productivity Workforce Growth in Agriculture, 1960

Singapore* Korea* Taiwan Malaysia* Indonesia Thailand China*

1.068 1.055 1.050 1.030 1.039 1.026 1.011

1.081 1.059 1.043 1.046 1.015 1.020 1.039

0.074 0.613 0.555 0.633 0.748 0.837 0.830

Fraction of Workforce Moving to NonAgriculture, 1960-90 0.070 0.432 0.426 0.359 0.196 0.196 0.110

* Agricultural productivity growth greater than non-agricultural productivity growth. Source: Gollin et. al., (2001)128 Gollin et. al. (2001) provides empirical evidence to support the above argument (Table 5.10). According to Gollin, countries in association with high agricultural productivity growth show they have successfully evolved into higher stage of evolution. In fact, such as shown with * in Table 5.10, the successful countries in transforming their economic structural transformation are indicated by the growth of agricultural productivity which are higher than the growth of non-agricultural productivity. Of course, Singapore is one of country that agricultural contribution is small because of its nature as a city-state. Taiwan and Thailand even though the agricultural productivity growth of these countries was not higher than the growth of non-agricultural productivity, the growth of agricultural productivity of those countries were relatively high. Indonesia, however, fall into a situation that the growth of agricultural productivity was further behind of the growth of nonagricultural productivity. According to Gollin, the seeds of Asian miracles are the high growth of agricultural productivity.

128

D. Gollin, S.L. Parente, and R. Rogerson, “Miracle Economies and Miracle Seeds,” September 2001. http://www.bu.edu/econ/ied/neudc/papers/Gollin-final.doc

129

Box 5.3. Agriculture and Poverty Alleviation: Lack of leaderships Lynn Brown and Lawrence Haddad called the agricultural growth as a “Key to Poverty Alleviation” which can be read in the “International Food Policy Research Institute, 2020 Vision Brief 7, October 1994. Developing countries are the region that suffered the most incidence of poverty, as one of the oldest problems of human societies all over the globe. Now, more than 1.1 billion people earned about US$ 1 or less a day. How to have an imagination of the meaning of such numbers, we can imagine that, the size of the poor population is about five times of population size of Indonesia in 2002. Indonesia is the fourth largest country in the world according to her population size. Then we can imagine that there are five countries with each has the same size of Indonesia’s population, and all of their citizens are poor people with level of income per capita as much as US$ 1.0 or less a day. Poverty has many facets of problems of human civilization. The poor in the world have relatively common characteristics: lack of food, poor health and nutrition, low education, low productivity, susceptible to disease, and other characteristics of badness. Those are dependent to each other, but they form what literature said: vicious circle of poverty. Agriculture plays a very basic roles, namely increasing basic functioning’s of people. Agricultural development is not the same with planting rice or developing rural education or rural infrastructures. In a more basic view, agriculture development is “planting people and culture.” Therefore, better agriculture will produce better people and better communities. Income, employment, economic growth, healthy environment, and educated people are just derivation of “planting people and culture”. Therefore, agricultural development goes far beyond economic development. If we view agriculture development as an inherent part of increasing basic functioning’s of people and communities, therefore it is just only another name of poverty alleviation. However, the worlds in general and the developing countries in particular have inconsistent policies and practices on how to utilize agriculture as the main vehicle to solve poverty. Many policies negative impacts on agriculture in developing countries. In addition, there are also not strong enough commitment hold and policies practices by developing countries, in promoting and protecting the interest of agriculture and farmers. Therefore, why are so hard to solve poverty is not because of we having no experience, knowledge of technology. The most limiting factor in poverty alleviation is the lack of leadership, which is characterized by high commitment and his/her consistent policies to support agriculture.

130

Box 5.4.

Poverty and rural population (ILO data)

The above Figure shows that there is not only a positive correlation between poverty rate and the population living in rural areas. In Indonesia, for example, number of population below poverty line in rural areas in 1996 was 24.9 million, and at the same date, the number of population below poverty line in urban area was 9.6 million. Therefore, the proportion of the poor in rural areas was 2.6 times larger than that of in urban areas. In 2002, number of population in rural areas increased to 25.1 million and number of the poor in urban areas increased to 13.3 million people. These figures at least have two important meanings. First, there is correspondent with the regression line above, namely more people in rural areas create higher poverty rate as a whole. Second, even though the rate of growth of rural poverty in Indonesia was relatively slow, i.e., about 0.1 % per year, it was compensated by high growth rate of poverty in urban areas, i.e., 5.5 % per year. Therefore, it can be speculated that some of the poor were moving to cities and add up to the population of cities’ poor people (BPS, 2003). Therefore, increasing agricultural productivity will be strategic to solve rural poverty problems. Solving rural poverty is also solving urban poverty. Therefore, the circle is complete: healthy and strong agriculture will alleviate poverty in both urban and rural areas.

131

Box 5.5. The Story of “Supper Rice” International Rice Research Institute (IRRI) has made significant contribution to the world when IRRI produced “miracle seeds” of rice in the 1970s. Spreading new high yield varieties of rice has boost rice productivity and production in Asia and other parts of the globe. The seeds are associated with the image that is called green revolution. We learn that the same size of land can give more yields if there are new seeds and new ways to cultivate it. The seeds, therefore, have not only changed the production and agricultural productivity per se, but they created change in culture and social institutions. How to feed the world is a major issue now and will continue for the next coming decades. It is , then called for innovation in increasing rice productivity. As a continuation of efforts that has resulted in new high yielding varieties of rice in the 70’s. Furthermore, in late 1994, agricultural researchers at the International Rice Research Institute (IRRI) in the Philippines unveiled a new strain of high-yield rice predicted to boost the annual global rice harvest by 100 million tons. This production increase will provide enough to food to meet an estimated additional demand of 450 million people. In addition, according to the developers of this "super rice,” the new seeds will reduce the use of fertilizer, which is important for environmental and economic reasons. We cannot wait! Of course, such as had happened in the past, Super Rice would not stand-alone. It will call for other kinds of innovation in agriculture and global world’s policies as well. One of the most important issues is population control and environmental care. See: Boyce Rensberger. "New 'Super Rice' Nearing Fruition." The Washington Post. October 24, 1994

What we learn from this section is that agricultural sustainability is conditioned by whether or not a nation can maintain its high productivity and whether or not a nation are able to tailor agriculture and non-agriculture that can make both of them are in synergy. A nation like Korea and China, for example, is a good case that these nations can maintained high productivity growth of agriculture and at the same time expand the growth of the economy, which also provides positive feedback to agriculture. In addition, Vietnam is a good case for a nation that shows us that Vietnam has been able to fully utilize agriculture as main source of economic growth. Indonesia also could learn how agriculture has been playing a significant role as a buffer when the economy as a whole experiencing negative economic growth due to economic crisis which occurred in 1997. Furthermore, agriculture also plays strategic roles in alleviating poverty. However, poverty itself can be a threat to agriculture especially when a nation practicing policies that are against agriculture and rural areas.

Interpretative Summary As part of global communities, Indonesia and other countries, especially developing countries, can learn from the evolutionary path of other own countries in the world. In a global context, due to international market imperfections, developing countries cannot rely on agricultural primary products export earnings as a major source of income since the trend of net export earnings of both developed and developing countries are negative net export. Unfortunately, developing countries has no alternatives to earn foreign exchange because other economic activities other than agriculture have not developed yet. Therefore, developing countries have to renew their agricultural development strategies in order to be able to adapt with the world changing future trend. Economic transformation is necessary because it is a matter of evolutionary process of civilization. However, whether a path of evolution should follow what has been experienced by the develop countries or not, it is a matter of individual or collective strategies of all nations in the world. Each country has her owned uniqueness and at the same time has similarities with other countries. The

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point is that high productivity growth of agriculture is necessary for having success in economic transformation, as indicated by China. China’s agricultural productivity growth is higher than nonagricultural productivity growth. It is one of the most important perspective that has be taken seriously by developing countries, especially Indonesia as a country with significant size of population. It is also an important aspect for building efforts in poverty alleviation. The evolutionary path of sustainable development of agriculture of developing countries will be highly determined by developed countries’ policies. Long term declining agricultural primary product prices cannot be solved by developing countries’ decision alone. Such declining trend of agricultural product prices in the world market is a result of developed countries’ policies, which depressed international market prices. Even though developed countries’ subsidy for agriculture has decline, but it has just declined slightly. Subsidy issue is one of the subtlest issues because it will directly affect farmers in developed countries that now enjoy “unearned income” through government transfer. Therefore, developing countries must be able to find the best strategy for themselves that can run by itself. In areas of natural resources care and maintenance, it is important to learn from developed countries. More than a half of OECD countries maintain more than 50 % of their land in agricultural land. It is the opposite situation with, for example, a situation in Java in particular or in Indonesia in general. Agriculture requires fertile land that is more difficult to find rather than other types of land uses. In addition, due to historical process, in the area of fertile land, there have been invested varieties of capital that need high costs or more times than if we will develop similar capital elsewhere. Other types of land uses such as industry usually take advantage of this situation. At the end, agriculture has to pay the prices. In short, building sustainable agriculture is not a simple task.

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CHAPTER SIX RENEWING THE VISIONS: Framework of thinking What we are is the result of what we have thought, is built by our thoughts, is made up of our thoughts. If one speaks or acts with an impure thought, suffering follows one, like the wheel of the cart follows the foot of the ox. What we are is the result of what we have thought, is built by our thoughts, is made up of our thoughts. If one speaks or acts with a pure thought, happiness follows one, like a shadow that never leaves. The Twin-Verses

Dhammapada Thought is starting point and, therefore, a vision that we will gain will depend on our thought, a total complete thought. Clearly, we will never have the absolute truth or perfect knowledge because we are, as human being, intrinsically characterized by our imperfection of our mind. Simon 129 calls it as bounded rationality. However, the efforts for reaching better view of the world are necessary. From previous five chapters we learn that within a global perspective, agriculture has been successful to provide more food and other agricultural products that make people in the world have longer life expectancy, reduce starvation and other valuable things for betterment of human life. We may call that agriculture has been successful for human civilization in general. However, substantial food increase has no significant meaning for farmers’ life and welfare. In fact, increasing productivity has been hurting farmers more. Geertz call it agricultural involution. In the longer run, continuing agricultural involution will decline the agricultural capacity. This evidence is clearly found in Indonesia in recent years, namely, the declining rate of agricultural productivity growth such as presented in Chapter III. The main objective of this Chapter is to seek knowledge that is useful to help us in renewing our vision. We will start with a short elaboration of concepts of position, distance, hierarchy, network, and values as basic concepts then to build a concept of vision in this chapter. Image of Realities  I have to admit that I could be subjective in a sense that what I am going to share is my perception that has been evolving throughout my life. Position I took a position that we are an integral part of nature. Therefore, there is no separation between a man and nature. Of course, we are as a unit of entities that are not in the same position with other entities at a given point in time and in place. It implies that there is a physical distance among units of entities. Therefore, two units of entities are having two positions in a given time and place. This awarenes is important for allowing us to make explicit statement about my view and other’s view. 129

See for example, H. A. Simon. 1957. Models of Man. Wiley, New York.

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Different positions will produce different point of views. Different points of views mean that there are different kinds of images. Because images are subjective knowledge then what we are going to talk is also subjective. All kind of knowledge cannot be free from this subjective situation because what we are doing is limited by our position as an observer of realities. That is why all knowledge is evolving. In addition, an evolution of knowledge is resulted from new findings, which are obtained through new observation or new research activities. The evidence of obsolete knowledge suggests this phenomenon. What is the usefulness of taking different position? At least there are four kinds of benefits by taking different position. First, it will give us an opportunity to exchange or share a result of what we see or what we observe with other people. It can also apply onto a same subject. For example, a chemist and an economist can observe rice, as their common subject of observation and the results will be predictably different. It connotes that at the beginning we place ourselves in a context of building common mutual exchange. In fact, two or more scientists can treat the subject of the same rice as a common subject from a single discipline and a result can be different if they use different methods of observations. In fact, there is also a factor of luck that makes one is able to find X, for example, where many scientists in a single discipline have tried hard to find X. Second, taking different point of view is also an important situation for making opportunities to create a room for exercising mutual respects and mutual exchange across participants. It is a process of learning together directly or indirectly, as a process of deepening parts of a subject and a process of integrating them into a unit of entity. Understanding hierarchy, organization, and networks, which we will discuss below, is a complementary of taking different points of view into an integral part of entity, horizontally, longitudinally, or vertically. Third, it will encourage our mind to be aware that we are not alone. It means that other people will also put his or her attention or energy on the same subject that we pay interest. This awareness is important in a sense that we may develop a mechanism that we will gain self-control on an issue we are going to discuss. Self-control is an essential thing in a process of developing our mind and our physical actions in order to gain mutual respect habits. To make a point clearer, we can think of a coordinate such as we learn in geometry. Without zero point which is a place of vertical intersection between X and Y-axis, we cannot determine our or other position relative to it. Therefore, it is a fourth benefit for us to determine our position for taking different point of view, namely we will be able to know where we are. Distance Between two or more entities, there will always be a distance. A measure of a distance depends on where the positions of entities are. A concept of distance can be broaden, namely it is not only include a physical distance. A concept of distance is also involved social, cultural, or psychological distance. Of course, the latter is more difficult to measure. However, it is real. For example, there is a psychological distance between teacher and student and there is a cultural distance between two different cultures. A concept of distance will relate with a concept of efforts. Any movement from one place to another place, for example, calls for an effort. A distance determines efforts that are needed to make certain activity. It will be required more energy to make an effort if a distance between to entities is further. Furthermore, a distance will also affect distributional patterns of entities. Here we know of gravity law, which is not only useful in physical science but also in economics 130. Therefore, knowing a distance 130

See for example E.M. Hoover. 1975. Regional Economics. Alfred A. Knopf, New York.

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implies that we will know efforts that are needed. Knowing position such as described earlier is the first step to know a distance. Social cohesiveness or sense of community will be a function of social distance. Social cost in a sense how to create strong sense of community, therefore, will be determined by social distance. Ruralurban or developed-developing countries will not only include physical distance but will also involve social distance. Improving communication capacity is one of the most important aspects of reducing social costs. Hierarchy Hierarchy is a concept of distance, which is placed into a specific structure. A structure is a system or organization made up of interrelated parts functioning as an orderly whole. If within a structure we place ranks of power according to certain rules such as seniority or level of importance, we developed a structure becoming a hierarchy. There are natural hierarchy and social hierarchy. A natural hierarchy is a hierarchy within a structure that is governed by natural law. In a concept of ecology, we know that there are class of producers such as plants, a class of consumers such as animals and a class of decomposers such as microorganism. The sun is the origin of energy where its energy is transformed into food, among others, and this is a source of animal energy. In this case, the law of nature determines a structure and hierarchy. Social institutions create a concept of social hierarchy such as ranks within organizations that we find in government, business, or social institutions. A hierarchy between parents and children such as position of father-son is a hierarchy, which is determined by both natural and social rules. In fact, a case of adopted children or single parent is a product of social rules. In area of psychology, it is well known Maslow’s concept of hierarchy. Maslow classifies hierarchy in structure of human needs, which are conceptualized into physiological, safety, love, and esteem needs that must be satisfied before a person can act unselfishly. What and how individuals or a group of individuals to pursue their needs are determined within a social context. Networks Network is a system of interconnectedness among entities. There varieties of network patterns. But, the essential things of a network is the establishment of formal or informal, general or specific of interconnectedness among entities, with a varieties of means and mechanisms that make the whole entities enable to communicate. One of the most important elements here is communication across entities, which is facilitated by a networking structure established by social entities. The advancement of network has evolved along human history. At ancient time, there should be a network but its coverage and its substance will be very limited. An invention of a pigeon or a horse for communication and transportation, respectively, has enlarged social network coverage. Market invention which make sellers are competing or cooperating to each other have further expanded the social network. Now, in our global era, people all across the globe can communicate to each other with declining costs of communication trend. The limitation of participating in global networks now is not in term of science and technology of innovation. Major limitation is in an area of culture such as the way of thinking, feeling and believing of people across cultural backgrounds. Therefore, our basic problem now is how to build social or cultural interconnectedness.

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Values There are varieties of meaning of values which their meanings are dependent of philosophical orientation one’ hold. According Johnson (1986) there are three kinds of philosophical underpinnings, namely, positivism, pragmatism and normativism. Positivism does not accept values as a characteristic of real world. According to this philosophical thought, values are living only in human mind. Therefore, values are not a subject of science. The furthest condition of this philosophy, with regard to values, are only accepting values in a sense that assuming such knowledge of values in underlining human behavior. Johnson names it conditional normativism. Pragmatism accepts values in a sense that there are interdependencies between value free positivistic knowledge and knowledge about values. This loop of interdependencies brings a meaning of values in term of a prescription or prescriptive knowledge. It differs from conditional normativism because a pragmatist accepts knowledge of values and conditional normativism, as a branch of positivism, just only assuming that values as a characteristic of real world. Different with the above philosophical thought is normativism. This philosophical orientation accepts knowledge of values as characteristic of real world. Therefore, badness or goodness is a part of real world. It implies that there are intrinsic values that are independent from knowing mind. Which philosophical orientation is used by a party will be determined by his or her background and understanding about real world. Therefore, at the end it is just a matter of belief. What important thing for us is that a choice of philosophical orientation, whether it is realized or not, will influence what is considered important or not by a decision maker involved. Therefore, at the end it will determine what kind of knowledge will be produced and accumulated.

Agriculture Agriculture is a concept that has evolved along human history. For Abraham Lincoln (1859) “Agricultural fairs are becoming an institution of the country. They are useful in more ways than one. They bring us together, and thereby make us better acquainted and better friends than we otherwise would be…They render more pleasant, and more strong and more durable bond of social and political union among us…(F)armers being the most numerous class, it follows that interest is most worthy of all to be cherished and cultivated—that if there be inevitable conflict between that interest and any other, that other should yield”131. Furthermore, in the mind of Soekarno, the first President of Indonesia, agriculture is a matter of life or death of a nation (Indonesia)132. Both Lincoln and Soekarno see agriculture in a broader meaning. Their viewed was parallel with, among other, Sen’s view such as can be read in his paper “Food and Freedom”.133 Sen explained how food, as major output of agriculture in relation with freedom, where freedom is accepted as intrinsically good. Sen also mentioned that food could also be instrumental for profit. However, doing agriculture does not mean will automatically reaches profit. In fact, engaging agriculture now is giving less and lesser profit or even farmers get loss. 131

An addressed of Abraham Lincoln which was delivered before the Wisconsin State Agricultural Society, Milwaukee, Wisconsin, September 30, 1859.

132

An addressed delivered by President t Soekarno at Bogor, 1952.

133

Amartya Sen, 1987. Sir John Crawford Memorial Lecture Washington, D.C., October 29,

1987.

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It will be some possibility of meanings of agriculture. If we use pragmatism philosophical orientation that sees agriculture is good as long as it gives profit, then agriculture should not be practiced if it gives us losses. If we accept and use this pragmatism point of view then the world should say, especially in developed countries, that agricultural production should be reduced by significant amount because at present situation, and it already happened since many decades ago, agriculture is not profitable business. We observed that the world is not moving to the above pragmatism’s position point of view. In fact, up to now almost every body talking about increasing productivity of agriculture in order to increase production. More interestingly is a case in developed country, namely, that those productivity and production increase are supported by tax money, which is transferred through various kinds of agricultural subsidy. What is an answer will we get if we ask suggestion from a positivist? There will be two types of answer. First, “I have no suggestion because it is up to you.” Here, a positivist is unwilling to give judgment because he or she believes that what she or he is doing is unscientific. Second, “let us assume that having profit is good, then it is right to do agriculture as long as it is give us profit.” This answer is seemingly not different with a pragmatist answer. However, if we see the word assume, he or she just assuming not accepting that profit is good because goodness is not a characteristic of real world. Here, positivist maintains a common scientific attitude that they play to avoid judgment by hiding behind their assumptions. What is about normativism point of view? At a beginning, a normativist will say agriculture is good by itself. He or see accepts goodness of agriculture regardless people giving value on it or not. Therefore, if we asked a normativist to suggest what is a right thing to do with agriculture is to keep maintain agriculture as healthy as possible. Developed countries seem to hold normativism point of view. They keep going to maintain agriculture even though agriculture has not been profitable any more. It is very difficult when we take a position that we are a part of nature and we follow an intrinsic point of view, which say that our existence is good by itself. The difficulty lies when we think that it is too close to be able to see ourselves. We need a distance if we want to see, for example, value of agriculture. Of course, this position is true when we think of that seeing or observing is just using our eyes. But, when we think of that our mind and our brain are two different things but physically one, and then it is possible to use our mind to think of that we are as wholeness with nature. Imagine that A and B make an exchange between an apple (from A) and an egg (from B). The result is just A received an egg from B, and B received an apple from A. Now, imagine if A and B exchange ideas of how they are solving a homework. There will be no distance between A’s ideas and B’s ideas and both ideas can be transformed into one new idea or more. Mixing ideas is just like a chemical reaction, which is no distance in it. On the other hand, mixing two physical things are just making a collection. In a case of chemical reaction, we have a new different thing or more. Synergy provides us transformation into higher level of evolution. The word synergy describes those efforts we make create a result that more than the sum of their individual effects or capabilities. It implies that economic development will only transform the whole economy into higher level of evolutionary stage if societies can develop synergic efforts among elements of development. How can we, at least imitating, a chemical process in our development? A key factor in economy is value. In term of physical point of view, for example, we use energy as a common denominator, the maximum ratio between total output and total input is one. Therefore, it is impossible to gain surplus. However, if we use value as a common denominator we may gain ratio of total value of output and total

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value of input, which is larger than one. In economic theory, what we mean by value is utility. It is commonly accepted that US$ 1.00 in the hand of the poor provide higher value than that of in the hand of the rich. It means that utility of US$ 1.00 in the hand of the poor is larger than that of in the hand of the rich. Whether or not we measure such utility in term of cardinal or ordinal scale is dependent on our philosophical point of view we believe. Progressive income tax, for instance, reveal that the policy makers believe that we can put cardinal scale measure on utility. Let us apply the above concepts into thinking about agricultural development. We simplify outcomes of agriculture into four categories: (1) a living system for life plants and animals and other kind of organism, (2) food, (3) instrumental goods for producing other goods other than food, and (4) products of agriculture belong to beauty category. It is implied that there are different degrees of importance of those categories in association with people and other living things and with utility (value) of those goods with people’s perception about a good life. We will have different points of view and different results according philosophical orientation we use. For example, according to normativism, living nature and food are a part of wholeness of agriculture and nature where human and other beings are in it. Furthermore, there is another side of food, namely instrumental value for generating income, employment and other human aspects of human life. Other kinds of agricultural throughput are products that are used in process of making other goods, which is usually called raw material. It is a process of industry. Main objective of industrial process is making profit. Employment opportunities or labor income are a derivation of seeking profits. Finally, I use a world of beauty to mean a product of agriculture that its main purpose is for having sense of goodness such as one’s feeling beauty. Using this line of thought, I try to evaluate meanings of agriculture according to alternative philosophical orientation such as described above. The results are presented in Table 6.1.

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Table 6.1.  Meaning (knowledge) of agriculture according to philosophical orientations

Positivistism

Pragmatism

Normativism

Living Nature

Food

Position: it is viewed just as a complex nature, without saying good, bad, right, or wrong.

Distance: distance is seen as a “physical” distance. There is a complete distance between people and living nature, especially in a sense of goodness or badness.

Position: Without saying good or bad, food is seen as a fundamental input for human survival. However, positivism will have no ground to say right or wrong with starvation, for example. Except just assuming that starvation is bad. Distance: There is a complete distance between food and human being such as expressed that rice, for example, is an object and a farmer as a subject.

Hierarchy: There is no hierarchy in a sense of values; except in a limited sense such as assuming there is goodness or badness.

Hierarchy: There is no hierarchy in a sense of values; except in a limited sense such as assuming there is goodness or badness of food.

Network: Limit to behavioral networks point of view or just assuming having networks is good.

Network: Limit to behavioral networks point of view or just assuming having food networks is good.

Position: A value of living nature is dependent on what it can contribute, Distance: There is a distance in a sense that the outcome of pragmatism is prescriptions and prescriptions are just a product of knowing mind. Hierarchy: There is a possibility we come out with very complicated hierarchy which is influenced by existence of interdependency loop between value free positivistic knowledge and knowledge of values. Network: Value of network will depend on its outcome. In addition, it will also make possibility of “closing” or “broadening” networks due to different or similarity of cultural backgrounds. Position: The acceptance of intrinsic values makes very clear position that living nature is good by itself. Man and nature have equal position.

Position: Food is seen in term of its workability to serve people.

Distance: There is no distance between man-nature because man is viewed as a part nature in term of wholeness.

Distance: There is no distance between manfood because both are a part of nature. Distance is interpreted only as an effort that should be endured by human to get food.

Distance: There is a distance in a sense that the outcome of pragmatism is prescriptions and prescriptions are just a product of knowing mind. Hierarchy: There is a possibility we come out with very complicated hierarchy which is influenced by existence of interdependency loop between value free positivistic knowledge and knowledge of values. Network: Value of network will depend on its outcome. In addition, it will also make possibility of “closing” or “broadening” networks due to different or similarity of cultural backgrounds. Position: The acceptance of intrinsic values make very clear position that food is good by itself and starvation is bad by itself. Man and food have equal position.

Instrumental goods (raw material) Position: There is no sense of goodness or badness in seeing instrumental goods, except in a sense of conditional normativism point of view. Distance: There is a complete distance between instrumental goods and human being such as expressed that rice, for example, is an instrument for having nutrient intake. Hierarchy: There is no hierarchy in a sense of values; except in a limited sense such as assuming there is goodness or badness of raw materials to get profit. Network: Limit to behavioral networks point of view or just assuming having networks in order to get higher profit is good. Position: Inputs is seen in term of its workability to serve people. Distance: There is a distance in a sense that the outcome of pragmatism is prescriptions and prescriptions are just a product of knowing mind. Hierarchy: There is a possibility we come out with very complicated hierarchy which is influenced by existence of interdependency loop between value free positivistic knowledge and knowledge of values. Network: Value of network will depend on its outcome. In addition, it will also make possibility of “closing” or “broadening” networks due to different or similarity of cultural backgrounds. Position: The acceptance of intrinsic values make very clear position that Inputs are instrument to get outputs. However, normativism accept that it its instrument there is an intrinsically good character. Distance: There is no distance between man-input because both are a part of nature. Distance is interpreted only as an effort that should be endured by human to get inputs.

Beauty Position: Beauty is about feeling. Positivism sees that feeling is just exist in knowing mind. There is no goodness or badness in seeing beauty good, except in a sense of conditional normativism point of view. Distance: Similar with previous argument. There is psychological distance in a sense of conditional normativism. Hierarchy: There is no hierarchy in a term of values.

Network: Limit to behavioral networks point of view or just assuming having networks in order to get higher “beauty” it is good. Position: Beauty is seen as fine thing as long as its workability to serve people. Distance: There is a distance in a sense that the outcome of pragmatism is prescriptions and prescriptions are just a product of knowing mind. Hierarchy: There is a possibility we come out with very complicated hierarchy which is influenced by existence of interdependency loop between value free positivistic knowledge and knowledge of values. Network: Value of network will depend on its outcome. In addition, it will also make possibility of “closing” or “broadening” networks due to different or similarity of cultural backgrounds. Position: The acceptance of intrinsic values makes very clear position that beauty is good by itself.

Distance: There is no distance between man-beauty because both are a part of nature. Distance is interpreted only as an effort that should be endured by human to get such a beauty.

140 Hierarchy: Hierarchy is a part of nature, including it is good by itself.

Network: Living nature always represent a network. For example, how ants build network among themselves and with other beings. Network is good by itself.

Hierarchy: Food is essentially produced by nature in which human only involves in efforts to get food. Human cannot live without food. Therefore, hierarchy of food is very close to man. Good food is seen a part of good life. Network: Food is a product of nature and social networks. A network to build efforts for achieving societies good life is seen intrinsically good.

Hierarchy: Because input is a part of nature and there will be no outputs without inputs, then both of them are inseparable. Then, hierarchy of input is also very close to man. Good input is seen a part of good life. Network: Input is a product of nature and social networks. A network to build efforts for achieving societies good life is seen intrinsically good.

Hierarchy: Beauty is a part of nature and they are inseparable.

Network: Beauty is a product of nature and social networks. A network to build efforts for achieving beauty societies, which reveal good life, is seen intrinsically good.

Results in Table 6.1 suggest that there will be different outcomes of different philosophical orientation of analysts or of decision makers when they are dealing with agriculture. It implies that there will be different points of view hold by decision makers of what will be regard as a right policy in creating a plan or doing agricultural development. Each philosophical orientation has its own value. But, for a complex subject such as agriculture, there is a philosophical orientation such as called eclecticism which try to use an eclectic approach, namely choosing what is the best or preferred from a variety of sources of philosophical orientations. In Table 6.2 below, I use a result of analysis provided by Norgaard for comparison. Noorgard also concludes that we need a more appropriate cosmology to tackle an issue such as environment. Table 6.2. Dominant and alternate premises of philosophical orientation134 Dominant Premises

Alternate Premises

Atomism: Systems consist of unchanging parts and are simply the sum of their parts.

Holism: Parts cannot be understood apart from their wholes and wholes are different from the sum of their parts.

Mechanism: Relationships between parts are fixed, systems move smoothly from one equilibrium to another, and changes are

Systems might be mechanical, but they might also be deterministic yet not predictable or smooth because they are chaotic or simply very discontinuous. Systems can also be evolutionary. Contextualism: Phenomena are contingent upon a large number of factors particular to the time and place. Similar phenomena might well occur in different times and places due to widely different factors.

Universalism: Diverse, complex phenomena are the result of underlying universal principles, which are few in number and unchanging over time and space. Objectivism: We can stand apart from what we are trying to understand.

Subjectivism: Systems cannot be understood apart from us and our activities, our values and how we have known and hence acted upon systems in the past.

Monism: Our separate individual ways of understanding complex systems are merging into a coherent whole.

Pluralism: Complex systems can only be known through alternate patterns of thinking which are necessarily simplifications of reality. Different patterns are inherently incongruent.

Agricultural development calls for a new orientation of philosophical orientation that is required to be applied by each country with her own problems perspective. Such as indicated in Chapter V, knowledge gained from global experiences would be very useful. Table 6.3 below is provided for us to gain such insights and we will use them a part for our effort in developing vision on what is and what should be done area of agricultural development in the future. 134

See Richard Norgaard, “Chapter 6: The Philosophical Roots of The Betrayal”,

http://www.swaraj.org/shikshantar/norgaard.html

141

There is correlation between food availability and income per capita. Cambodia with income per capita US$ 300 has only 1970 kcals/day of food availability. At another extreme, industrial countries in general have income per capita US$ 3410 and their corresponding food availability 3430 kcals/day. However, income per capita indicator does not necessarily reflect life expectancy, child malnutrition, or under-5 mortality rate. Vietnam with only has income per capita US $ 430 can reach life expectancy 70 years, child malnutrition 18 % and under-5 mortality rate 20 per 1000 person. Indonesia, for example, has income per capita US$ 710 but Indonesia’s life expectancy was lower and under-5 mortality rate was higher than that of Vietnam’s. If we use per caput availability measure, Vietnam has 2500 kcals/day, which is almost the same with other ASEAN countries. Income per capita is clearly an economic indicator. It is a value indicator in a sense that it is measured by monetary value. It reflects power of a household to purchase or exchange something with others. On the other hand, life expectancy, malnutrition or mortality rate are other indicators that are a part of human indicator. They are indicators that measure human situation: life, death, or suffering. Interpretation of these indicators is more difficult than interpreting income per capita, especially when we see them in term of value. To have children malnutrition is bad by itself and the same thing with early death. There are many causes of one’s death that should be explained other than by food availability or income per capita. Table 6.3. Selected key indicators of development GNI/capita (Atlas) $ 2002

Per caput Food Avail/Capita (kcals/day) 1999-2001

Life Expectancy Birth Years 2002

Cambodia China Indonesia Lao PDR Malaysia Mongolia Myanmar Papua New Guinea Philippines Thailand Vietnam

300 960 710 310 3540 430 ** 530 1030 2000 430

1970 2970 2970 2280 2920 2070 2810 2180 2370 2470 2500

54 71 67 55 73 65 57 57 70 69 70

45 10 25 40 20 13 28 ** 32 18 34

138 38 43 100 8 71 108 94 37 28 26

East Asia/Pacif. Europe & central Asia Latin America& Caribbean Middle East & North Africa South Asia Sub Saharan-Africa

960 2160

69 69

15 **

42 37

3280

2880 2890+ 3430++ 2840

71

9

34

2240

2950

69

15

54

460 450

2450 2210

63 46

48 **

95 174

at

Child malnutrition under-weight (1994-2002

%

Under-5 mortality rate per 1000 (2002)

Source: 1. FAO, “Summary of Food and Agricultural Statistics. 2003. (for food availability data) 2. The World Bank, “2004 World Development Indicator data Base. 13 April 2004. Note: + is developed countries transition economies and ++ industrialized countries.

In general, improvement in economic performance will positively affect quality of life. Such as already commonly realized, however, development issues are far more complicated than just increasing income per capita. The same thing with agricultural development is just not increasing food production or agricultural productivity in general. It should be able to maintain natural resources capacity, increasing social capital, and providing good life in general, including other beings’ quality of life. It is our common tasks for now and future.

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Vision: A Framework of thinking I will not write down a vision statement in this Chapter. I will rather develop of a framework of thinking that can be seen as a model of thinking in order to internalize what is an appropriate vision is considered appropriate by a decision maker or a group of decision makers that face similar problem. In fact this section is also a response to a development of tradition that was almost mushrooming since early 1990s, namely every body or agency tried working hard to develop a vision. There has been allocated a significant amount of money, time, and efforts to establish of such new tradition. However, the results of such new tradition have not been significantly change societies’ performance, including in agriculture development area. A vision is a dream under a conscious situation. It is not easy to have a dream when we are awake. In fact, we see that a word we use is already in conflict with a rational interpretation. A normal word of using a word of dream is when we are in sleeping situation. However, why American uses the word of dream in “American Dreams” as symbol of their spirit? Here laying down a “magic of word” or a “mantra.” A mantra is an expression or idea that is repeated, often without thinking about it, and closely associated with something. A mantra can also be interpreted as a sacred word, chan, or sound that is repeated during meditation to facilitate spiritual power and transformation of consciousness. Therefore, it is not only a dream but also a dream that is already internalized into one’s belief or societal values. In present practices, we observed that after we have written a document of vision, we put the book on a shelf. Then, we are busy working on other things. Even though the top leader holds the vision, which was already written in a document, when someone else replaces the leader, a new leader formulated another vision. If a replacement of a leader is quite often, then people see that there leader changing a vision every time. If this is a case, then that is not a vision because a vision should extend through a long horizon. We can imagine how Chinese leaders’ vision in the past when they decided to build the Great Wall, or a vision of Old Mataram kings when they build Barbour Temple, or Indonesia’s founding fathers to keep their mind in order to fight for Indonesia’s independence. A vision is not only a leader’s perspective. All leaders certainly must have his/her owned vision. However, social change is not dependent on only individual actions. By definition, a leader is an individual whose mind is followed by people. Gardner (1995) described that leaders are “persons who, by word and/or personal example, markedly influence the behaviours, thoughts, and/or feelings of a significant member of their fellow human beings. The leaders’ voices affected their worlds, and, ultimately, our world (italic from the author)135. Therefore, communities necessarily share a leader’s vision and in turn, it will be becoming communities’ vision. I used word of “mantra” to express an idea that a vision should not only true in a sense of a product of a good mind, but also should be “magical.” By magical I mean that a formulation of vision is so beautiful or pleasing as to seem supernaturally created. It is a part of creativity, which is by itself expressing the quality of being creative, or the ability to use imagination to develop new and original ideas or things. Without any doubt that all of the process of creating vision calls for hard work or high endurance. We may learn from the case of creating Bahasa Indonesia (Indonesian National Language). Creating a language that is used by more than 215 million people is very far from an easy job. Indonesia is composed of more than 17,000 islands and hundreds of local languages that are rooted from different cultural backgrounds are used by each ethnic or sub ethnic entities. Majority of Indonesian are speaking Javanese. In 1928 when Sumpah Pemuda (oath of Indonesian youth) was declared, there was less than 3 % of Indonesia people spoke Bahasa Indonesia. However, the Javanese or other cultural backgrounds had not rejected that they should accept and learn Bahasa Indonesia. Now, all Indonesian younger people speak Bahasa Indonesia. Why? Sumpah Pemuda is not only containing a good formulation of language but is also “magical” just like what we see with “American Dreams.” 135

Howard Gardner, 1995. Leading Minds. BasicBooks, New York.

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What can we do in an area of development, such as sustainable agricultural development? If we learn from the case of Bahasa Indonesia, we found that a vision, which will become a vision of a nation, should be able to express the spirit of all people. The most important spirit for survival or better life is freedom. I fully agree with Sen that expressing an idea of development such as “ Development as Freedom”136. What President Soekarno said that agriculture is a “matter of life or dead” is an expression of freedom. However, his followers wrongly interpret such an ideas. According to Sen (1987), an idea of freedom has two meanings137. First, freedom is an expression than one is free from intervention of others. Moreover, second, freedom is an expression of one’s capabilities to face varieties of his/her problems such as poverty or injustice. Following this interpretation, we may integrate into a form of matrix such as presented below. Table 6.3. Implications of two meanings of freedom Having no capability (type I unfreedom)

Having capability (type I freedom)

Unfree from Totally have no freedom intervention (Type unfreedom)

Having freedom according Type I expression

II-

Free from Having freedom according Type II expression, but Having freedom according both intervention have no freedom according Type I expression) expressions of freedom (Type II freedom)

We learn from Table 6.3 that a different belief about freedom has far reaching implications on people behavior. If we notify having no capability as Type I unfreedom and having capability as Type I freedom, and further more we express free from intervention as Type II freedom and is unfree from intervention as Type IIunfreedom, we may have four possibilities of combination of them. Let us imagine now that we make a survey that asking people to fill a form with his/her choice, which he/she prefers. We may guess that all respondent will choose an alternative of having freedom according to both expressions of freedom because it is the best choice among those four alternatives. However, which one will be chosen: (a) having freedom according Type II expression, but have no freedom according Type I expression; or (b) having freedom according Type I expression, but no freedom according Type II expression? It is not an easy choice. Having no capability-free from intervention choice is weak for a longer-run goals because having capability is necessary for being able to reach what a good thing to do or what is going to be in the future. On the other hand, having no freedom in a sense of one’s behavior is fully intervened is also suffering psychologically. One is usually expressing this situation as like people who is in a jail. Even though one, for instance is served good food, nice cloth and sleep well but one has no freedom. In a democratic country a law, a regulation, or a policy is by itself a form of collective decision, which 136 137

A. Sen. 1999. Development as Freedom. Alfred A, Knoff, New York. Amartya Sen, 1987. Sir John Crawford Memorial Lecture Washington, D.C., October 29, 1987.

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is made by government subject to aspirations, and control of people. Therefore, it is a form of coercive intervention. Such coercive intervention will always be with people who live within an organization such as a country. Therefore, it is impossible to abolish an intervention for seeking freedom. The point here is not an intervention per se. Just like we have to live with air, so the question is that whether the air is fresh or polluted. People do not want to live in a polluted air. We use this as an analogy; people cannot be free from intervention but what kind of intervention is implemented. Actually, law, regulation, or policy is an institution that is created through evolutionary process to make good people free from negative intervention such free from criminals. However, of course, there is still possibility that law, regulation, or policy is created to serve certain groups’ interest. So, the point is whose interest count? That point is one that most developing countries, including Indonesia have not paid so much attention. Rewriting what had mentioned by Lincoln (1859), such as follow, is important to remind us when we want to build a vision. Lincoln said: “Agricultural fairs are becoming an institution of the country. They are useful in more ways than one. They bring us together, and thereby make us better acquainted and better friends than we otherwise would be… They render more pleasant, and more strong and more durable bond of social and political union among us… (F)armers being the most numerous class, it follows that interest is most worthy of all to be cherished and cultivated—that if there be inevitable conflict between that interest and any other, that other should yield”138. What Lincoln said in 1859 is what we still see in most developing countries—“Farmers being the most numerous class, it follows that interest is most worthy of all to be cherished and cultivated”. However, their interests are not represented or not internalized in laws or regulations. Therefore, it is by itself government makes them unfreedom. We have to express deeply that freedom is guaranteed not in a form of physical power, but in a form of laws and regulations we are aware that our system of power is a democratic system. So, following this frame of thought we can reach a conclusion that there will be no conflicting ideas of type I and type II freedom. We have three kinds of action than should be managed in order to develop freedom as a basis for sustainable agriculture, namely: to do, to be and to have or to posses. In this regard, we have two kinds of intervention, namely, planning and designing. Such as has been mentioned in Chapter II, a concept of planning reflects direct intervention of power to influence people behavior and this is not the case for a concept of design. So, a concept of planning should be improved in a sense that intervention is conducted within a limit of how to assure future desirable goals is achieved without sacrificing people’s freedom. In addition, a design is created to broaden people (farmers) opportunities of what to do, to be, and to have. After having a long discussion, it time to ask what is our vision, or at least my vision, of agricultural development which can be expected will be sustainable. I believe a good, healthy and wealthy farmers are determinant of sustainable agriculture. An expression of it is that freedom for farmers, freedom in both cruel intervention and freedom from incapability. Interpretative Summary In this Chapter, we have developed of action of thought that is important for renewing our vision of sustainable agricultural development. It is started by quoting a deep thought in Dhammapada that place a high important of action of thought in seeking a desirable good future life. Based upon this notion we develop of framework for seeking a uniqueness or relativity of agriculture with other human actions. Here we arrived with a notion that position, distance, hierarchy and network in association with agriculture is very complex. This finding implies that we need a new philosophical orientation, which we called eclecticism. Furthermore, we analyze what is the most important implication of agriculture by using a 138

An addressed of Abraham Lincoln which was delivered before the Wisconsin State Agricultural Society, Milwaukee, Wisconsin, September 30, 1859.

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previous framework. We come with a notion that there is much closed relation between agriculture and freedom. This finding provides a great insight for renewing our vision. Based upon this finding and supported by very illuminating case such as Sumpah Pemuda and Bahasa Indonesia creation, we come with one of the most important principle elements for having sustainable agriculture: FREEDOM FOR FARMERS. So, our mission is how to create laws, regulations, policies, planning, designs and other aspects of development for reaching future desirable agriculture such as expressed by FARMERS’ FREEDOM.

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CHAPTER SEVEN FREEDOM, JUSTICE, WELFARE AND EQUALITY From every mountainside Let freedom ring. Samuel Francis Smith

In Chapter VI we have discussed an essential meaning of vision of agricultural sustainable  development within a context of varieties of philosophical orientations. One of the most important results  is that we have to take into account of freedom of farmers as our foundation for future agricultural  development. We will use this conclusion as a foundation for conducting further analysis. The purpose of  underlying analysis in this chapter is that to seek a relation between freedom and other fundamental values  in development issues, namely justice, welfare, and equality.   Freedom, justice, welfare and equality are basic values that are invisible in a sense that our limited capacity to observe them directly. However, our deep mind will be able to “measure” that is human actions are guided, conditioned, and motivated by those basic values. As a free man, a man can use his or her capability to pursue his/her own interests. Without a sense of justice and equality a man or a women will, for example, misuse of his/her freedom or welfare. In this chapter, it will be tried to seek knowledge of relations of those basic values and will try to make use of the results for constructing thoughts dealing with the vision of agricultural development that has been stated in previous chapter. Evolution in Values Concepts of freedom, justice, welfare, and equality are concepts that have been in association with social life since at the beginning of human existence. In a religion such as in Christian or Islam, we are told that how men have to move from heaven to earth, and after that men have to struggle for life. It is a form of justice according to the God’s rule. It gives us an idea that freedom and justice are subjected to rules. It also gives us insight that welfare is determined by freedom. In addition, equality, for example between Adam and Eve, were also determined by God’s rule. As a man, Adam, and as a woman, Eve has intrinsically different natural characteristics which represent each uniqueness as a human being. It is the God’s rules that make them distinct or unique. Of course, there are similarities among them. However, value of uniqueness cannot be ignored. If fact, the value of existence of uniqueness must not be forgotten, it makes possible of regenerations of human beings. Evolution of human being shows that there is also evolutionary concepts or perceptions of meanings and functions of freedom, justice, welfare, and equality. In an ancient time, perception of freedom has been understood as a free capacity to exercise physical power to take advantage of other people. That is why slavery was institutionalized. Therefore, a master set up the rules and a slave must obey fully. We can imagine there would be no transactions between a master and a slave. The cost of production at that kind of institution would be just a cost of maintaining a slave to be able to work. In fact, a slave was also a source of income (welfare) because a slave was a tradable commodity. Because a

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slave was major input in production, we can imagine that how many slaves can indicate welfare of a master they have. Here, a free man is a master. According to present rules, such a situation must be violating basic human rights. There was no equality between a master and a slave. Therefore, the meaning and relations between freedom, justice, welfare, and equality had been in the hand of a master. Human civilization developed over time. As technology of survival shifted into a higher degree of sophistication, social institutions also evolved into a higher compatible level. This co-evolutionary process, following a term used by Nogaard, has also changed meaning of freedom, justice, welfare and equality of people within their social context. Agriculture is one of the first steps of civilization. In this era people cultivated land for supporting their living, instead of hunting and gathering. If now people still-hunt, for instance, hunting is just a mater of a hobby. At the beginning of agriculture era, rules also had been set up by rulers. However, the rulers now become a form of larger groups of rulers. Farmers were a group of people that stay outsides of center, which was called a rural area. Rulers lived in a center, which is called a city. In this era, economic sectors were dominated by agriculture. In fact, a size of a state was determined by how large a state can control fertile lands that can produce sufficient food for supporting the state’s increasing population. Power was in the hand of military, politicians, and religious leader who lived in cities. Farmer was a group of people that has no political power. Farmer’s position in a social hierarchy was just one step higher than a slave. Farmer’s power was very limited. In fact, what they gave to their rulers is a form of payment for their security from violence that might come from both their rulers and others. Agricultural revolution can be interpreted as an era, which was marked by a situation where people stayed at the same place and cultivate the lands by using their endowment of their technological knowledge. Farmers domesticated plants and animals. They developed tools and irrigation. As a result, agricultural productivity significantly increased. One of the most important products of agriculture is food. Therefore, increasing food production is increasing freedom for people to do valuable acts and to reach life that is more valuable. The existence and sufficient of food was a necessary condition for freedom and after this is reached the next steps of development will follow. Agricultural institution implies that there must be a set of rules that have made evolutionary process shifted from hunting and gathering to agriculture. The rules must also give more benefits to both farmers and other group of people within their social bound. This mutual benefit was necessary because without mutual benefits there will be no spirit to grow. Mutual benefits will come to an existence if there is a mutual concern and mutual respects. Sufficient food produced by agriculture and rural areas, a product of creativity and hardworking under class of people, has expanded social opportunities in cities, where a place of rulers and other citizens live. The growth of art, culture, and trade, and so on in cities in fact was supported by agriculture, which is a profession of farmers. Food availability and food security have expanded city’s professions. Industrial revolution will never be in existence without agricultural revolution at a first place. One of the most interesting questions here is that what is such a thing that has induced a shifting situation from pre-agriculture to agriculture era and from agriculture to industry era. In a context of values, we observed that world’s communities have mostly abandoned institution of slavery. Increasing of food production was not based upon slavery but is determined by advancement of technology, institutions, management, and knowledge. So, one of the most

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embarrassing value measured by present culture had been abandoned, namely slavery. However, to what extent such an abandonment of value has improved freedom, welfare, equality, and justice in relation with farmers as a subject of agriculture is still a valid question. The world now is divided into two groups: (i) developed countries and (ii) developing countries. Developed countries are characterized by huge surplus of food and higher income and developing countries are characterized by the opposite situation. To have some insights of what relationships between freedom, justice, welfare and equality we will use conditions that are associated with developed and developing countries. The case will be seen from farmers’ point of interests. Developed countries Developed countries now are champion of democracy. There are various meanings of democracy. One of them is that democracy implies free and equal right of every individual to participate in a system of government, often practiced by electing representatives of the people by the people and for the people. We see there is association between freedom and equal right. Therefore, rights of farmers and rights of other people are equal. What interesting here is that number of farmers in developed countries now is much less than number of other groups of citizens. Number of farmers in developed countries is less than 5 % and their contribution to gross domestic product (GDP) is only about 2 %. However, why agriculture in developed countries are protected by rules that have been created by majority that most of them not a farmer? If we use selfish as a basic value of an individual that reflects his/her choice only concerns with his/her own interests, needs, and wishes while ignoring those of others, then it is not logical to see agriculture has been protected. Therefore, there must be the people in developed countries are not selfish in a sense they also believe that their farmers should also share better life. The word of equality of rights does not mean that farmers have not received protection because of their numbers are small. In fact, equality of rights has been interpreted rights to share a national welfare that have been created by all citizens. The supports made by the states can be interpreted that farmers are entitled for receiving a good share of a country’s national income. Freedom of farmers was not given directly to market mechanisms because in a market what has been sold and bought is only a good that its values reflected in its price. Market price, therefore, cannot reflect full values contained in a good such as food. Therefore, an administrative system has been created and has taken care of farmers’ interest through establishing rules and regulations that enable protecting farmers’ welfare. There is a sense of justice for the weak parts of people that enable social institutions evolving over time. What has been created by Abraham Lincoln through Homestead Act 1862 and Morrill Act 1862 and what has been established by Franklin D. Roosevelt through Agriculture Adjustment Act 1933 is an example of how social institutions have protect a group of the weak that make the whole social institutions evolved and make a country stronger. Freedom, welfare, justice, and equality are endogenized into an administrative system, which may vary from one country to other countries in developed countries. The essential thing is that such problem has been realized and taken care of by establishing values and rules that protecting farmers’ life on a one hand and assuring national freedom from lack of food on the other hand. We can observe a tradition of protecting of the weak such as farmers as a character of developed countries up to now. The following figure and Table show how governments in OECD countries 139 have 139

See OECD. 2004. Agricultural Policies 2004 AT A Glance. Organization for Economic Co-operation and

Development. OECD, France.

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supported agriculture that resulted in agriculture in developed countries have not only grown but also has dominated the world’s food production. What is actually paid by those supports? Market has taken care what is sold and bought in the market up to properties of the good that can be internalized in market price. However, price of freedom in association with or due to, for example, abundance of food, which is not only in term of quantity but also in quality, security and safety, is not internalized in a market price. Food abundance is implicitly believed that it is good. Food abundance in developed countries now is also not coming without long process in history. Cases of famine in Ireland that killed some 1.5 million people more than 150 years ago or experiences of starvation because of wars, and evolution of knowledge of relationships between food and health have inspired people mind on how important food is for human welfare. Perceived inequality or injustice will produce unproductive feelings and chaotic behaviors. However, a state of abundance will always bring a situation that market price will be low; even it will approach zero price. In fact, we learn from a case of abundance in great depression in 1930s, agricultural prices were so low and make farmers suffering. If price of food is so low then there will be no incentives for farmers to produce food more than what farmers need to support their own. If we want to have secured food situation, means abundance food. Therefore, there is price of being abundance. And, the price cannot be supplied by existing market situation. It should be substituted by other kinds of market that enable a nation has food abundance but in an efficient mechanism. There is no such a free lunch. We have to “buy” freedom, justice, and equality. Here we face not a private thing like shoes, but we deal with a social good that must be produced socially.

Developing Countries Most developing countries have limited capacity to produce sufficient food for their people. Historically, most developing countries have been colonialized for a long period. According to our line of thought, what the most damaging effect of colonialism is that freedom of people being colonialized has been taken by the colonizer. There was all kind of freedom, including one of the most valuable assets a man and woman have, that is mind has been taken. It means investing in mind is prohibited. Furthermore, one of the most valuable social institutions, namely mutual respects, has also been destroyed. We can imagine what kind of institution will be in a society if there are no mutual respect and no investment in mind. Most people in developing countries also deprived from food and they are living in poverty. The meaning of poverty is not only in terms of material wealth but also in term of other meaning of life. Poor education, poor health, and other kinds of backwardness are characterized of most people in developing countries. Because most people in developing countries are dependent on agriculture then weakness of agriculture becomes a major cause of the whole economic weakness. The following figures demonstrate how weak is developing country agriculture (These figures are reproduced from IPC Position Paper, No. 3, 1996). Developing countries position in per capita cereal production from 1980 to 1991 and its projection to 2010 indicating that these countries’ per capita cereal production will only increase slightly. Per capita cereal production of developed countries in 2010 projected will be more than three times of cereal per capita production in developing countries. One of the most important facts is that developing countries should face and must work harder for solution. The problems started from implications of population size and growth on one hand, and constraints for increasing productivity and maintaining environmental sustainability and market limitation on the other hand. This situation cannot be separated from earlier history of globalization. Present world’s over supply of food is because of policies in developed nations. Increasing capabilities in science and technology and excessive provision of subsidy to farmers in developed countries has increased food production in general but it also caused negative impact to developing

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countries. Singh (2002) estimated that world’s per capita food consumption (kcal/person/day) would increase from 2761 kcal/person/day in 1995/97 to 3100 kcal/person/day in 2030. Food consumption in industrial countries will grow from 3374 kcal/person/day in 1995/97 to 3550 kcal/person/day in 2030 and in developing countries; food consumption will increase from 2626 kcal/person/day to 3020 kcal/person/day in that period. Within that situation, the level of Self Sufficiency Rate (production/demand for all uses) of developing countries for cereal in 1995/97 was 90 %, and it will decline to 87 % in 2015 and 86 % in 2030. Net trade balance for cereals of developing countries will increase from –107 million ton in 1995/97 to –270 million tones in 2030 140. IFPRI (1999) provided another estimate, namely, that developing countries will increase their food imports from 106 million ton (1995) to 192 million tons (2020). So, the issue is very clear: developing countries will face a very difficult situation: have not enough food for themselves. It means lack of freedom. And, it also means there will be lack of welfare, justice and equality. Welfare There is variety of measures or indicators of welfare have been developed by researchers from variety of backgrounds. In economics, we learn about consumer’s surplus as measure of economic welfare; and we learn about income or gross domestic product as a measure of welfare. In this section, we will use food share as a measure of welfare followings Working’s law. According to Working’s that a household welfare is indicated by household’s food share, namely the same food share in households’ budget reflects a similar welfare level. Data provided by Seale at. al., (2003) such as presented in Table 7.1 shows food share data of household in 144 countries in 1996. Even though the data used are almost ten years old, the essential thing here is that to capture a pattern of food budget share across different level of development. Food share reflects a part of household income goes to food. The figure of household food budget share does not only empirically sound to reflect household welfare but also theoretically ground. Theil and Clements (1987)141 and Deaton and Muellbauer 1986)142, among others, have provided theoretical proof and empirical evidences of usefulness of food budget share to explain consumer’s behavior and to estimate household’s welfare. Data in Table 7.1 shows that household food budget share ranges from 73.24 % in Tanzania and 9.73 % in USA. In general, average household food budget share in high-income countries was 16.97 %, in middleincome countries 34.69 % and in low-income countries 52.28 %. It is very clear that households in Tanzania spend 73 % of their expenditure for food. On the other hand, household in the US only spends 9.7 % of expenditure for food. So, a household in the US has more than 90 % of their expenditure for non-food category such as housing, education, health, or recreation. In general, in low-income countries less than 50 % of their expenditure allocated for non-food. The higher the food share, the poorer the household will be. For this class of household, life is just struggling for food. Because the environments also poor, so what kind of food they consume is also predictably low quality of food. We can imagine where members of family such as their children normally should go to school; actually, they must go works to find some foods. So, we can say that because they are poor then they have no freedom. Freedom is not independent from 140

R.B. Singh, 2002. The State of Food and Agriculture in Asia and the Pacific: Challenge and Opportunities. International Fertilizer Industry Association, France.

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H. Theil and K.W. Clements, 1987. Applied Demand Analysis. Result from system-wide approaches. Ballinger Publishing Company, Cambridge.

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A. Deaton and J. Muellbauer, 1986. Economics and Consumer Behavior. Cambridge University Press, Cambridge.

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welfare. In addition, wide inequality between developing countries and developed countries will represent different level of freedom among them. This situation will have far reaching implications on justice. Most importantly is a notion of justice and equality at a global level. Those are, in fact, interrelated.

Source: IPC Position Paper No. 3, 1996143.

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International Policy Council on Agriculture, Food and Trade, 1996. Attaining Global Food Security by 2025. IPC Position Paper No. 3. Washington, D.C., November 1996.

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Table 7.1. Food expenditure shares of total household budget across countries, 1996 Country

Food Expenditure (%)

Total expenditures US =1)

Low Income: Tanzania Nigeria Tajikistan Zambia Yemen Malawi Madagascar Mali Mongolia Benin Kenya Sierra Leone Nepal Turkmenistan Congo Senegal Vietnam Bangladesh Pakistan Azerbaijan Cote d'Ivoire Paraguay Uzbekistan Kyrgyzstan Cameroon Moldova Bolivia Ecuador Armenia Sri Lanka Jordan Albania Indonesia Jamaica Zimbabwe Guinea Syria Georgia

73.24 72.97 68.94 60.81 61.13 53.35 65.88 53.27 58.74 55.40 45.82 62.09 57.88 50.82 46.92 53.35 64.75 56.05 46.99 73.51 44.32 27.27 48.33 47.15 43.80 43.45 42.52 29.09 69.66 63.55 37.67 69.26 50.62 34.78 25.58 43.69 47.92 47.39

0.020 0.029 0.034 0.035 0.035 0.038 0.038 0.039 0.039 0.049 0.053 0.058 0.058 0.060 0.065 0.069 0.071 0.072 0.082 0.088 0.090 0.091 0.095 0.096 0.096 0.096 0.101 0.103 0.107 0.108 0.114 0.123 0.126 0.126 0.127 0.130 0.138 0.139

Middle Income Ukraine Philippines Peru Botswana Thailand Morocco Venezuela Macedonia Belize Egypt

45.03 48.35 30.31 32.80 28.56 45.61 29.47 34.73 31.17 48.08

0.153 0.163 0.168 0.168 0.170 0.176 0.177 0.185 0.185 0.186

154 St. Vincent & Grenadines Swaziland Lebanon Belarus Kazakhstan Dominica Latvia St. Lucia Brazil Bulgaria Russia Fiji Grenada Turkey Lithuania Romania Iran Mexico Bahrain Chile Antigua & Barbuda Poland Trinidad & Tobago Estonia Gabon Tunisia St. Kitts & Nevis Uruguay Slovakia Hungary Argentina Oman Qatar Slovenia High Income: Czech Republic Greece Korea Portugal Spain Ireland Singapore Mauritius Israel New Zealand Finland Bahamas Sweden Netherlands France United Kingdom Belgium Norway Italy

35.87

0.187

27.48 39.33 50.45 51.82 38.27 41.76 46.62 22.71 30.70 34.35 36.28 40.99 32.60 40.42 45.26 32.55 26.63 28.55 22.96 36.12

0.197 0.201 0.203 0.203 0.203 0.214 0.216 0.217 0.218 0.225 0.232 0.233 0.236 0.243 0.248 0.258 0.263 0.269 0.273 0.273

30.65 22.06

0.283 0.291

33.45 47.94 35.95 36.33

0.299 0.301 0.307 0.311

25.25 32.06 22.54 32.79 24.14 26.22 21.34

0.314 0.319 0.346 0.385 0.403 0.426 0.437

25.00 21.17 31.64 23.23 17.52 16.59 13.04 28.12 17.70 15.19 14.67 35.73 13.26 13.29 15.34 16.37 14.36 15.98 16.59

0.451 0.485 0.494 0.505 0.508 0.522 0.536 0.558 0.577 0.585 0.587 0.593 0.638 0.646 0.682 0.686 0.693 0.695 0.701

155 Austria Germany Australia Japan Canada Bermuda Switzerland Barbados Hong Kong Iceland Denmark Luxembourg United States

13.53 13.09 15.07 14.88 11.68 14.23 14.57 11.10 10.28 18.90 14.02 17.08 9.73

0.715 0.718 0.732 0.741 0.754 0.782 0.794 0.796 0.799 0.801 0.808 0.972 1.000

Low-income Average

52.58

0.080

Middle-income Average

34.69

0.249

High-income average

16.97

0.674

Source: Seale, James Jr., Anita Regmi, and Jason Bernstein, 2003. Another important information provided by Seale et. al. (2003) is income elasticities across 144 countries. Table 7.2 just contains income elasticities for food, beverages & tobacco (food). Interested reader can consult Seale et. al. (2003). According to Working, patterns of food share negatively correlated with income level following semi-logarithmic relationships.144 Table 7.2 show that income elasticities for food for Tanzania is the highest one, namely, for any income increase 1.0 %, a household in Tanzania will predictably increase 0.8 % for food. On the contrary is in the US. In the US, any increase income of a household 1 %, there will be only about 0.10 % allocated for food. The average income elasticities for food in low income, middle, and high-income countries were 0.72, 0.60, and 0.33. In Table 7.2, we can learn income elasticity estimates for 144 countries.

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In this volume we will not go into detail, we just use such information for only giving us insights.

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Table 7.2. Income Elasticities for Food Subcategories and Education, 1996 Country Low Income: Tanzania Nigeria Tajikistan Zambia Yemen Malawi Madagascar Mali Mongolia Benin Kenya Sierra Leone Nepal Turkmenistan Congo Senegal Vietnam Bangladesh Pakistan Azerbaijan Cote d'Ivoire Paraguay Uzbekistan Kyrgyzstan Cameroon Moldova Bolivia Ecuador Armenia Sri Lanka Jordan Albania Indonesia Jamaica Zimbabwe Guinea Syria Georgia

Middle Income Ukraine Philippines Peru Botswana Thailand Morocco Venezuela Macedonia Belize Egypt St. Vincent & Grenadines Swaziland Lebanon

Food, Beverages & Tobacco 0.800 0.786 0.778 0.777 0.777 0.772 0.772 0.770 0.770 0.758 0.753 0.748 0.747 0.745 0.740 0.736 0.734 0.733 0.723 0.718 0.716 0.715 0.711 0.711 0.711 0.710 0.707 0.705 0.701 0.701 0.696 0.689 0.686 0.686 0.685 0.683 0.677 0.676 0.666 0.658 0.655 0.655 0.653 0.650 0.649 0.643 0.643 0.643 0.642 0.635 0.632 0.631

157 Belarus Kazakhstan Dominica Latvia St. Lucia Brazil Bulgaria Russia Fiji Grenada Turkey Lithuania Romania Iran Mexico Bahrain Chile Antigua & Barbuda Poland Trinidad & Tobago Estonia Gabon Tunisia St. Kitts & Nevis Uruguay Slovakia Hungary Argentina Oman Qatar Slovenia

0.631 0.631 0.623 0.623 0.622 0.621 0.617 0.612 0.611 0.609 0.605 0.602 0.595 0.592 0.588 0.586 0.585

High Income: Czech Republic Greece Korea Portugal Spain Ireland Singapore Mauritius Israel New Zealand Finland Bahamas Sweden Netherlands France United Kingdom Belgium Norway Italy Austria Germany Australia Japan Canada Bermuda

0.477 0.456 0.450 0.444 0.442 0.434 0.425 0.411 0.399 0.394 0.393 0.389 0.361 0.356 0.332 0.330 0.325 0.324 0.320 0.311 0.309 0.300 0.293 0.284 0.265 0.257

0.580 0.575 0.570 0.568 0.564 0.562 0.560 0.557 0.541 0.517 0.506 0.492 0.486

158 Switzerland Barbados Hong Kong Iceland Denmark Luxembourg United States

0.256 0.254 0.252 0.247 0.126 0.103 0.729

Low-income Average 0.602 Middle-income Average 0.335 High-income average

Source: Seale, J. Jr, et. al. 2003. Freedom as the origin Our analysis above suggests that there is very clear evidence that a path of evolutionary process for thousands of year finally come to an existence that majority of the earth citizens are still poor an inequality among developed and developing countries are still wide or even widening. In this situation, it is natural for us questioning about the most fundamental problem and seeking of what is the fundamental thing to have to be established for having better global future. History of civilization suggests that the starting point of non-marginal changes in human civilization is that the social acceptance of freedom of human being through establishing new values or rules for underlining new human and social affairs. Freeing people from slavery is one example and abolishing colonialization is another one. However, freedom in a sense of capability to do valuable acts and to reach valuable state of beings, calls for a set of values or rules that can make a freeman or a freewomen in term of an individual entity, or a free nation in term of collective actions, can grow spirit, broaden opportunities and increase capability to seek what they want. Such as has been explained in Chapter VI, freedom is an essential part of social design. With 8 billion people living on earth in 2020, it is very clear that degree of human interdependences across nation will significantly increase. Such interdependencies will cause any unwanted events such as wars or terror. One of the most important seeds of wars or conflicts is injustice. We commonly heard a statement such as freedom for justice or justice for freedom. Injustice is commonly perceived as a situation where there is high inequality among entities, namely where one group entity belong to the poor group and the rest is the rich one. If we learn from a case of slavery or colonialism, we can realize that abolishing those two kinds of social sickness in the past, has produce more benefits than its cost, both for the early master or early colonializers and to the slaves or the colonialized nations. So, the key is freedom, freedom for justice. Now, we apply that lesson to agriculture. Here we see very different situations between developed and developing countries agriculture. Actually, the two can be complementary if there is a mutual respects and commitment. Basic reason lies in natural and cultural endowment, namely most developing countries are in tropical region, and most developed countries are in temperate region. So, each region has its natural advantage for building global agreements together. Now, such a situation has not been capitalized. In fact, both are competing to each other. If this competition is continued and developing countries must depend on food supplies from developed countries (see, for example, self sufficiency rate for cereals of

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developing countries is around 80 %), we will put our future civilization in severe situation. One of reasons is that such a situation will also put burden to developed countries that have to feed the world. Second, it will cause a declining civilization of developing countries because without growing agriculture up to 2030, for example, there will be huge unemployed labor force and poor people in developing countries. This situation will also create negative externalities to developed nations. The principle of wholeness such as elaborated in Chapter VI suggested that establishing a structure of pair between temperate and tropical climate would create synergy just like in chemistry, not competition in a sense of zero or even negative sum-game. One of the best ways for freedom is that all countries with a large size of population must be able to produce sufficient food for them. It was realized in the past such as we experienced with green revolution. As, a result food production has been expanded significantly. However, such as Norman Borlaug had mentioned that green revolution was just for halting food problems for about 30 years. 145 What Borlaugh mentioned more than 30 years ago, now is already seen, namely, developing countries still struggling with how to feed themselves. We see the problem does not merely lie in technological issue, but it is more complicated one because its roots is in cultural perspectives, namely in our way of thinking, feeling and believing. We think of that to be a free nation, we have to be able to control other nation. Food can also be an effective weapon to gain one’s interest over the other. In the age of communication or information, the world has become a small world. So, if we want to be the world’s rulers it is by itself against nature of freedom of the world. Information or communication era will only be sustained based on certain social condition, namely there must be similar level of sophistication among people who engage in communication. It implies that people whose use their life is just struggling for food cannot be a part of communication era. So, if most people in the world are just struggling for food because they remain poor or illiterate, then the world will by itself shrink. Or, at the best level, what we can achieve is just a minimal size of potential available technology that can serve better or higher level of civilization. Unused potential technology is not only wasteful but it will reduce demand for further advancement. Who should move first? The problem is obvious. The efforts made by international communities have also been conducted. In 1970s we learned what the world called import substitution strategy; in early 1980s we learned Washington Consensus, and in the 1990s we learned Post Washington Consensus146. One of the most important lessons here is that framework of thought have not been founded based upon freedom point of view such as elaborated in earlier chapter. The foundation of international assistance lies in a mechanistic point of view such as just seeing food problem as a matter production function only (production function an sich). So, if we think it is lack of irrigation, then we build irrigation; if there is lack of fertilizer, then we just build fertilizer factory for supplying enough fertilizer; if we have no money, then we borrow money. Of course, physical inputs are necessary for expanding outputs. However, it should be differentiated with frame of thoughts, which is not physically determined. If we learn from history of civilization, we can have insights that evolutionary process has been induced by non-marginal changes in human mind. Such non-marginal changes in human mind is usually called era of enlightenment which has been enlightening the life of social mind. That was “a revolution” in social mind. It is true in the West and it is true in the East. Enlightenment is a process of renewal of culture, a process of learning and unlearning, a process of high creativity in all areas of human mind within a social context. 145

See Norman Borlaug. "The Green Revolution, Peace and Humanity." Lecture on the occasion of the award of the Nobel Peace Prize, Oslo, Norway, December 11, 1970.

146

See, among other, Y. Hayami,” From the Washington Consensus to the Post-Washington Consensus: Restrospect and Prospect”, Asian Development Review Vol 20, No. 2, 2003.

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A process of enlightenment is not the case in both action of thoughts and in the field of actions. What has been happening in our development thinking is that mostly a principle of how to operate the same technology within different socio-cultural environments. So, there has been green revolution all over developing countries. One of the most dangerous impact of this frame of thinking is that farmers have been conditioned to be dependent on the help of government and government in developing countries have been conditioned to be dependent on international agencies such as donor agencies. This approach does not only unsustainable but also it makes developing countries less capacity to develop themselves. One of the most intriguing evidence in practicing green revolution is that it was forced by using power. In fact, there was a tradition of thinking in extension work, namely: force farmers to use government recommended technology and then farmers will be habitable to use that technology. Furthermore, government has also controlled market but it was controlled in favor of non-farmers community. The argument is that food price should be cheap, so we learn about cheap food price policy. Furthermore, farmers have also been used as market for products such as fertilizer and pesticides which comes from outside the world of farmers. In short, farmers have been treated just as an object of agricultural development. An institution has been established to operate and to control that command and control approach of agricultural development have been practiced in the field works. Surely, this kind of philosophical development will not be sustainable. Major product of enlighten people is creativity within the boundary of mutual respects. Mutual respects reduced victims of crime and crime become social enemy. So, creativity grew and people sought their own welfare voluntarily. It is the foundation of growing trade and commerce all over the world’s history. The development of civilization was actually induced by trade or commercial revolution before industrial revolution comes into existence. This kind of process has not been practiced in agricultural development. In fact, what has been done is the opposite way of the process of enlightenment. Farmers have been ordered to do this or that. It is a social coercion using government institutions. What should enlighten us now is that basic functioning of agriculture: It is supporting human life. A basic of human life is freedom, and agriculture provides freedom. If a man or a woman has their own freedom, the next steps will come by themselves. There will be self-growing mutual respect and creativity in free-mind people. Within this context, at the starting point should be realized that agriculture cannot create farmers as a rich man such as what a banker can earn, for example. So, agriculture is by itself not for getting rich. There is self-evidence that there are almost no rich farmers (in Chapter 8 we will explore who become rich because of farmers). But, there should be normal wealthy farmers that have a good house, nice transportation and are able to send children to college. The reason is simple, namely values of farmers’ produced goods are not all captured by market price, so those benefits should have price. Here is the role of state or international communities to create an institution that enable farmers to capture those benefits. If we accept a proverb that says that is no such a free lunch, so this words also applicable to farmers that already give us “free lunch” because we have not pay the rest of characteristics of the goods that have not internalized in their price. International communities and government of every country, especially developing countries must seek a new way of agricultural development. This new way should be based on philosophy of freedom, such as what can we learn from enlightenment era. In fact, enlightenment is a seed of freedom because freedom is a product of enlighten human mind. Farmers have to be freed from the past philosophical orientation and its practical implications that have made agriculture in developing countries weakening.

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Interpretative Summary In this chapter, we have already tried to seek philosophical foundation of agricultural development. By using historical perspectives and global evidence we come with conclusion that farmers should be freed from past philosophical orientation and its practical implications of agricultural development that have made farmers unfree. Since practices of global agricultural development have been determined or intervened by international frame of thoughts that have been engineered by international institutions, then the first move of unlearning old habits and building a new one should also be initiated by international agencies. It is necessary to enlighten agricultural development thinking by seeing at the beginning that farmers as subject of development. They are free to choose whatever they want to decide. However, choice is conditioned by the opportunity set that faced by farmers. Poor farmers face fewer opportunities than rich farmers. Farmers in developing countries, of course, are facing more constraints than farmers in developed countries. International cooperation should be directed toward establishing mutual respects and mutual benefits across nations, especially developing countries and developed countries. The trend that the developed countries should feed the world should be avoided by making agricultural capacities in developing countries expanding to the degree that they are able to feed themselves. Agriculture should be viewed as human activities that their basic functioning are not for seeking rich because it is a fact of life that agriculture cannot make one to be rich. However, reaching normal wealthy and healthy farmers are necessary. It cannot be done by relying on conventional market mechanisms because most of good characteristics of agricultural products are not registered in market prices. It is a global problem, so internationals communities must seek how to invent global mechanism for internalizing such externalities. Let us quote four enlighten words such as follows for giving us spirit and insight: "Agriculture is the most healthful, most useful and most noble employment of man. " - George Washington "No occupation is so delightful to me as the culture of the earth, no culture comparable to that of the garden." - Thomas Jefferson "There seem to be but three ways for a nation to acquire wealth. The first is by war, as the Romans did, in plundering their neighbors. This is robbery. The second by commerce, which is generally cheating. The third is by agriculture, the only honest way, wherein man receives a real increase of the seed thrown into the ground, in a kind of continual miracle, wrought by the hand of God in his favor, as reward for his innocent life and his virtuous industry. " - Benjamin Franklin “ It is said in Eastern monarch once charged his wise men to invent him a sentence, to be ever in view and should be true and appropriate in all times and situations. They presented him the words: “And this, too, shall pass away.” ….”And, yet let us hope, rather, that by the best cultivation of the physical world, beneath and around us; and the intellectual and moral world within us, we shall secure an individual, social, and political prosperity and happiness, whose course shall be onward and upward, and which, while the earth endures, shall not pass away.” - Abraham Lincoln

Agriculture is unique just like a zebra and a tiger; those are two kinds of animal having their own uniqueness. If we think of that a zebra and a tiger are just an animal without awareness that those are different animal, and then put them in one place, then surely it is natural to expect that a tiger will kill a zebra. Its uniqueness of agriculture as human life support should be used as a common denominator for setting social global actions to empower developing countries agriculture. It means, that self-control and mutual respects between developing and developed countries should be operationalized based upon basic values such as described above. Global common goods will be self-generated if we can promote better

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life of agriculture in developing countries just like what have been proved by history of freeing slave and colonialism. It is certainly a very difficult task for global communities but it will not make the evolution of civilization pass away.

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CHAPTER EIGHT 

THE WORLD ABOVE US: Farmers’ Points of View Perfect competition requires that everybody is free to move unlimited amounts of productive resources into any field that looks promising to him, and that there are no man-made obstacles to the movement of factors of production into and out of particular employment. ….. The condition of perfectly free entry into any field of economic activity is certainly not satisfied in reality. There are thousands of barriers keeping out newcomers from particular occupations, trades or industries at particular places..Some of the barriers are the work of private organization, others are the work of public institutions. Fritz Machlup

What do we expect in our life if we count that we have passed 2005 years, or about 731,825 days or 17,563,800 hours since the birth of Christ? We also could take a longer period of time than that because history also told us that within ancient times, there were also great civilizations such as found in Greece, Mayan, Egypt, Babylonia, India, or China. We see that such a great civilization, if we measure with cultural achievement such as reflected in languages, temples, irrigation or other human artifacts, had spread all over the world since more than two thousand years ago. Agriculture itself has been practiced for more than 7,000 years. Lowdermilk has documented the impact of agriculture on civilization in “Conquest of the Land Through Seven Thousand Years”147. In this report Lowdermilk wrote: “Records of mankind’s struggles through the ages to find a lasting adjustment to the land are found written across the landscapes as “westward the course of empire took its way”. Failures are more numerous than successes, as told by ruins and wrecks of works along this amazing trail. From these failures and success we may learn much of profit and benefit to this young nation of the United States as it occupies a new and bountiful continent and begins to set up house for a thousand or ten thousand years—yea, for a boundless future”.

Agriculture is mother of civilization. The growth of human activities in certain regions was determined by stock of food that could be gathered by communities. The invention of plants and animal domestication and capabilities of communities to build and to manage irrigation in all over the world have shown that such capabilities were a determinant factor in accumulating varieties of wealth. However, such progress had been interrupted by varieties of causes that made digression of civilization such as shown, among others, by Lowdermilk148. After more than 2000 years, we evolved, if we look around, then we still found there are billions of people still struggling for food, water and shelters, and for other kind of human basic needs. However, there are also a small part of the earth planet citizens that enjoying very luxurious kind of life that consume more than 80 % of resources that the earth produced. Therefore, we see that the poor majority and the rich minority share the same earth at the same time. Can we expect such kind of living pattern will result in sustainable future? In Chapter VII, we discussed about freedom, justice, equality, and welfare. In Chapter VI, we come with a conclusion that the deep meaning of agriculture is to give us freedom and so give us opportunities for expanding our capabilities to reach our dreams for having good life. If we believe that 147

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W.C. Lowdermilk, “Conquest of the Land Through Seven Thousand Years”. U.S. Department of Agriculture, Soil Conservation Service, S.C.S. MP-32, February 1948. Lowdermilk documented what he called “Graveyard of Empires” in the Near East, China, Africa, Europe, and America.

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agriculture is a necessity in association with good life of all people, then it implies that it is also necessity for protecting agriculture fro its failure. However, as we have seen in earlier chapters, and we will explore deeper in Chapter IX, the world of agriculture in developing countries and in developed countries as well are in crisis now. It seems natural that agricultural communities live in rural areas. Agriculture is an industry that directly using sun light, waters, air, plants, animals, soil and all kind of nature gives us. Therefore, agriculture produces what we call primary products149. I this process, agriculture call for a large size of land per unit of production. The land is available in rural areas. The main implication of this geographical pattern is that agriculture is located at a place that has longer distance150, physically, economically and most important politically from the centers of power, namely cities. Policy makers, traders, bankers, scientists, technologists, artists, and other kinds of people, except farmers are city citizens. So, based upon farmers’ points of view, up to present time, and predictably will remain in the future, except majority of people are able to learn from history, there are two kinds of worlds. First, rural that means agriculture with farmers as majority; and second, cities that means all kind of types of living other than farmers. That kind of world, I call it “the world above us” because they are controlling or even determining condition of life of farmers and other rural citizens. We will explore this phenomenon and we will try to answer what implications of such phenomenon for our future in this chapter. Matrix and Borders It is natural for human being to pursue freedom, justice, equality, and welfare. It is also not just a matter of survival but it is a matter of principle for reaching a good life. However, our life is not started from a new blank piece of paper. What we have now are cannot be separated from our long history evolution of all people on earth. Through long evolutionary process, human beings create what we call now ethnics, sub-ethnics, nations, and other types of institutions that create not only differences in sense of community but also create differences in laws, regulations, and more importantly legal differences in citizenships. Therefore, our globe is divided into pieces of land that are belongs to me or to you. All within that border are mine and our neighbor owns the rests of the land. Therefore, even though the geographical pattern of the globe has no discontinuity, our mind creates such discontinuity what we call a border. Our mind creates many kinds of borders. First, we create national borders. We draw maps and use the maps for what ever can be supported by maps. Within a nation, we continue to create borders such as provincial borders, district borders, village borders, and our owned land borders. We also create other kinds of borders, including imaginary borders. If we are agree that we are the same human being under the same name of species such as called Homo sapiens why we think or feel we are different types of people? Therefore, there are borders according to ethnic, religions, and other things that create a group of people into several categories of human beings. Rural or urban is a classification of people according to geographical locations where people live. Here we create a border according to both homogeneity and functional criteria. A homogeneity criterion says that people who live in areas where majority of people who lives in those areas engages in 149

Almost all primary products have low or even have no market price. However, such products have high non-monetary values, which directly contribute to what we call life itself.

150

We learned from land economic theory that the land rent is determined by distance from market place (transfer costs). Value of land rent declining from the highest value in urban center and agriculture and forestland are the lowest one. Within agricultural region, land rent is determined by soil fertility.

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agriculture are called rural. On the other hand, a region where most of them engage in non-agricultural activities such as industry and services are called urban. Moreover, administratively, urban areas are called cities and rural areas are called villages. Different types of law or regulation and institutional settings are required as implications of administrative borders. The above-created borders are social or political, but not natural. There are no borders between nature and us because we are a part of nature. If people are also a part of nature than there are no border among people. If there are people have created borders so such borders should be viewed as only instruments for making advancement of people life, not the reversal. Therefore, borders are subordinate of people. However, why borders create wars among people? Why people want to expand their border? If we know that the size of earth is constant, so expanding one border, mean declining the others. It is a nature of incompatibility among people if we talk about borders. Such incompatibility is created by our mind. Therefore, the main cause of human-societal evolution is not nature but our mind. Of course, environment influence societal evolution. Nevertheless, human being is different from animal in such away that human does not only able to adapt to their environment, they are also able to change their environment. In term of physical power, human power is much weaker than horsepower or an elephantpower. The power that make human being in most cases are more powerful than animals is in the mind of human being. Mind is the most powerful source of human power. In our mind, there are inherently instinct, belief, feelings, knowledge, and other cultural aspects or endowment. As social institutions, there are also social mind. National interest is an example of social mind of a nation. Even though there is always a traitor, in general there is a national interest. It is also true for a group. Different groups have different social mind. Some social minds are aggressive and the other extreme social minds are calm or even passive mind. If social mind are conflicts to other social mind, those two minds will clash. One of the most dangerous clashes of mind is war. Our history is history of wars. According to Rummel (1979) since the Battle of Waterloo in 1815, there have been about 350 wars of all kinds, and since 3,600 B.C., the world has about 13,600 wars. The total human misery reached about 30,000,000 people deaths since Waterloo and 1,000,000,000 since 3,600 B.C. Furthermore, within a period of 25 years after World War II in 1945, many wars have taken place, which accounted up to 97 internal and international wars occurred, which had killed about equal to those killed in World War II. Rummel also estimated that on any single day during these 25 years, there were slightly more than 10 internal or international wars were being fought somewhere. The historical trend of war is level, namely more than six major international wars per decade and 2,000,000 battle deaths. Around this trend, there are at least three cycles of warfare, showing different peaks around every 10, 25, and 50 years151. Figures provided by Rummel are frightening. At present time, at least we see there are wars in Iraq, Afghanistan, and in other places. Terrorism has been a new daily vocabulary all over the world. There are increasing tensions of people feel frightened by unanticipated bombs explosion that may kill whoever around them. Even in a place that in the past we never imagine that there would be a bomb, now we cannot ignore all possibilities being attacked. One thing that we have very difficult time is to understand why one can do suicide bombing and killing innocence people in the street or a hotel. How can we explain a suicide bombing? Is it because of frustration or because of different ideology or religious beliefs? Is it because of economic reason or because of religion belief? We are not 151

R.J. Rummel, 1979. Understanding Conflict and War, Vol. 4. War, Power, Peace. Sage Publications, Beverly Hills, California.

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so sure. Nevertheless, there must be seeds that make what we call wars or terrorism are growing. We believe the seeds are because we have two extreme different worlds. People mind is filled with the impact of two extreme different worlds such as has been mentioned earlier. In the world of animals, we can see a tiger eats a deer. However, a tiger never stocks deer much  more than a tiger need. In fact, a tiger just eat as mush as a tiger need. Therefore, there will be no rich  tigers. That kind of values and behavior is not true for human beings. Human satisfaction seems  unlimited. In addition, unlimited wants are what we learned in our world. Therefore, we are not only  making our own becoming rich and richer but we make ourselves rich from making other people poor and  poorer. Therefore, finally we come out with two extreme different worlds. The world of the poor and the  world of the rich are our fact of life now.  For some people insecurity could be beneficial. Demand for weapons or security instruments will be high in un-secure world. For our illustration, the World Wide Military Expenditures was US$ 950 billion in 2004. The military expenditure of the US was US$ 466.0 billion, or about 49 % of the world’s military total expenditure. The rest of the world (excluding the US) military expenditure was US$ 500 billion. Countries that spend military expenditure more than US$ 10 billion were China US $65 billion (2004); Russia US$ 50 billion; France US$ $46.5 billion (2000), Japan US $44.7 billion (FY05), Germany US$ 38.8 billion (2002), United Kingdom US$ 31.7 billion (2002), Italy US $20.2 billion (2002), Saudi Arabia US $18.3 billion (FY00); South Korea US $16.18 billion (FY04); Brazil US $ 13.408 billion (FY99), India US$ 12,079.7 million (FY01). Australia with population about 38 million people (2002) spent US$ 9.3 billion (FEY/02) or about US$ 245 per capita. Malaysia and Indonesia military expenditure were $1.69 billion (FY00) and $1 billion (FY 1998/99)152. We observed that except China and India, developed countries undertook mostly military spending. In fact, the US spent almost a half of the world military spending. It is interesting to note that whether world peace, harmony and stability is product of military power. If we learned from history, excessive military power has been always frightening. On the other side of the coin, having no power is also frightening too. So, peace, harmony, and stability of the world cannot be solved by a single or a group of countries. The law of any action will be followed by many reactions will always take place. Arm race among conflicting countries will continue as far as the world still using military power as solution for reaching peace and stability philosophy. Poor countries will be countries that facing more burden because of increasing rate of exercising military power in solving global affairs. There will be no way to protect a country except by following what other countries do as could be as possible. Therefore, security costs must be increased. For developing countries, the cost for increasing security is a forgone cost. It could be used for financing valuable activities such as schools or irrigation that are activities that are more valuable rather than for buying weapons. For majority of people insecurity mean loss of income, directly or indirectly. More allocation of resources for building military power is reduction of resources for other activities. One of the most vulnerable groups of people is farmers and other rural villagers, and low-income people who live in the cities as well. We can learn from history, because of cultural revolution in China, within 19591963 period there were starvation that killed about 27 millions people153. The wars or social conflicts could occur everywhere. So, if within one nation, or within the same group of people we found there were wars among themselves, what does it mean? Does it mean that war 152

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http://www.globalsecurity.org/military/world/spending.htm.

R.J. Rummel, 1991. China's Bloody Century. New Brunswick, N.J.: Transaction Publishers, 1991. http://www.mega.nu:8080/ampp/rummel/note2.htm

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is just a natural process of balancing number of people with their environment carrying capacity? Does it mean a matter of character of people that always love to fight among themselves? Or, does it mean that there are bad groups of people and there are good groups of people and good groups of people have duty to eliminate bad groups of people? I think there will be no general answer for all questions. One case of war will have different background from other cases of war. One of the most important lessons from all kinds of war is that it will cause very high cost not only for people who involve in wars but also the costs will spill over to other regions. Therefore, it is important to think about avoiding war rather than recovering the costs of war. The world teaches us that besides physical war there are also economic wars. In a polite word, we do not use economic wars, but we use competition. It is viewed morally right to develop economic competition. In fact, economic theory which is grounded by neo-liberalism, believe that free trade and minimal government intervention is not only morally right but also will produce more welfare, freedom, justice and equality for the world communities. Globalization such as now in increasing scale is a main product of such economic philosophy. As easily predicted, there are at least two different points of view to see globalization phenomena. First, a pro-motor of globalization, of course will agree and will continuously campaigning for developing global free trade. On the other hand, the opponents of globalization, in a sense of promoting free trade, will always work very hard to develop influence to stop or at least to reduce the rate of globalization. However, our simple logical thinking will say that for pro-motor globalization they see globalization is important because it will give them more advantages rather than the opposing alternatives. For developing countries, on the other hand, whether or not globalization is worthy is still uncertain. The logic is so simple, first, there will be no such thing as a free lunch, and every thing should be paid. It is a law in market economy. Second, it will be harder job for us to make profits if we are dealing with more experience, cleverer, and powerful institutions. Third more advance people will put more requirements on our products because they do not like them or because they want to press prices as cheap as possible. These three things are already enough for developing countries to be the losers. Therefore, globalization is a war between the strong and the weak. The strong will be always the winner. Not all people in developed countries agree with that kind of economic war. One of the most influential academicians, a Nobel Laureate in economics, is Joseph E. Stiglitz, who expressed his thoughts and feelings in his book “Globalization and Its Discontents” (2002)154. In the Preface of this book, Stiglitz wrote: “.[W]hat I saw radically changed my views of both globalization and development. I have written this book because while I was at the World Bank, I saw firsthand the devastating effect that globalization can have on developing countries, and especially the poor within those countries”.

I think it is more than enough for us, developing countries citizens, to be aware to what Stiglitz said. Let us see what developing countries economies in 1820 look like. Even though all developing countries were under colonialism at that time, information about economic condition will give us insights. According to Madison (1993)155, income per capita of Indonesia at 1820, measured by 1990 US$, was US$ 614. Furthermore, income per capita of India and China were US$ 531 and US$ 523, respectively. As a comparison, income per capita of UK and USA at that time was US$ 1,756 and US$ 1,287, respectively. In about the next 180 years, income per capita of UK and USA reached US$ 25,120 and US$ 154

J.E. Stiglitz, 2002. Globalization and Its Discontents. Allen Lane, The Penguin Press. London.

155

A. Maddison, 1993. Monitoring the World Economy, 1820-1992. OECD, Paris.

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34,400. However, income per capita of Indonesia just reached about US$ 700156. If the world has distributed an equitable distribution of income, I think, it will be hard to believe that we have so much different level of income now. What happened to Indonesia and other developing countries? Why they move so slowly? Do they different kind of people so that fit to be discriminated? Are they having no interest to become rich? We can address many more questions. However, if we do reading on economic development in the third word countries we will find the answers that can be summarized into statement that developing countries are poor because they are poor. They are lack of capital, lack of knowledge, lack of education, lack of infrastructure and so on. To solve those kinds of lacking resources government should initiate development, which is guided by international agencies such as the World Bank, IMF, or Asian Development Bank. There have been conducted studies using very expensive international consultants who have also been financed by developing countries loans. There have been significant economic growth, for example in Indonesia, but in a very short time, economic crisis in this country have eaten almost all of 30 years accumulation of capital. The aggressive foreign private sector has bought such accumulated capital and economic growth and income per capita has slumped into almost initial condition of development. And, now a climate of privatization that means capital owned by Indonesian should be sold at a cheapest price. Therefore, even though we have done something, but at the end, those things should be given up for the stronger ones. Observing of what just described above is interesting. What just come into mind is that a question: Do people mind have no changed in a sense that people always take advantage from disadvantage people? Does market have morality such as what has been said by Adam Smith in his book “The Theory of Moral Sentiments?” Smith said: “He is certainly no a good citizen who does not wish to promote, by every means in his power, the welfare of the whole society of his fellow-citizens”157.

Is that the meaning of citizens is just limited to our fellows that have the same country citizenship with us? However, Smith talked about morality, and we oblige to seek morality that should be applied to all parties. Now, we also talking about globalization that is the one-world which belong to us, together. Therefore, taking advantage of disadvantage people cannot be morally acceptable. Talking about market is accepting that something behind market is morally acceptable. It is important to be noted that basic operation of market is mutual exchange, and it must be founded by mutual respect. If other people disadvantages are seen as an opportunity to make huge profits, then it is violating requirement of market institutions. Not only governments in developing countries but also by all governments in the world should take this violation seriously. The reason is simple, global sustainability will depend on global right actions. Of course, realities are much more complex than the idea of business ethics. However, it is not a right argument to allow advantage parties taking benefits by sacrificing disadvantage parties. If we continue this tradition, then what we are doing is not different from what has been done in the colonialism era. We are just repeating colonialism into what Soekarno or Mahathir Mohamad158 are called neocolonialism. If this is the case, then we have not been able to change our mind from older social trap, namely mind that allow us to take advantage of disadvantage people. What make developing countries in 156

The World Bank, 2003. World Development Report. Washington, D.C.

157

Such as quoted by Douglas Henton, John Melville and Kimberly Walesh, 1997. Grassroots Leaders for a New Economy”. Jossey-Bass Publishers, San Francisco.

158

Mahathir Mohamad, 2003. Globalisation and the New Realities. Pelanduk Publications (M) Sdn Bhd, Selangor Darul Ehsan, Malaysia.

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difficulties is that we have almost no choices because the believers of globalization are coming from very powerful countries that are for more than 400 years have been controlling the world. More than 400 years of colonialism implies very significant meaning. If a man has no freedom, that man will be just like a doll. He/she cannot think because he/she is socially not allowed to think. What he must do just to do what his master says. Using mind is forbidden. Therefore, a man is just a tool. We can throw away a tool if we can no longer use it. The same philosophy is also true for a slave. This social condition is transmitted from one generation to another generation. 400 years means 18 generations and within this range of time, such social condition has been transmitted. So, no wonder if now we are still recycling our old colonialism value in our daily practices. And, to change it is the hardest part of our duty. What we call globalization today is a matter of evolutionary process that has been continuing for more than 400 years. The flows of matter, energy, information, or value from one border to other borders have been increasing at an increasing rate. However, pattern of flows has shown as asymmetric pattern of flow. Due to experience and fast development of developed nations in science and technology, developed countries endowed with more knowledge of developing countries. On the other hand, developing countries have more limited knowledge of developed countries. This situation creates problems of communications which in turn causing miscommunication or making wrong decisions. The developed countries have monopolized the process of thinking about development, and if we come with wrong solution developing countries must bear the risks and uncertainties. Therefore, developed countries own the truth about development thought. It is important to be noticed because the truth is a part of nature, not a part of who says a thing is the truth. People in developed countries not only should be allow thinking for themselves but also should be encouraged to learn how to think. Such as said by Negroes College Fund, mind is a terrible thing to waste. In this regard, Mahathir Mohamad said: “The fact that globalization has come does not mean we should just sit by and watch as the predators destroy us”.159

In an earlier discussion of this chapter, it has been mentioned that there are two kinds of extremely different worlds, namely the rich developed country world and the poor developing country world. And, agriculture in both worlds, especially in developing world, has been treated unfairly. The word unfair is used to express a situation that agriculture is seen as a sector that can be taken for other people advantage. Therefore, according to this point of view, it is all right if farmers face sufferer life. Agriculture in the US, according to Ikerd, is an economic sector that deprived from colonialism160. If we see agriculture in developed countries as a sector that experienced just like what Ikerd mentioned, agriculture in developing countries will be even worse. American Corn Growers Association showed that price of corn, soybean, and rice in the US declined by –3%, -5%, and -1 % within period of 1975/79-1996/99. On the other hand, in that period consumer price index for food (1982/84 =100) has increased by 235 %. Major caused of such deteriorating farmers income is due to significantly increase of market concentration for agricultural products. Therefore, farmers face almost monopoly market structure. For example, in beef packing industry four companies share 81 %; in pork processing, the concentration ratio is 59 percent; four firms own and process 50 percent of the broilers; market share of the top four Grain Complex Terminal Grain Handling Facilities is 60%; Corn Exports Concentration ratio of the top 3 firms is 81%; Soybean Exports Concentration ratio of the top 3 firms is 65%; Flour Milling Concentration ratio of the top 4 firms is 61%; Soybean Crushing Concentration ratio of the top 4 firms is 80%; the largest four processors of wheat have

159

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Mahathir Mohamad, 2003. Globalisation and the New Realities. Pelanduk Publications (M) Sdn Bhd, Selangor Darul Ehsan, Malaysia Ikerd, John, “The Colonization of Rural America”, Department of Rural Sociology, University of Missouri.

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61 percent of the market; soybean processing, the largest four firms have 80 percent of market share161. Such increasing dominance of a small number of companies also takes place in farm input markets. Increasing concentration of food market in developing countries seems also taking place. However, we still lack of data and research. A global trend is usually following the trend in developed countries. Cargill, Carrefour, Nestle, and other multinational corporations also operate their activities in developing country markets. Malls, shopping centers, and large-scale food retailers are now growing just like a mushroom in rainy season. Their power is more than enough to displace local stores just what had happened in developed countries. Therefore, farmers in developing countries will face harder and harder days in the future. Table 8.1. Structure of geographical living Items

Developed Countries Rural Rural

Developing Countries Urban

Urban

Lower income or poor  There is also urban agriculture citizens. We observed in in developed and developing countries. However, they are developed countries  only a small fraction. farmers income have been  In developing countries, most heavily subsidized. In  urban citizens are poor. In developing countries,  developed countries, there are poor farmers are getting  also poor urban people. However, the point here is that poorer. urban citizens control rural life.  Globalization creates  Cities or urban areas in  agricultural products  developing countries are  from rural areas in  just like developed  developed countries are  countries large cities’ s  flooding to urban families  satellite. Urban biased  in developing countries.   policies in both developed  and developing countries  are affecting agriculture  badly.

Information provided in Table 8.1 summarizes what are the position and functions of agriculture and rural areas in developed and developing countries. The faith of agriculture in both developing and developed countries are similar, except in developed countries government still plays an important roles in protecting agriculture such as giving subsidy to their farmers. In developing countries, farmers and rural communities are facing harder life to find ways to survive. In fact, it seems no way to adapt to the world that is dictating above their head. Unlearned Mind Habits Advancement of science and technology and increasing in wealth, power, or human capital do not give us warranty that the future situation will be better than now. Observation of Stiglitz about globalization, among others, and my own observation show that farmer’s now facing harder life than in 161

Heffernan, William D. and Mary K. Hendrickson, “Multi-national Concentrated Food Processing and Marketing Systems and the Farm Crisis”, Department of Rural Sociology, University of Missouri, Columbia, MO, Paper Presented at the Annual Meeting of the American Association for the Advancement of Science Symposium: Science and Sustainability The Farm Crisis: How the Heck Did We Get Here? February 14-19, 2002Boston, MA.

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the 60s. In the ‘60s, I still remember that there were many new houses built by farmers in my village. Now, there are also new nice houses, according to Indonesian standard, are built. However, those houses are not financed by income generated from agriculture. Those new houses are financed by income from somewhere else. Furthermore, I observed the old houses have not been renovated. Older farmers or their predecessors cannot afford to renovate them. Who are rural villagers that can build new houses? They are mostly a group of people that seek a fortune in cities. What are they doing in cities? Most of them open a small kiosk, selling food or cigarettes. What kind of food they are serving? They are selling food that has been produced by large food industries such as Indomie, a product of Indofood. Of course, they make a big margin from serving Indomie to urban workers or other types of buyers, who mostly come from low income or blue-collar types of workers. It is important to be noticed that both kiosk operators and bluecollar class of workers, now are becoming a main source of income for big food industries in Indonesia. The same phenomenon, I supposed will also happen in other developing countries. In the ‘60s or ‘70s, there were also people from villages migrate to cities. They also opened a kiosk to sell food. However, they cooked food that they sold, not just boil a package of food that has been produced by huge food industry. In the past, their existence was not directly integrated with food processing industries. There were also varieties of food consumers can choose. The food was also healthier in a sense of varieties of nutrition in it. For example, there was a combination between cookies or cake with bubur kacang ijo, which is a source of protein. However, now what they served is just carbohydrates. One of the most important things, furthermore, raw materials of foods is coming from import market. Therefore, we see that starting from raw materials, end retailers, and consumers are those people who mostly within a group of low incomes level, and those people are source of income for large food industries. Let us imagine, PT Indofood, is one of the largest food industries in Indonesia and one of the largest food industries that produce mie noodle in Indonesia, targeted Rp 19 trillions revenue in 2005 (Bisnis Indonesia, 12 Maret 2005). All wheat used by Indofood imported from world markets and almost of them came from developed countries. Total sales of Indofood are roughly equal to 40 % of total export of industrial crops of Indonesia. Furthermore, that revenue is also equivalent to about 9.5 million ton of rice at farm gate price. Total production of rice in Indonesia was about 51 million tons in 2002. Therefore, value generated by Indofood is almost 10 % of total values of rice in Indonesia, which is produced from more than 10 million hectares. We see that process food products are much higher in value than that of farm products. In a case of industrial crops export, low value is due to that almost all exported products are unprocessed products. It is interesting to ask ourselves whether the above situation is a right reflection of what we mean by sustainable development. Indofood is just a symbol of food industries in developing countries that getting bigger and bigger through exercising its total power by using imported wheat162 which is clearly 162

USDA (2002) estimated that food industry demand for wheat and wheat related industries increased by 10 % per annum. Post increased the estimate for total wheat imports (including wheat flour), from 4.5 ton to 4.8 ton for MY2001/02 and the forecast for MY2002/03 from 4.5 ton to 5.0 ton. Indonesia’s noodle and bakery push-carts are growing and Indonesia is one of the world’s largest markets for instant noodles. Post estimates that domestic consumption for wheat will grow approximately 10 percent per annum. The increasing consumption of wheat products is a result of people moving slowly towards consumption of easy-to-prepare products. Furthermore, flour prices are also comparable or lower than rice prices - a staple food for most of the population. As a result of these developments, the estimate of total domestic consumption of wheat for MY2001/02 has been revised from 4.2 ton to 4.7 ton, and for MY2002/03 consumption is forecast to reach 5.1 ton, revised upward from Post’s previous report of 4.4 ton. Approximately 60 percent of wheat flour is used by Indonesia’s noodle industry. However, there has been rapid growth (approximately 20 percent per annum) in the bakery/biscuit industries. A significant change has taken place in Indonesian diet patterns -- from big cities to villages --

where people are not substituting rice for wheat products, but instead are adding more and more wheat

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seen that wheat is not grown in Indonesia. In Vietnam, we know about po hwa, which is a type of rice noodle. Vietnam developed their food processed made by their own grown crops. In Indonesia, we used to have many kinds of rice noodle. But, strong power of new food industry like Indofood have pressed down smaller similar food industries to close their business. We learn that the impacts of growing large food industries that have no linkages with farmers in developing countries just make more pressure for developing countries farmers and small food processors to be able to survive. Huge income of such large food industries is taped from majority of people. They played as both end retailers without being paid by the industries and they are as huge groups of consumers. Other groups of beneficiaries are farmers in developed countries that their products are exported to developing countries. However, such as shown above, farmers in developed countries have not received sufficient income from their products. In fact, in real term, farmer’s income in developed countries has been declining. Farmers’ life in developed countries is dependent on government subsidy, and it is using public money that has been collected through taxation. So, if developed countries farmers are not having satisfying income and people should pay taxes and then transferred to farmers, and then that money will be taken by large food industries in a next cycle. Who gain benefits from declining income of farmers in both developing and developed countries? Who finally will get benefits from taxpayer? Let us first try to understand what is exactly mean by poor in developing countries such as Indonesia. Projected total sales value of Indofood in 2005 compared to total sale value of Nestle in 2002, for example, is just about 3.5 % of Nestlé’s sales worldwide. Total sales value of Nestle in 2002 reached US$ 54.2 billion (see Table 9.2). GDP of Indonesia in 2001 was about US$ 150 billion. Therefore, Nestle income was about 36 % of Indonesia’s GDP. Population of Indonesia in 2002 was 212 million people. Therefore, we can imagine the distribution of income in Indonesia and the distribution of income in Nestle. Per capita income in Indonesia was just about US$ 700 a year or just about US$ 2 per capita income per day. Two dollars a day, it could also over estimate figure. Today (March 2, 2005), according to Bisnis Indonesia Newspaper, value of a dollar is equivalent to Rp 9,345. Therefore, US$ 2 is equal to Rp 18,690. If we count numbers of day in a year equal to 365 days, then within a year, an average head of a household received income Rp 6.82 million. Wage of agricultural labor in Java ranges from Rp 15,000 to Rp 20,000 a day. Therefore, their income per day is about US$ 2. However, they do not work in the fields for the whole year. Therefore, actual their income will be less than US$ 2 a day. More surprisingly is salary of a government official. A second highest ranking official with working experience for more than 27 years just receive salary Rp 1,7 million a month or equivalent to US $ 182 per month, or only US$ 6 a day. We may take another case. A new graduated college such as an engineer or an architect in Indonesia, if they work in private companies they salary ranges from Rp 750,000/month (US$ 80) to Rp 1.5 million/ month. The upper limit of that salary is just equivalent with US$ 160/month or about US$ 5 per day. Therefore, there are two things interesting here. First, an engineering college graduated only received, at upper limit of salary range, only US$ 5/day, or just 2.5 of poverty line such as US$ 2/day. products (such as noodles and bakery goods) to their diet. Voluntary Report - public distribution Date: 9/17/2002, GAIN Report #ID2017.

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Second, salary of a high ranking officials with almost 30 years of work, only received US$ 6/day, only 3 times higher than that of poverty line. So, if we use US$ 2/ day as a poverty line then most of Indonesian will be classified as a poor family. Here, we have not yet used per capita based of income. In fact, if we use per capita term, level of income will be much lower. In a case of high rank government officials, if he has two children and they are still in school, and his wife does not work for wages, then his per capita income will be only US$ 1.5/day. I think, if we had a dinner in a restaurant in Detroit, and give a tip to a waiter as much as US$ 1.5, I think a waiter will “kill” us. So, how people maintain their life? There are three alternatives of making money and all are bad. First, people work so hard. They have no time for leisure. They do everything, day and night or may be until morning. For example, in the morning until afternoon he or she teaches in public or private schools. I put schools in plural word, because he/she might teach in several schools. In the evening until late night, he/she sells some things in his/her kiosk. Therefore, in this case there is no time for leisure, for family or for improving skills and knowledge as a teacher. Certainly, quality of teaching, for instance, will be declining over time. Second, on the contrary to the above case, people react to low income with lazybones. They just use income what they get for everything. Of course, such an income is far from sufficient. Therefore, they reduce quality of life. In the tropical climate, it is easy to live. We do not have severe climate such as a winter season. People can live with their family in a very low standard of housing or even live in the streets. People can also live in a very crowded house. There are grand parents up to grand children living in very small room. Cycle of poverty is continuing over time from one generation to another generation. Third, people adapt to severe income level through what we call doing crime. There are many things of possibilities. Corrupting time is one. Corrupting quality of work is second. The youngsters ask by using force to other people to give some money. People call them preman (little Mafioso). It is another name of robber. Traffic congestion is new opportunities for asking some money to drivers. We call the pak ogah, which mean they will not help you to make a turn if you do not give them money; or they will scratch your nice car. Low wages or low income is a part of history. If we asked our elder people, they explained that in the past lime, during the Dutch colonialism, we were commonly received wage “segobang sehari”. It means that labor only entitle to have wages just enough for meals, low quality of meals. What I mean by low quality meals is that people only eat twice a day and what they eat is a bowl of rice with krupuk, kecap (like soy sauce), and salted fish. Certainly, they cannot make savings or other kind of valuable things to do. Does industrialization help? I don’t think so. It neither does help workers nor farmers. Yes, industrialization helps make job available for sometime. However, wages are too low if we compare them to what people need for having fair quality of living. What had happened in England during early industrialization does also happen in developing countries like Indonesia now. That is why after reformation era, there are many labor movements taking place. In earlier time, labor was under pressured. Therefore, they were just kept to be quite. Industrialists, even though they come from developed countries, in fact, just repeating history that already abandoned in their countries. To support industrialization, government enacted what we call cheap food price policy. Price of food especially rice was kept as low as possible. The main objective is labor cost in industrial sector should be low because major expenditure for poor families are for buying food. If average household’s food budget is 60 percent then if their income is US$ 2 a day then, US$ 1.2 is for food and US$ 0.80 is for other expenses. We can imagine what we can buy by US$ 0.80 a day. Therefore, labor will always remain poor.

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However, farmers also received negative impacts. Cheap food price means low income for farmers. In the past, farmers have been forced to work harder to increase rice production. Starting from president up to village levels they involved in rice production. It is true rice production increase, but that productivity increase paid by farmer. There are not only monetary costs because of price of rice is low; there are also other costs such as farmers’ labor that never been imputed into calculation of costs. Therefore, food production increase is good for consumers and industrialist who pay low cost of labor because food cost is cheap, but it is bad for farmers and for agriculture. Therefore, it is no wonder why productivity growth has been declining since 1992 such as explained in earlier Chapters. Table 9.2. Top 10 food and beverage companies sales in $US millions in 2002 Company 1. Nestle S.A. 2. Kraft Foods, Inc. 3. Unilever plc 4. PepsiCo Inc. 5. Archer Daniels Midland Co. 6. Tyson Foods 7. Cargill Inc. 8. ConAgra Inc. 9. Coca-Cola Co. 10. Mars Inc.

Revenue $54,254 $29,723 $25,670 $25,112 $23,454 $23,367 $21,500 $19,839 $19,564 $17,000

The above story is our story at present time. Now, I will present a short history of colonial time. I think such history has been imprinted in our mind up to now, whether it is consciously realized or not. However, just for early stimulant, I presented information in Table 9.2 that shows how powerful multinational or transnational corporations. We will concentrate our analysis of multinationals in Chapter X. Let us compare sales value of multinational food industries with Indonesia net export earning in 2002. Total Indonesia’s net export was US$ 25.8 billion with export and import values were US$ 57.2 billion and US 31.2 billion, respectively. Therefore, in 2002 Nestle sales value was almost equal with total export value of Indonesia as a country. And, net export of Indonesia is just 49 % of Nestle sales value. How powerful is multinational company? Out of a hundred of institutions in the world, including a state of nation and corporations, 51 multinational corporations are having income more than countries’ GDP. Therefore, it is very clear that multinational corporation has very dominance roles in global economic affairs. In fact, we cannot imagine how to win competition with multinationals in international markets. We will keep this multinational issue for our discussion in next chapter. Now, let us put our attention to a longer time in our history. The era of renaissance and enlightenment in Europe had brought European into new era that was characterized by the birth of new philosophy. However, increasing power in Europe implies very devastating impacts to other parts of the world. One of them was the impact of the emerging Verenigde Oostindische Compagnie (VOC) in the Netherlands. If we take a history as our perspective, we can see that the roles of corporate in shaping the world economy are not new. According to history of Indonesia, we learned that the Dutch at the first time arrived in Indonesia under the name of company, namely “Far Lands Company” which started sailing the oceans heading to Asia in April 2, 1595. However, the first voyage must return to Holland without bringing monetary profits. The most valuable thing from such sailing to Asia was knowledge of the route

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from Holland to Indonesia which was almost for a century such knowledge monopolized by Portuguese. The success of traveling to Asia induced numerous other Dutch ships sailed to Indonesia under auspice of companies. Between 1959-1601, there were eight different companies with 65 ships in 15 fleets sailed to Indonesia. As easily predicted, the more ships dispatched to Indonesia, the more spices had entered to the Dutch market. The Dutch learned that competition among buyers reduced profits. So, sponsored by the Dutch government, in March 20, 1602 Verenigde Oostindische Compagnie (VOC) was established. VOC was total merger of the Dutch companies that received monopoly rights of all Dutch trade and shipping to Asia163. This was a mark of our historical time of starting point of interactions between the Dutch and Indonesian in the world history. What had happened with Indonesia had also happened to other countries in Asia and Africa. Colonialism and globalization were two things that cannot be separated. There were not only trading among nations but was more than that. According to Ricklefs (1998)164 what had been permanently destroyed by Portuguese occupation of Malacca in 1511 was economic network of Asian economy. The next European colonialism in Indonesia and other parts of the world have made this region as a periphery of Europe. European took almost everything to engine growth that spurred by industrialization. One of the fatal impacts of colonialism is not in a form of taking the land or other natural resources but was taking people mind through killing their freedom. A corporation such as VOC was an instrument to conduct economic and other dimensions of colonialism. Great Depression in the US and other parts of the world in 1930s taught important lessons for agriculture. Even in one of the most developed nations at that time such as the US, the fall of a symbol of modern economy, namely stock market, had caused severe impact on agriculture and farmers. Agriculture that linked tightly with modern economic structure cannot avoid negative externalities, which was caused by a free fall of stock markets. Very low price of agriculture at Great Depression time was due to the US unable to export their agricultural surpluses to Europe that before the crisis played as an outlet for their surpluses. The declining of demand for import food by Europe was also another factor that hurting the US agriculture. Franklin D. Roosevelt took New Deals and used agriculture as a part of recovery. Agricultural Adjustment Act (AAA) 1933 was enacted. There was a controversy about AAA, but this is an important lesson for developing countries to learn from a history that directly affect agriculture. In the early 70s, most developing countries practiced what the world called green revolution. This built new hopes for the world. In practice, farmers were loss their freedom. In fact, developing countries dependency to developed countries was tightened. First, dependency on agricultural inputs especially seeds, fertilizers and pesticides. This strategy has made developing countries as good markets for industrialized countries. Second, it is dependency on capital, especially money, for building infrastructures such as irrigation. Third, there is dependency in knowledge and technology. Green revolution is good in term of introducing new technology to traditional farmers and in term of increasing food production, particularly rice for the case of Indonesia. However, one of the most essential thing was forgotten, namely farmers welfare and farmers freedom. How to organize green revolution was not how to increase farmer participation, but how to consolidate them, by force, into production process. Farmers are economic agent. They know whether they get profits or not. They are entitle for freedom to choose what they think is good or right. However, in green revolution, those things were abolished. When there was an outbreak of brown plant hopers in the mid of 1970s up to early 80s, most farmers fail to harvest rice. However, they did not receive compensation from government even though what they practiced was a part of government plan or program. So, when rice harvest fail, farmers 163

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Els M. Jacobs, 1991. In Pursuit of Paper and Tea. The story of the Dutch East India Company. Netherlands Maritime Museum, Walburg Pers.Zutphen. M.C. Ricklefs, 1998. Sejarah Indonesia Modern. Gadjah Mada University Press.

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got nothing, and when harvest was good, farmers almost got nothing, because price of rice was always low in harvesting seasons. In colonial era, the mastermind was the Dutch. One of the most successful system under the Dutch government was cultuurstelsel (Cultivation System), namely farmers were forced to plant industrial crops such as sugar or coffee and at least 20 % of yield was given to the Dutch. It was practiced formally from 1830 to 1870, but in actual practice more than that, especially for coffee and sugar. This system gave the Dutch huge of income. Fasseur (1992) wrote: “With Cultivation System den Bosch struck gold in Java like Moses struck water  from the rock in the arid desert”165.

How much money the Dutch received? According to Mack (2001), in 1833-1840, the Dutch obtained 75.9 million guilders (35.3 % of Dutch national income). The highest income based on percentage of Dutch national income received in 1860-1865, namely 56.8 % or 126.8 million guilders. Within the period 1833-1875, the Dutch received 725.3 million guilders166. We see colonialism was profitable. Java is only a part of Indonesia. Therefore, it should be much more than that amount of money flowed from Indonesia to Holland. What I would like to mention here is that not about money. However, it is about our mind. What have evolved over time in our mind has not so much changed from our history. What had happened in Cultivation System is similar with what happened in green revolution. The different among them is just in term of instrument and commodity that have been chosen. However, in term of more fundamental thing such as farmers freedom and farmers welfare have not been taken seriously. As a result, we experienced rice production increase but farmer’s welfare remained the same or even worse. Can we change our mind? Freedom, justice, welfare and equality such as we discussed in previous chapter will be a part of farmers life if we can unlearn our mind, our sense of seeing or accepting other people, especially disadvantage group of people such as farmers. It is essential for farmers in developing countries and farmers in developed countries. The different among them is only technicality. Interpretative Summary In Chapter V, we learned that world’s net export value of agriculture products is negative and we learned that positive income of farmers in developed countries was caused by developed countries governments’ variety of supports. In developing countries, on the other hand, farmers must be able to survive as far as they can do by themselves. If we learn from natural world ecological point of view, there are three general groups of players: producers, consumers, and decomposers. Producers are plants that assimilate energy from the sun; first level of consumers are groups of animals that use energy stored in plants; second level of consumers are animals that use energy that is stored in a body of animals belong to first level of consumers; and finally decomposers use all kinds of dead cells of plants or animals. Therefore, there is a cycle of energy that is dictated by nature’s laws. 165

Such as quoted by Andrew Mack,2001. Rethinking the Dynamics of Capital Accumulation in Colonial and Post-Colonial Indonesia: Production Regulation”. A thesis submitted in fulfillment of the requirements for the degree of Doctor of Philosophy, Department of Economics, University of Sydney, September 2001.

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Andrew Mack,2001. Rethinking the Dynamics of Capital Accumulation in Colonial and Post-Colonial Indonesia: Production Regulation”. A thesis submitted in fulfillment of the requirements for the degree of Doctor of Philosophy, Department of Economics, University of Sydney, September 2001.

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There is a similar pattern between natural world and social world. Farmers, anglers, and miners are groups of producers, which are similar with plants; industries and traders are like first level of consumers; and scavengers or wastes processors are like decomposers. Only major difference among social world and natural one is that in natural world, what is flowing is energy but in social world, what is flowing is utility, which is mostly measured by money. Of course, the systems are very complex, what I just described is just a simplification. World food production has been expanded and agriculture in an aggregate level has produced food, which is more than enough to eat. Because of this situation the trend of world’s agricultural primary products prices trend to decline. This trend has been true for more than 50 years. On the other hand, even though price of food industries’ inputs tend to decline, prices paid by consumers for processed food has not been declining, or even increasing. Therefore, there is a widening gap of price between processed food and agricultural primary products. The benefits of such situation have been captured by economic institutions between farmers and consumers, namely food manufactures or retailers. Increasing concentration of market power of those institutions deteriorated farmers’ income. The global world needs a specific global culture that is able to maintain peace and global balance. Basic condition for market to operate is that the existence of mutual respects as a main source of mutual exchange. Making profits by taking advantage of disadvantage group of people is immoral according to business ethics that are underlining moral of markets. Setting global institutions that are corresponding to that requirement is essential. The main goal is to catalyze and to facilitate learning and unlearning process in globalization. New technologies, global social and cultural aspects, and environment and economy should be a part of new global institutional design that giving the possibility for the humans to interact more actively in the global process. Above all, the design should empower process of intelligent behavior of the human network, in order to maintain freedom, justice, welfare, and equality as essential part for establishing peace, stability, and prosperity. The global harmony and peace is possible, the global prosperity is also feasible, and a healthy environment is attainable. Everything depends on our understanding and processing capacities, and of our will. We need to sow and to grow our new spiritual values. The world above us, according to farmers points of view, will become the world is ours if we can establish the mentioned above institutions. Therefore, we will have only one world, not two or three worlds what just like we have now. This world is the world that we can share for having freedom, justice, equality, and welfare among us. Peace, harmony, and stability will automatically follow.

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CHAPTER IX

MAKING THE IMPOSSIBLE POSSIBLE "Self-reliance is the only road to true freedom, and being one's own person is its ultimate reward."

Patricia Sampson If we try to think how difficult our problem in our hand, the answer is certainly our problems will be very difficult. We learned that even though agriculture has been evolving for about 7000 years, we still have difficult time to feed the world. Even though production of agriculture is in surplus condition, such as we found in developed countries, consumers still pay high price for food, but at the same time, farmers received low income. Surplus of food in developed countries are also deteriorating farmers’ income in developing countries and, make agricultural capacity in developing countries deteriorating too. Green revolution that has been expected to solve food problems in developing countries has increased food production, but it does not mean farmers’ income improving. The environmental quality is also deteriorating over time because. One of major causes is too much chemical input such as fertilizer and pesticides used by farmers. Increasing demand for fertilizer and pesticides, which has been induced by government policies, has been important source of revenue for agrochemical industries that come from developed countries. In addition, green revolution has caused deprivation of farmers’ freedom, justice, welfare, and equality because it has been practiced by highly intervention by government. The only groups of socio-economic institution that have gained substantial benefits from past development are multinational corporations and their associates. Our problems now cannot be separated from what have been decided in the past time. The framework of development in Indonesia such as described in Chapter III, such as documented in Repelita I-Repelita VI and then in REPETA is a reflection of values, thoughts, or knowledge at that time. This is also reflecting values, thoughts, and knowledge of international representative bodies such as the World Bank or Asian Development Bank and other donor agencies that also have been heavily influencing development processes in developing countries such as Indonesia. In agricultural development, for example, a country agricultural sector studies conducted by the World Bank have been used as a “guide book” for development including priority settings. Therefore, because doing is a derivation of thinking, and our way of thinking has been intervened, it implies that international agencies that involved in such process should also bear responsibility. I supposed what have happened in Indonesia also have taken place in other developing countries. There was growing optimisms in Indonesia before economic crisis hit this country. However, in early 1970s there were also some criticisms on the way development of Indonesia undertaken. Hard criticism occurred in January 1974, which was called “Peristiwa Malari.” January 15, 1974, students went to streets and protested foreign investment, particularly Japanese investments. The protesters were arrested and some of them sent to jail. Student’s protest took place again in 1978, asking government to stop corruption. Successful government interventions to academic societies after 1978 completed government control to university students. It was “real” stability for 10 years for Indonesia. However, in 1998 a wave protest from various elements of society took place again, which resulted in President Soeharto resign. As I described in Chapter III -Chapter V, agriculture has been taken as priority sector of development. However, we see that after 1992, agricultural performance declined. One might not agree with this assessment. However, if we use growth of agricultural productivity data, which is one of the

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most important performances in production process, we cannot avoid it. In addition, farmer welfare is also not improving, and the same thing with people welfare in general. General economic performance is also cannot absorb a shocking event such as what we see in adjustment process of the economy recently. All of economic sectors collapse when the economic crisis began in 1997, except agriculture. Eight years latter, a situation in Indonesia has not been significantly improving. In addition to unstable political situation, Tsunami has destroyed Aceh and a part of North Sumatra province. Some conflicts and potential conflicts are also taking place in several places. Such kinds of situation in Indonesia are also taking place in other parts of the world, or even harder. The magic world of development is under question now. What we thought was right in the past; we found it was wrong now. What we though easy to achieve, it was actually very hard to achieve. We can see what happened in Africa, for example.167 The same situation can also be found in other parts of the world. The world of development that played just like religion should be reinterpreted. We cannot use the same method to achieve the same goal if we knew that according to our experiences it did not work. We should also reinterpret our goals because it is unreasonable if we used new method without directly connected with the goals. Our experience and other countries experiences with more than 30 years of development will be very important sources for taking lessons. The world of agriculture and farmers is unique. In term of development, agriculture and farmers in both developing and developed countries have been sacrificed for growing wealth of other parties. Even though situation is different between agriculture in developing and developed countries, but the life of farmers are quite the same, in both countries region farmers are suffer. In developed countries, the issue is related with over supply of agricultural products relative to their needs. Motivation of having surplus in developed countries is not only for food security in their own countries, or for income received from exports, but also food surplus is effective power. Developing countries, on the other hand, short of food supplies relative to their needs. Therefore, the main interest in term of nation is to increase supplies of food. In addition to food, developing countries are also having not many opportunities to develop their economies, except to use agriculture as major sources. Industrial crops as major earning, such as palm oil, coffee, or rubber, are major source of foreign income. However, most of processing industries are owned and located in developed countries. Declining price trend of industrial crops is hurting developing countries farmers, but it is profiting multinational corporations. Therefore, there uniqueness of agriculture but at the same time, there are also conflicts of interest between farmers and corporations between developing and developed countries. Can we solve those conflicting interests? Can we make that such things impossible becoming possible? After more than 50 years after the World War II, where most of Asian and African countries gained independent, the world has been evolving. However, the evolutionary process showed that the world is broken into three kinds of the world: rich, poor, and very poor countries. Here, we see only a few countries joined the world of the rich. In Asia, beside Japan, there are only Singapore and South Korea. In Africa, none of those are becoming rich countries. In Latin and Central America, there are also none of those countries classified as a rich country. If we suppose all developing countries just like students in a class room, and almost all students cannot pass the exams for a long period of time, it brings us to a question: who are wrong, a teacher or students? Starting Point We cannot avoid that people may have different interest. We also cannot avoid that people interest can be conflicting to each other. There are individuals interests and there are groups or national interest. The world of globalization, if we want to have its meaning should also imply that there are global interests. If there are no global interests, mean we have no globally common interests, then globalization 167

See…

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just only to mean there are only interactions among countries without binding with globally common interest. So, if we believe that globalization should yield benefits for all people the world must have global common interests. It is natural that such a common interest must yield win-win solutions. Suppose there are two worlds: developing countries and developed countries. In addition, if we simplify that global affairs may produce three alternative outcomes, then we will have the following figures: Matrix 9.1. Alternative possible solutions of global affairs DC

Win

Status quo

Loss

LDC Win Win-win Win-status quo Win-loss Status quo Status quo-win Status quo-status quo Status quo-loss Loss Loss-win Loss-status quo Loss-loss Notes: DC stands for developed countries LDC stands for less developed or developing countries

Within the above simple matrix, we see that only one cell out of nine possible outcomes that expresses win-win outcome. The other options are a combination between loss, win, and status quo. In fact, there are 5/9 that at least 1 party loss and 5/9 at least one party in a status quo position. There is also possibility reaching outcome loss-loss or status quo-status quo with the same probability with win-win outcome, namely 1/9. Of course, the above matrix is only a simplification. However, from the above matrix we can imagine that reaching win-win outcomes for both parties is not an easy job. It is natural that a stronger party wants to win, and a weak party will suffer. Therefore, if developed parties just use all kind of power they endow, global interest will never be in place. Therefore, global communities will not move further into higher and better stage of human civilization. Power is important but using power to abuse a weaker party is not only immoral but also against the goals of civilization itself. Do we have sources of self-induced behavior for reaching win-win outcome? Do we have any rationale or reason for having global common good? What are the requirements for enabling global common interest such as global common good? Neo-liberalism168 philosophy argues that free market is the way to reach global common good. However, anti-neoliberalism sees that free market just contains a good meaning for the stronger party. We have to differentiate between market and interest. Interest is about what people wants, so it is a kind of motivation. Market is an institution that is basically an exchange institution of property rights. There are many kinds of interests and there are variations of exchanges. The following matrix tries to show relations between markets and interests of people. Again, Table 9.2 is only a simplification. However, it will help us to imagine what will we face in global affairs. Whether or not globalization is logical? Whether or not globalization is not only logical but also reasonable? Alternatively, whether or not globalization is meaningless because it is unreasonable to be implemented; or, the most reasonable is that just a type of globalization that what we have now.

168

See Susan George,”A Short History of Neoliberalism”. Conference on Economic Sovereignty in a Globalising World , March 24-26, 1999.

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The key aspect to the above question do not lay in market, administrative or grant mechanism. Those mechanisms are already basic need for our civilization in all communities, but our source of problems is in human mind such as described by altruistic, normal, and selfish. We summarize the most probable implications of people attitudes on market, administration and grant mechanisms. We propose that if most people are selfish, than all kinds of instruments for allocation and distributions of goods will not work well. In addition, fair or normal attitude is necessary for making fair transactions. However, all kind of public goods, such as caring other people or caring environment, will be only very well provided if they are sufficient number of people with altruistic mind.

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Table 9.2. Relations between interests and exchange institutions Market

Altruistic Altruistic individual will see market as good way for exchange. However, he/she will care other parties more than just making exchange.

Administrative

An individual with altruism will care more to administrative process such as good governance.

Grant

Grant is a character of altruistic individual. If he wants to help, then he chooses grant mechanism.

Fair or Normal A normal person will see market as an opportunity for making money. However, he/she will make an exchange based on right moral value. This person will not take advantage from disadvantage people. A normal person will see administrative mechanism as also a normal practices in exchange. This person will make normal calculation about costbenefit if he/she wants to involve. This person sees making grant is also a part of normal life, including in business. However, all are based on normal calculation.

Selfish A selfish will see market as a source of opportunities for his/her own benefits. He/she will not take into account whether exchange makes other parties suffering or not. Selfish does not pay a tax if he/she could. Whether administration is corrupt or not is not his/her interest. His/her interest is only making money or what ever he/she likes. Self-interested individual will hardly give a grant to other party, including a minimum caring.

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Table 9.3. Relations among farmers, traders, manufactures, and bureaucrat Agents Farmers (1)

Traders (2)

Manufacturers (3)

Bureaucrat (4)

Farmers (1)

Traders (2)

Manufacturers (3)

Bureaucrat (4)

Farmers usually see other farmers not as competitors. Farmer’s also more as social agents rather than economic agents. They work mostly based upon traditions. They calculate cost and benefits but it is not as a prime objective, especially in developing countries

Traders usually see farmers as a weak economic agents, so traders usually make a high bargain for lower price. Actually, traders see farmers as source of profit. On the other hand, farmers see traders as “economic animal,” but they cannot do anything. Farmers have weak bargaining position Traders see other traders as competitor. However, the possibility of competing each other is lower than the possibility cooperating each other, especially where number of traders is small. Therefore, we observe more traders associations rather than farmers associations. See (2) (3)

Just like traders, manufacturers see farmers have no bargaining position. Therefore, manufacturers usually take advantage of farmers, especially when manufacturers play as local monopolist.

Major objective of bureaucrats is to maintain power in his/her hand. So, farmers are seen as their object of his/her power.

Traders and manufactures are more representing complementarities rather than competition. However, traders have more flexibility.

Traders usually have a strong relation with bureaucrat because they have strong lobby. In addition, bureaucrat usually sees traders as a part of power that can be used for their purpose.

Relationship between manufacturers depends on structure of market power. Merger or making vertical integration or joint venture is more probable than competing to each other. Evolution of market power in developed countries shows this phenomenon. See (3) (4)

Just like relationships between traders and bureaucrat.

See (2) (1)

See (1) (3)

See (1) (4)

See (2) (4)

Farmers are also see bureaucrat just as a power seeker. In addition, farmers also know that bureaucrat is closer to traders or manufactures.

Bureaucrat usually works based on SOP of his/her bureau. Therefore, there could be cooperation or conflicts among them. Interest of his/her bureau is major background.

Now, let us see most common relationships between farmers, traders, manufactures, and bureaucrats, especially in developing countries such as summarized in Table 9.3. Based on this table we can make the following statements. First, farmers are the weakest part in the system. Large numbers of farmers make them very costly to organize themselves and due to characteristics of farm products and of farmers’ economic situation, farmers have no strong bargaining position. Second, more natural for traders and manufactures to cooperate rather than to compete each other. Therefore, expecting competitive structure in agricultural markets, in term of farmer’s point of view is unreasonable, especially if bureaucrats have closer relationships with traders or manufacturers. Third, sustaining the above relationships is not supportive for agricultural sustainable development purposes. Fourth, win-win outcomes such as indicated in Table 9.1 will be attainable if and only if we can develop new values and new structure or new institutions underlining agricultural world affairs.

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Some Insights The above notions are not new. In fact, to some extent, those are well known by policy makers or researchers. What make us more concern on that issues are the situation is getting worse. We cannot imagine, for example, farmers situation in developed countries have been deteriorating and the emerging of agricultural market concentrations in the hand of four or five large companies has caused its deterioration. This situation can be interpreted as a situation that reveals that values of competition as basic values underlining market has been violated. If developed countries cannot control conducts of large corporations, developing countries will have more severe conditions because large corporations that operate in developing countries come from developed countries. There seems that industrialization that had taken place in early 19th century will be repeated in developing countries. Large companies seek locations that give the cheapest wages and resources in the world. We know that productivity has correlation with wages, so if wages so low, how could labor be productive? Of course, efficiency is a law of competitiveness of companies, but if unimaginable low wages as the main factor for efficiency, why do not we reinstitutionalize slavery. The only cost of labor under institution of slavery is just how to give them minimum amount of food and marginal place of shelters. World class of products will only come from world class of communities. And, it will be attainable if labor has opportunities to develop their capabilities169. Such opportunities will not come into existence as long as their wages are too low and companies do not give a chance for labor to develop their own productivity. It is impossible to stop time moving, and also impossible to return to the past. The world and its contents must move without regard our interest. So, if we have to move over time, what kind of move we should make? Table 9.1 – Table 9.2 already explicitly shows that the root of all problems is derived from people mind. Different points of view, positions, and hierarchy have produced some distance among entities. Such distance has produced different values, or in narrower meaning, produced different interest. Economic teaching assumes that individuals are pursuing only their own interest. On the other side, we need public goods such as the world’ peace. The above tables also imply that seeking win-win outcome is also not easy. On the other hand, the world has endowed so much experience, knowledge, and other types of capital. We have many –ism such as capitalism, socialism, liberalism, democracy, and other kinds of products of deep thoughts. Developed countries have moved far a head in both economy and social issues. Military power is already an exclusive issue of developed nations. Developed countries such as the US have several times to travel to outer space that case for developing countries is unimaginable. The advancement in science and technology of developed nations has also remarkable high relative to what developing countries have. Therefore, social distance, if measured by nations’ endowment, between developing and developed countries is very far. It has been imagine by Lee M. Silver in his book “Remaking Eden” that if genetic engineering is allowed for human being then there will be genetically enriched people and natural people. They cannot communicate and if they are married, they will not be able to reproduce, just like a horse and a zebra.170 Why the world cannot be developed by such kind of endowment? Why the past cannot enlighten us now? Do we develop our own social trap, which cannot be solved together? What we face is not a personal or private issue, but we are dealing with global issues that some times will also come to us. Global poverty, for example, will not be different with global warming in a sense of producing negative externalities. We have power to solve them why we do not use it or why we use wrongly. 169

See D. Henton, J. Melville and K. Walesh, 1997. Grassroots Leader for New Economy. Jossey-Bass publishers, San Francisco.

170

See L.M. Silver, 1999. Remaking Eden. Cloning, genetic engineering and the future of humankind? Phoenix, London.

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If we believe that the world is changed by invention or innovation that is assimilated by majority of people in the world, can we continue to create other inventions or innovations? History teaches us that humankind has power to invent or innovate and to create better world using their innovated products. However, what has been innovated by humankind is also able to destroy us. Nuclear power or other kind of weapons is one example. Therefore, invention or innovation is not dependent on purpose of having good life. Global poverty or global inequality should also be perceived as dangerous as weapon that may destroy humanity. The world history gives us lessons that one of the most important things is freedom. Freedom broadens opportunity for individual person to use all power he/she has to find and to reach his/her goal. Freedom means people not to abdicate their life for or under other people command. It is a source of creativity, and creativity is one of the most important characters of people. Creativity is valuable under environments that people care to each other and people respect to each other. It means that environments give the fruits to creative persons because such persons give valuable goods to other people; in fact, other people enjoy most of goods. Some Thoughts There are many thoughts or even many results or seminars, conferences, or meetings in national or international levels that come with some important documents such as Agenda 21 or Millennium Goals. They are very important documents, and becoming a historical document that have been written and talked by many people in the world communities. Those documents also have been treated as a guideline by government offices and non-government institutions in developing their views, programs, or projects. Many resources have also been drawn to socialize, understand, and further development of derivation of thoughts based upon such world-class documents in a smaller regional or sectoral context. However, such process has made almost a uniform frame of thought all over the world. People sometimes see such world-class documents like a Bible or a Koran. I thought it is dangerous if we let our mind just following what has been produced by other people without trying to develop or to replicate them based upon our own thoughts. What I mean it will be very dangerous for us if we just make a photocopy of other people thoughts and then use them for us without critical efforts. By saying this, I do not mean that such thoughts are not important. However, I think we also should try hard to develop our own thoughts and use them just as a reference. Of course, it will not only difficult to create our own thoughts but also is risky. However, there will be learning process we encounter if we are willing to put our serious efforts to develop our own thoughts and such process is beneficial by itself. I will try to take this road. Micro issues Farmer points of view with Indonesia as a geographical setting are used in this analysis. We realize that Indonesia is not a homogenous country especially if we considered Indonesia is composed of more than 17 thousand islands. However, there are common characteristics of farmers, in fact not only in Indonesia, but also in the world. Therefore, what we draw from Indonesia will be also important insights for other farmers in the world. We will not repeat to explain that the worlds of farmers are the world of crisis. One of the most important aspects of human being is freedom. Then, the most important source of crisis is freedom of farmers. For century’s farmers’ freedom have been taken by others, especially by ruling elites. The impacts of Cultivation Systems such as introduced by van Den Bosch in 1830 are still sustained up to now. Of course, we may not realized that such a thing is similar to Cultivation System, for instance, if we

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just see such current system in a surface of the problem. However, if we go deeper we can find that freedom of farmers has been taken by different names or by different mechanisms. Development of agribusiness in developed countries that through deeper industrialization up to farming level of business have made farmers loosing their freedom. Horizontal or vertical integration has made farmers not only dependent on decisions made and imposed by corporations but also make farmers just like low paid workers. It happens because concentration of market power in corporations has made corporations to capture value added from agribusiness that is not shared with farmers. The idea of integration, vertical, or horizontal integration has been repeated in Indonesia or other developing countries. The cost of such institution is not only lowering income of farmers but it makes farmers creativity declined. Farmer’s position is in the lowest part of agribusiness systems. We have to start to find ways to overcome lack of freedom issue of farmers. Such as discussed in previous chapters, issues of freedom are composed of two types of freedom, namely capability to do valuable acts and to reach valuable states of being, and to be free from negative interventions from other parties, including government. Corporations are a form of institution. Human beings through the acceptance of values and rules that called capitalism create them. In a simple interpretation, capitalism is an ism that accepts that capital owner, in a very broadest sense, can create a body of institution that is morally and legally acceptable to play a role just as human being in economic affairs. So, in a business sense, we do not know Mr. A or Mrs. B that making certain transactions, but what we see is company X or company Y that making economic transactions. Individuals are abstracted in a name of company. Physically Mr. A and Mrs. B cannot be mixed into one body, but with the idea of companies, Mr. A and Mrs. B can be in one body. Furthermore, Mr. A and Mrs. B can create several companies under different names and different roles. Public is usually difficult to know who are the owners of company X, for example. The owner can play various strategies in developing or protecting theirs company. Sometimes they are hiding. In other time, they show up. A company is also tradable. Selling or buying a company becomes major strategy for parties involved to gain benefits. Mergers, joint ventures, and other types of strategies are a part of company sides to create benefits. Market concentration or market dominance is major source of power that may have no relationships with efficiency or welfare of people. In term of farmer’s point of view, companies are something abstract. Most farmers in developing countries cannot understand fully what companies are. What they know is that they charge low price of farmers product or they sell products to farmers in high price, or they cooperate with farmers but farmers get small share. We can see from history, farm gate price are very low for most farm product relative to what consumers’ pay. It is usually called as asymmetric situation between farmers and companies that means company is more powerful than farmers in market place. The degree of asymmetry becomes higher and higher if companies develop associations among themselves. Therefore, to make companies more powerful they can perform through building economic concentrations, social interactions, and other types of means. One can see that the way of companies to create power can also be the way for farmers to develop their power. The main interest of companies to create power is for having larger profits or for controlling market. Competition is tiring and loosing too. Therefore, the best way and cheapest way to develop certainty and easy way for controlling market is through collusions. In the world of farmers, profits are also interest of farmers. However, numbers of farmers are large and farming unit is small. Transaction costs for making associations or collusions among farmers, then very costly. Therefore, farmers have to find other terms for enabling them to reach the same bargaining power with companies.

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Farmers in developing countries are lack of experience in developing associations. In the past, politically farmers are also not allowed to have their own associations, except using institutions that created by government. Therefore, it is justifiable to ask whether creating associations is a right strategy for farmers to gain freedom and then to have strong bargaining power. We have to move a step by a step. First, we have to find and establish farmers “common challenge.” Common challenge here is farmers’ survival. There must be some one to wake up farmers’ mind if there is no one among farmers among farmers saying that they will be dying soon. To what extent this wake up call will work it is just a matter of empirical evidence. However, it is the first step that cannot be avoided. Farmers should develop their own awareness and such awareness should be internalized into deep of their mind. We may call it as farmers’ awareness development stage. It is not an easy step, of course. It calls for not only energy but also require deep mind and empathy for making effective communications. Friends of farmers can take a part in farmers’ awareness stage. However, just as being friend, we cannot replace the position and function of farmers. However, as a friend we can give farmers help in what farmers have no capacity. One of the most important things is information or knowledge about the world. So, we have to inform farmers about World Trade Organization (W.T.O), agriculture subsidy in developed countries, dumping issues, smugglings, price trends, and so on. New knowledge and new information will induce learning process among farmers. Of course, there are some limitations of farmers understanding about those issues, but they are some of them or some of their children that enable to communicate with other farmers. In turn, knowledge of farmers regarding what are the main causes that make them should develop for survival will emerge. The main roles of information or knowledge for farmers are to make them understand what kind of the world above them. I think this is universally true for all people. Knowledgeable people will understand what, why, and how such a thing is taking place to him. The next step is the step how to utilize knowledge. Just as what people usually say, major source of power is knowledge. However, how to make them powerful is another problem. Knowledge is not a form of physical power. Knowledge resides in people mind but cannot be used in term of physical power such as we can measure in a horsepower. There must be alternatives that can be used as an instrument to use knowledge. Just what usually do by entrepreneur in business that they use a company and association as an instrument, so that what farmer can do. There must be farmer organization for a means to use knowledge. Developing organization is a mean for farmers to metaphor or transform their body into an abstract form but morally and legally acceptable. Therefore, farmer organization should have legal power. Such a legal power is important because we are now living in a modern world. Every thing should be legal. If not, it will not be accepted in formal interactions with other parties. We can call it as a stage of knowledge internalization into a form of organization. Organization is not a living body. We cannot see and we cannot touch. However, there  is  an  organization in our surrounding. Every one must be a part of organization or institutions, whether it is  realized or not. For example, people who was born and live in the forests and never interact with other  people in more open communities may not realize that they are a part of citizen of one’s country. What I  would   like   to   mention   here   is   that   it   is   also   not   easy   to   be   aware   that   one   farmer   is   a   part   of   an  organization.   Therefore,   it   is   unavoidable   to   develop   an   organization   at   the   beginning   stage   without  involving all farmers in a country. If two or more people develop an organization, as far as minimum size  of members is not violating legal rules, I think it is already an investment in an institution. Of course, the  larger the member is better. However, an effective organization is not necessarily dependent on large size 

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of its member. It is dependent on how far such organization can influence other parties that are having  interdependent relation with farmers. Farmer organization involves a mass of people. It is what is usually viewed. It is true, but huge  mass of people is not guaranteeing also that farmers’ organization will work well. Mass power will be  important for pressure but it should be guided by knowledge or wisdom of organization. Here we enter  one of the most difficult part, namely how to combine power of knowledge that is naturally in the hand of  few people initially, and power of mass that is function of numbers of farmers. Initial endowment of  farmers in organization will be very important in this stage of farmers’ organizational development. The  role of leader, leadership and structure of organization being set up are the keys in this stage. Structure of  organization will set how far opportunity sets are available for farmers within organization and leaders  and leaderships will create what strategy and what move will be taken by organization. We may call this   as an identity formulation stage of organizational development. The next stage is implementation of ideas, knowledge, and power to reach certain goals. In this  stage, after having identity and consolidation of power, organization should start to work. The key here is  to choose a focus of work and what are the instruments to reach such focus. The focus should be a thing  that is interest of all farmers and farmers should easy to materialize it. One of the most important issues in  agriculture is price. It is well felt that prices of agricultural products are not enough to make farmers  survive in the longer run. So, just choosing price, as a focus then the next step is how to complete this  mission, namely reaching better price. Price of a product is set, at least, by two parties, namely buyer and seller. Without organization, in  the past an individual farmer sells a product individually. Therefore, the first challenge now is how to  make   organization   as   an   effective   part   of   farmers   to   make   better   price.   One   of   the   most   important  strategies here is to develop a single chain marketing decision across all farmers. A process to reach a  decision usually quite long not because it is a new mechanism but also it involves trust here. A successful  process will depend on how hard they work and how successful they come with right rules to govern  themselves.  The roles  of  leaders and their leaderships are keys for success. When they reach  with  a  conclusion, namely, they establish one­gate policy in marketing their products then they have to move to  other steps. The next step is to find a buyer. Buyers, namely traders, face farmers’ move as threat to them.  Therefore, they will try to break farmers’ decision. They will exercise power and influence farmers to  break their commitment. It is really a hardest part for farmer’s institution must face. Traders will also  influence political elites, bureaucrats, and other parties to help them. However, there will always way if  farmer organization is strong enough. Such as indicated in Table 9.1, there is 1/9 possibility to gain win­ win outcome.  Therefore, farmers should try to find that cell. One of available strategy is to make an open  auction to all traders. The auction is not auction of selling amount of product that will be sold by farmers,  but auction of establishing cooperation in marketing such a product. Of course, traders will see how much  they will get profits from such cooperation. The same thing with farmers, they will try to find which  traders are willing to share profits with them. Here, farmers try to break the coalition of traders with  profits they offer.

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There must be certain degree of a mixed attitude between selfish, normal or individualistic and  altruistic characteristics across traders. They will calculate cost­benefit of cooperation and they will bid  for cooperation with farmers’ association. Once they bid, the highest altruistic trader will give highest  bidding. The main reason is that they will value long terms cooperation as valuable thing for them. It will  not only reduce transaction costs for longer term but also they will see closer to farmers is beneficial. So,  in this case is just like farmers and trader doing merger.  One thing that interesting here is that farmers have new friend, namely cooperative trader. To make  a coalition worthwhile, they should protect together that price of the product does not fall. It is a time for  farmer organization to exercise mass power. Price incentive is energy for farmers to move.  A new target is  policy maker. Therefore, the next move is increasing farmers lobby to government and ask government to  produce policies that protecting farmers’ interest. One of the targets is to control imported commodities  and smugglings.  The rest of traders will continue to fight and not all farmers will follow a scheme. The rest of  farmers will wait and see what will happen with the above new coalition. As far as the outcome of new  coalition is giving farmers better price and more certain future, then in the next cycle the rest of farmers  will follow the previous move. The above story is a real story that happens with farmers sugar cane association in Indonesia.  Sugar is highly politically commodity in the world. Production of sugar in developed countries are highly  subsidized that make, for example, European Union as the second largest exporting sugar countries in the  world. International sugar price is lower than production cost that cause sugar cane farmers in developing  countries suffering. IMF (International Monetary Fund) intervened government of Indonesia to liberalize  sugar market and it hurt farmers. Now, sugar cane farmers enjoy better price and sugar production has  increased by 0.5 million ton in 5 years even though there has no new investment in sugar mills. The next  steps for sugarcane farmers association is how to actively involve in restructuring sugar industries.  Major purpose of the above story is to give insight that freedom is a basic source for revealing  farmers spirit to survive. Market is usually viewed as institution that giving freedom by itself. It is not true  if farmers just wait and watch what other parties do to them. Farmers should be catalyzed to develop their  organization using their owned chemistry.  They cannot just wait and accept the cook to make food for  them. They must cook by themselves. Sugarcane farmers association in Indonesia is one farmer institution  that now is working, they are “cooking” not only for them but also for other people. We are expecting  other farmer institutions to emerge, grow and becoming strong institution. National issues Again, our major issue here is how farmers get their freedom. Sugarcane farmers association has been sowing some lights and those lights are nationally or internationally relevant to be considered. If one talks about development and says that development should “bottom up” or should not “top down,” then sugarcane farmers’ association movement in Indonesia is a bottom up process. Sugarcane farmers have moved in a right time when reformation era took place in Indonesia and when economic crisis hit most

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farmers in Indonesia. There were involvement of government but the role of government was only as a catalyst. As a catalyst government does not involved directly in reaction process, it just plays as facilitator that does not determine the result of reaction processes. Farmers determine the results of reactions. Farmers take initiatives. What   can   be   learned   by   a   national   government   for   the   case   shown   by   sugarcane   farmers  association in Indonesia? In the past, we have developed many institutional projects financed by external  loans or by national budget but we have not seen a case just as shown by sugarcane farmers association.  Therefore, there must be some good lessons for government to take into account what are values from  sugarcane association movement.  First of all, I repeated again here, is that farmer have their own rights to seek their freedom as part  of their survival efforts. Laws should protect their freedom because laws determine the boundaries of  people in making their affairs. What have been done by Abraham Lincoln in 1882 and by Franklin D.  Roosevelt in 1933 are good examples that should also be the case in developing countries. Government  should build climate of freedom for farmers and it also freedom for others.  Second,   government   should   reconsider   practices   in   agricultural   development.   In   the   past  government put too much effort on direct active roles to control or intervene farmers’ behavior. We can  observe   from   Repelita   to   another   Repelita   the   goals   of   agricultural   development   are   to   increase  production. We learned that the results are not successful. We have to reorient to things that are more  substantial. In the volume I argued that basic of development is freedom in relation with justice, welfare,  and equality. Production can be enlarged, but it does not necessarily mean welfare or farmers freedom  increasing. Of course, the ideas of developing market that pro­farmers will face strong opposition from the  establishment.   Most   of   traders   and   manufactures   of   agricultural   products,   including   multinational  corporations may not support farmers to gain better price because better price will mean cost to them.  However,   for   sake of  longer run interest, there is no way to develop agribusiness without increasing  welfare share of farmers. Therefore, it is the role of governments agencies to harness the conducts of  agribusiness companies so that they to support farmers. Corporate social responsibility that is now very  popular term is not showing much benefits for farmers. It is a good term for lobbying governments and  other parties so that they support multinational firms. One of the most important but the most difficult parts of improving farmers’ future is that how  farmers   receive   fair   shares   from   added   value.   Most   of   food   and   other   manufactures   that   process  agricultural products are located in cities or in developed countries. On the other hand if developing  countries just exporting primary products, farmers will not have fair price. Data show that almost all  primary   product   prices   are   continuously   declining.   In   the   case   of   rubber,   for   example,   Michelin,  Bridgestone,   and   Goodyear  that   all  share  56   %   of   world  market  dominate  tire   industries.   Indonesia,  Malaysia, and Thailand shared 70 % of natural rubber production in the world. However, rubber farmers  are still poor up to now. This is just only a case because multinational corporations dominate almost all  agribusiness sectors.

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Is   it   possible   to   replicate   what   has   been   conducted   by   sugar   farmers   association   into   other  commodities   or   other   contexts?   It   is   one   of   the   most   important   roles   of   government   in   the   future.  Government whether directly or indirectly can play as a catalyst to develop cooperation among farmers  and traders or manufactures. Poverty alleviation fund, in fact, can be used to develop markets that are pro  farmers because most of farmers are in poor condition. How can it be done? The key is how can we develop institution that can broaden opportunities of the whole system of  economies. Within this framework, we have to use  ownerships as a major instrument for broadening  opportunities and at the same time increasing cooperation, efficiency, and productivity of agriculture. In  the past, there were community development programs that purposed to increase farmers’ participation.  One   of   very   well   known   program   is   nucleus   estate   smallholder   (NES).   It   is   similar   to   establishing  horizontal integration between farmers and corporation where farmers plant certain crop and the nucleus  plant the same crop. The nucleus developed the plantation and then the plantation transferred to farmers  after certain period. The nucleus also owned a factory, received farmer’s production, and gave farmers  with price according certain formula developed by government. Farmers should returned credit loan to  government.  The weakest part of the NES model is making farmers unfreedom. Farmers have no control to  manufacture and they just received what price is given by nucleus. Of course, according to rule there is a  process of negotiation facilitated by government but in realities the rule is profiting the nucleus. Data  showed that almost all NES program failed except in palm oil. However, in this program too, farmers  cannot make palm oil replanting at the end of the cycle. There was substantial amount of money that has  been invested with major purpose for alleviating poverty. However, at the end farmers are still poor. What are major roles of ownership we have to use? In a case of sugar trading by sugarcane farmers  association and its partner, the partner (sugar trader) plays a role as farmers in dealing with a bank to  support farmers’ need for fund before their sugar is sold. It is done because farmers usually need cash but  at the same time, they have to control sugar price in market. We can replicate this model to other activities  or commodities. However, the most essential thing I want to raise here is that farmers’ income should be  assured through managing their product market. What has been done in sugar is clearly profitable for  farmers. Government money can be invested in the same mechanism just what traders case in sugarcane.  One of the most important strategies that can be considered is that such fund can be used for source of  fund for farmers to buy state owned enterprise (SOE) where most of inputs processed in SOE are provided  by farmers. It is the case for sugar mills in Java where almost all cane are supplied by farmers. So, using  this mechanism there is control mechanisms for controlling the fund and at the same time enlarging  business. Farmers are selected according to their willingness and contributions. Increasing productivity  and  farmer’s   income will have far reaching implications. There will  be strong multipliers effects  for  growing rural economies.

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One of important strategy is to create agricultural bank or farmers bank. Corporate culture and  structure of farmers’ bank should be suitable for agriculture and farmers life. 

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Table 9.4. Agriculture and bank lending CALIFORNIA Market value of agricultural sales

17,052

IDAH

OREGO

WASHINGTO

FOUR

O

N

N

STATES

2,96 4

2,293

3,821

26,130

1.4

2.4

16.1

10.5 Market value of sales as % of US total

1.8 55.1

53.7

Ag production loans as % of total farm debt

41.9

69.4

58.4 54.5

33.0

49.7

42.8

48.6 3.1

162,6 08 100.0

62.9 Bank share of ag production loans, in %

U.S.

45.8 3.0

2.7

2.4

2.9 2.6

Ratio of sales to ag production loans Notes: Market value of sales in millions of dollars, from 1992 Census of Agriculture. Total ag production loans and total farm debt from 1992 USDA Farm Balance Sheets by State. Bank ag production loans from December 1992 Call Reports. Source: Mark E. Levonian, “ Explaining Differences in Farm Lending among Banks. FRBSF

ECONOMIC REVIEW 1996, NUMBER 3.

Levonian (1996) stated that the main determinant characteristic of agricultural bank is that the head office location and bank’s size both are important factor. However, the size of bank’s branches in agricultural area is the single most important factor determining agricultural loan levels. With total sales of agricultural products in the US in 1992 US$ 163 billion, there was 54.5 % of bank share of agricultural production loans. Total farm debt out of agricultural production loans in the US was 45.8 % and ratio of sales to agricultural production loans was 2.6 % (Table 9.4). Levonian stated that agricultural production units that participated in bank loans are large farmers with annual sales more than US$ 500,000. All this happens because banks offices located in agricultural region and its size are also fit with condition of the economies. Let us suppose this US$ 500,000 or roughly equivalent to Rp 5,000,000,000 per unit of farming. There will be almost none of individual farmers have sales such as that amount. If we use sugarcane farmers as our bench mark for Indonesia, we will come with a size of farming about 240 hectares. If we use that sugarcane farmers operate 1 or 2 hectare then there would be about 120 to 240 farmers per unit of farming. If we develop a group of farmers with a size of 120 farmers per group, then transaction costs for managing loans to farmers will be decline substantially compare to if bank administer farmer’s loan based on an individual basis. Now, to finance sugar trading farmers and their partner manage bank’s money for about Rp 3,1 trillion US$ 3.1 billion a year. This fact suggests that if we develop farmers organization there is a friendly bank for farmers, farmers’ access to bank will develop. Developing new institutional setting will make farmers becoming bankable. However, there should also be renewal process in the minds of banks. At present condition, banks in developing countries mostly do not see such an important opportunities of agriculture. There is only a bank

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like Bank Rakyat Indonesia (BRI) its main income mostly relies on microfinance. However, there is only a small fraction of farmers or villagers, namely about 14 %, that gained credit from BRI. One of major reasons is that cost of borrowing money is very high in developing countries such as Indonesia. According to Sinha (2004), interest rate in Indonesia is ranging from 30 to 50 % a year. This rate of interest is much higher than that of in Vietnam, namely ranging form 12 to 18 % a year171. If we compare those interest rates with what farmers in developed countries enjoyed, such rate of interests in developing countries are significantly high. Therefore, there is a paradox where large corporation that has caused economic crisis that called for Rp 600 trillion for bank recapitalization in 1998 gain so much attention but farmers that has rescued the country received lack of attention even though they give great opportunities. Reasons that usually used to justify high interest rate are first to avoid moral hazard. If interest rate is low, farmers, businessperson, or others who do not need credit will borrow money from the bank. However, it is not a good reason if banks have good management system. Second reason is that high interest rate is needed to recover inflation. It is also not a good reason since inflation rate in Indonesia is just about 10 % a year. Therefore, if the interest rate is 30 %, then minus 10 %, we still come with 20 % of difference. Saving rate in Indonesia is about 6 to 7 %. The banks will still have 13 % of difference. Therefore, we can propose here that banking cost is too high. Economy cannot grow if capital cost is too high. This situation in the longer run is dangerous because it will increase inequality and unfreedom for majority of people. Especially for agriculture that reflects decision for long-term investment such too, high interest rate will make no investment at all. It means economy will be deteriorating. Declining rate of growth agricultural productivity and farmers’ welfare has reflected such situation. We can take some lessons, for example from Rabobank in Europe that has been established by farmers in late 1800s. The same thing is a case in Thailand with Agriculture and Agricultural Cooperative Bank, or in China with Agriculture Bank of China. In fact, in 2002, Agriculture Bank of China granted US$ 240 million fund to Jilin University for developing science and technology for facing China agriculture future. Such as said earlier, the development of agricultural bank is strategic not only to finance agricultural production, but more important is to facilitate trading or marketing farmers’ products. Therefore, government should catalyze the establishment of farmers’ agricultural trading house. Sugarcane farmer association has established a quasi farmers’ trading house. The next step of evolution is to establish a new trading house that can reflect farmers’ bargaining position in marketing. It is, of course not an easy task. However, there are no possibilities to increase farmers’ welfare without improving marketing institutions. So, this task should be undertaken. Seven thousand years of agricultural evolution has not created better farmers’ education. Tacit knowledge such as knowledge farmer’s gain through experience that is transmitted from one generation to another generation, of course, very important. This is a part of culture of farmers. However, exploding information and knowledge in the world of agriculture and other kind of the world call for fast improvement of farmers. It is including knowledge what has been happening in WTO, IMF, and the World Bank and in New York Stock Exchange, for example. What moves have been done by Monsanto, Cargill, Nestle, Indofood, and other large companies should be acquired by farmers. The same thing what kind of policies are set up by the US and EU governments. Knowing what happen in the world surrounding agriculture will be very important for farmers in developing countries. One of the main functions of such knowledge is to enlighten farmers to their worlds. Of course, knowledge about technology is necessary but it is not sufficient to build better world for farmers. 171

Sanjay Sinha, “Trend and Future Direction of Microfinance in Asia”. Paper presented in BRI International Seminar on Microbanking System, Bali, December 1-3, 2004.

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This is investment in human mind and this is one of the most important factors in shaping better future. It is not only involve in building human capital but it has more strategic meaning, namely we build ourselves as human being. This is the root of freedom, justice, equality, and welfare. Environmental problems in developing countries are mostly consequences of human behavior that have strong relation with unfreedom of farmers and villagers. Such as mentioned in earlier chapter, poverty and inequality are part of unfreedom. Therefore, expanding farmers’ opportunities will relax population pressure on nature. Reduction numbers of farmers because farmers have better income and send their children to school for getting better jobs in cities is will have very different impact compared to a situation when farmers sending their children to cities because of their poverty. Environmental protection or conservation, as long as ecologically is suitable, should also be viewed as an investment. It should be built institution that enable farmers to capture externalities as part of their efforts. For example, regreening program that conducted now is predictably will have not give better performance compared to what have been done in the past. Planting trees is not difficult but how to make trees sustainable is very difficult. It calls for new organization, new techniques, and above all new philosophy. Philosophy of freedom will suggest that the role of state or government is not taking but giving to people. It is a contrast of philosophy of colonialism, namely, state or government is taking something such as wealth of the people. Therefore, organization or institution should be created to enable farmers gain opportunities to involve in environmental recovery or maintenance. One of alternatives is to build an institution that enable trading between present and future situation. Waiting for 20 or 30 year benefit is too long for an individual. However, if farmers will receive immediate return from their activities then they will gain incentive to work hard. Therefore, government must establish an institution that can work together with farmers to produce environmental services but at the same time to increase stock of capital. Let us exercise with teak (Tectona grandis) for illustration. In Indonesia there are 60 million wood deficit a year. 30 years old of teak tree will have minimum about 1.0 m3 of wood. 1.0 m3 of wood is equivalent to at least Rp 3 million (US$ 325). However, to wait 30 years is too long for farmers because farmers need immediate income. On the other hand, there is good market and good value of stock that can be generated from teak wood. We can imagine if we plant a teak tree in 2005 with cost about US$ 2.0, we will receive at least US $ 325 in 2035. The growth of value of stock is 18.49 % in 30 years or 0.62 % a year. This minimum value is equivalent with saving deposit in dollar in Indonesia now. If a teak can grow in average rate of growth such reaching as 2 m3 in the year of 2035, then the value of stock will be doubled. It is only economic benefit; we have not yet to consider other benefits such as increasing supply of wood that fills wood deficit now and other environmental and social benefits. In fact, in 2035 we will have huge stock of money in form of teak forest if we, for example, develop an institution that can invite farmers and other communities to invest. Investment cost is not so much, for planting teak trees as many as 10 million trees, for example, we just need US$ 20 million for seedlings and first operation. If maintenance cost is 20 % of initial investment cost, then we just need US$ 120 million for 30 years. The value of stock will be US$ 2,6 billion if we assume there is only 80 % success. Therefore, ratio of stock value to investment and maintenance cost will be 18.57. Number of farmers in Java, excluding Jakarta, in 2002 was 19.6 million people. Therefore, if we plant 10 million teak trees, the average holding size of farmers is only 0.5 trees. It means that potential for investment is high as far as we can develop a means to participate farmers to invest. The principle of planting teak trees is to develop new learning habit for caring our future. Extending our capacity that will make us able to hold and to care our future need certain

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instrument. In economics, we know about savings. We save some money meaning that we buy our future. However, poor farmers or most of people in developing countries have no sufficient money to save. Therefore, we need find something that can help us to hold and to care our future. It does not only mean the future of us, but is also the future of our next generations. It is a means for developing self-education about future that cannot only be built by a single individual. Our future should be built based on our collective actions. Planting trees is a part of our education. If we can develop a system that enables us to work collectively to build our future then we have a means for our better future. Therefore, what are described above are not only a matter of investment but also a matter of education.

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Farmers Bank

Educatio n

Tradin g House

Figure 9.1. Investment in farmer education, bank, and trading house We can summarize the above discussions in Figure 9.1. In general, in order to obtain better future of farmers in developing countries, we need to invest in institutions that enable us to broaden our opportunities and at the same time will increase farmers freedom, welfare, justice and equality. First, we need to invest in human mind such as expressed in farmers’ education. What do we mean by education here is not the same with teaching farmers to do this or that but to build a system that will develop self reinforcement system that will improve knowledge, skills and mindset that care about our future. Farmer bank is developed in that context, so bank will perform as learning centers for farmers and other rural communities. Such learning center is strategically important to broaden and sharpen farmers mind in both economic and other aspects of human affairs. Bank as a center of money and other financial assets play a strategic role in connecting buying and selling activities that are conducted in trading house. In trading house, farmers will learn how to develop market that makes them entitle to gain fair benefits. In addition, trading house is also important for building socio-economic communities that facilitate coordinated transactions openly. So, education, farmer bank and trading house is a system that integrate present and future through better interactions in trading, financing and human development. How about people who live in or under bottom line of poverty? Of course, they have right to  participate in economic affairs and to increase their welfare. Data show that most of people under this  category are laborers. So, they have experienced for a long period to work for wages. Our orientation to  develop   the   above   system   is   to   broaden   socio­economic   opportunities.   Therefore,   our   reasonable  instrument is to increase employment opportunities in rural areas so that it will increase demand for labor.  Increasing investment and trading in rural areas that give higher welfare of farmers, will increase demand  for labor not only in quantity but also in quality. People that are now in the bottom line of poverty will  have access to the above systems, particularly education.  The   above  discussion   is  just  only  providing   some   experiences   and   insights.   One   of   the   most  important things I would like to mention that it is time for us to see farmers as a subject that assure 

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farmers entitle to freedom. Their freedom is a foundation for seeking instruments to catalyst them to gain  justice, welfare, and equality relative to other parties.  Global issues It has been told by history that self­interested institutions will use whatever power to reach their  goals. First, they come for travel to explore the world. Second, they offer something through trade. Third,  they   think   competitive   trading   needs   a   lot   of   money,   so   the   cheapest   way  is   to   monopolize   market.  However,   to   create   monopoly   needs   power   for   excluding   other   competitors,   including   domestic  competitors.   Therefore,   the   next   step   is  to  divide   local  interests  and   competitors,   and   make   them   in  conflicts or wars. Next, after they are weak, we use power to conquer them all. We will hear similar  stories all over the world in the era of colonialism. In this era, trade was only a first lure to attract other  people come into a trap. Therefore,   we   have   a   social   trap,   namely   our   inherited   mind   from   one   generation   to   other  generations. Our mind works, consciously or unconsciously, in different or even in opposite directions.  Significant social distance between developed and developing countries has created different meanings  even though we see and discuss the same subject. However, such differences are not only in term of  different of view, but also make conflicting interests. Here is a source of problem, how to solve our  conflicting interests. It is nice to say that we have common agreements  to increase our trade among developed and  developing countries. However, after we go deeper what is behind common agreement is a meaning that  you   have   to   follow   my   order   otherwise,   we   cannot   help   you.   Observing   the   practice   we   can   easily  conclude that market institution has been used too far, namely asking a weak part to trade his/her freedom  for a thing that he/she badly need; if not she/he will die, for example.   Using food as a weapon is one  example of this case. Of course, a contract is an agreement that has to be followed by signing parties. However, how  could we have a fair contract if powerful parties imposed power to weaker parties? The only condition for  having fair contract is if both parties at the beginning respect to each other. It means each party accepts all  parties  involved  in  a contract  as   equal  human  being.  We will  have  this  condition if  we sit  down   as  freeman. Again, I would like to say that freedom is initial condition that must be constructed in our mind  before we conduct discussions for reaching certain agreements. As a normal person, we are clearly logical to expect gain in every agreement. As a normal person,  we are also logical to expect somebody else also gain from certain agreement. Win­win outcomes such as  indicated in Table 9.1 is the most logical and reasonable solution to be expected if both parties have a  longer­term vision. So, only longer vision leaders or person will develop a condition for reaching win­win  outcomes. To what extent position of a person will affect his/her vision? 

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Table 9.5. Importance of vision associated with developed countries (strong institutions) and developing  countries (weak institutions) leaders Longer vision

Short sighted

Strong institution Weak institution

Longer vision

Short sighted

Common agreement and win­ Common   agreement   may   not  win outcome be reached because as a longer  vision,   even   though   he/she  comes from weak institutions,  he/she will have strong mind.  If   a   strong   institution   has   a  If   both   parties   have   short  longer   vision   than   we   will  sighted   vision   then   not   only  expect   he/she   can   use   his/her  common agreement will not be  mind effectively to change the  reached,   but   also   the   process  vision of a weaker party from  will   come   to   make   problem  short   sighted   into   a   longer  more   severe.   Of   course,   the  vision person. strong   party   will   be   the  winner,   but   the   way   he/she  won   can   be   dangerous   for  better future.

Major purpose of Table 9.5 is to show that solving global issues  not only need high  skill  of  negotiations but also a character of leaders from both developed and developing nations that have long  vision. It is true for all institutions such as government, business, NGOs, or others. A long vision leader  will be able to see better picture of the world at present time, future, and connection of both. He/she will  also have imagination or knowledge of what other parties think, feel, or expect. Longer vision of strong  institutions is more important to have because we can expect he/she will be able to influence his/her  strong mind to influence a short sighted leader from weak institutions. However, if strong institutions have  shortsighted leader and make negotiation with longer­term vision of weak institutions, the outcome will  not take place. In addition, the worse case will take place if both parties are short sighted. How can the world produce longer vision leaders in both developing and developed countries? It is  not easy to answer. At least we know that we need a good man or woman as our leaders if we want to  reach our better future. One of the most important characters of longer vision of man is like a character of  a  teacher  that he/she will be very happy if his/her student can perform well in all examinations  and  successful in his/her life. Therefore, there must be a minimum amount of altruistic character associated  with longer vision leaders. It is should be associated with leaders from all sides. 

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If we use a good teacher as our model, we will come with a model of teacher that gives freedom to  his/her student to find the best ways for themselves in understanding a subject being taken. Again, we find  that a source for having a good man is freedom, namely there is no intervention by force from one parties  to other parties. It is a process of true democracy that assures we will come with a good leader. I use a  term of true democracy to differentiate an application of democracy that using every means to control  people aspirations or voices with how to influence people mind by using morally accepted intelligent  mind.  So, wining as the goal is all right but it becomes not acceptable if the way to reach that goal is by  using immoral practices.  There   are   many   global   issues   that   all  issues   must   be   complicated   to   solve.   One   of   the   most  important issues in global context is food and agriculture. For both developed and developing countries,  food and agriculture is essential issue. For developing countries, food and agriculture is not only a matter  of how to receive income and generate employment, but also is a matter of life and death. For developed  countries, even though numbers of farmers are around 2­5 % out of population, it will be hard decision to  reduce production. In fact, agricultural subsidy is given to farmers. Therefore, it is incompatible issue  between developed and developing countries if both parties perceived that reducing farmers’ welfare are  wrong action.  Figure 9. 2. Interactions between developed and developing countries in global food developed  countries Surplus

Deficit

S U R P L U S

If   developing   countries   gain  surpluses   in   the   future,   then  global   food   situation   will   be   in  surplus.   Without   reducing  surplus  production  in  developed  countries,   there   will   be   severer  competition   in   global   food  market.   Farmer   welfare   in  developing   countries   will   be  significantly   reduced.   Better  world   future   will   not   be 

It   will   be   unreasonable   to   expect  developed   countries   experiencing  food   deficit   and   relies   on   global  food   market   from   developing  countries.   Therefore,   this   situation  is improbable or impossible. 

D E F I C I T

It is a present condition. However, if the world maintains this condition it will hurt developing countries especially when world agricultural prices continue to decline. Developing countries, especially a country with large population in agriculture, will continuously become poor country.

This condition is the worst unexpected situation. The world will experience great hunger or famine. Developing countries will severely hurt much more than developed countries.

LDC

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We see from the above figure that there is no easy solution. Given existing interdependencies between developed and developing nations we see that developed countries gave much more advantage than developing countries. We see also that if developing countries gain food surplus such as now most developing countries want to achieve, there is no assurance that farmers’ welfare in developing countries may improve. Of course, consumers at large will enjoy low price of food. However, if developing countries experience food deficit in the future, just as what is happening now, there is also no assurance that farmers will gain better welfare. Therefore, position of farmers in developing countries is very difficult. Do we have possibility to gain win-win outcomes just as presented in Table 9.1? Interest of developing and developed countries, I think, is the same, namely we want to have food surplus but at the same time farmers’ welfare improving. There are alternatives to reach that interest. First, utilize surplus for producing other than for food commodities. Technologically, besides for food agricultural products can be used to produce energy, fibers, and inputs in industrial processes. There are more than 60 different products can be produced from sugarcane, for example. The same thing is with cassava or coconut. An example is Brazil that has utilized sugarcane to produce alcohol as source energy. Second option is developing countries change their food habits from present patter to new pattern of food consumption. Present difficulties associated with developing countries, especially in Asia, we depend too much on certain major crop such as rice. All efforts have been put to spur rice production. It is not only increase cost of production but also affect environment significantly. In fact, it will be almost impossible to maintain high rice production forever because resources, especially water, will be increasingly scarcer. So, imitating what has been done in developed countries, if developing countries can shift from eating rice or other food to whatever food but it is made from flour then in a short time developing countries will gain sufficient food to eat. From flour there are many kinds of food can be produced and flour can be made from many kinds of crops. One example for Indonesia is sago. Indonesia has 1.13 million hectare or 51.3 % of area of sago (Metroxylon sp.) in the world. About 90 % of sago in Indonesia is in Papua and they grow in swamp area. Sago can substitute wheat for making cookies, biscuits, noodles, or syrups with high fructose content. Sago can also be used for feed. Calorie content in sago is almost the same with corn or rice, namely 357 calorie compared to corn 349 calorie and rice 366 calorie and higher than cassava 98 calorie and potatoes 71 calorie. By assuming in every hectare can be harvested 40 sago trees a year and average per tree contains 300 kg wet flour, then it can be produced 12 ton sago flour ha/year. Therefore, 1.13 million hectare of sago approximately contain 13.56 million ton of sago flour 172. In addition to sago, there are also cassava and other kinds of tubers such as sweet potatoes, and so on. Flour technology will broaden many new alternatives in food and non-food industries in developing countries, especially in Indonesia. Based the above discussion, we see that there are a combination of alternatives: First, promoting diversifications in production line such as developing agricultural products for energy, fibers and other inputs in industrial processes. In addition, second, develop new ways of eating habits by developing flours from available new underdeveloped crops such as sago. A summary of these alternatives is provided in Figure 9.3.

172

See Warta Penelitian dan Pengembangan Pertanian Vol. . 23 NO. 5, 2001. Sagu Memantapkan Swasembada Pangan.

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In Figure 9.3, we can see that the most probable option in the shorter run is to develop food diversification using underutilized crops such as sago. This option has some advantages compared to others. First, the crops are already available in a large scale and in a concentrated area such as sago in Papua. Second, Papua is less developed area in Indonesia, so developing sago based industries will open opportunities for Papua to farther develop. Third, Indonesia will broaden her sources of food genetically and regionally. Most food, such as rice is produced in Java and Java is very densely populated area and is only composed of 7 % of total land area in Indonesia. Fourth, development flours based food technology will also broaden opportunities for growing varieties kind of food and other agro industries, and make less dependency to wheat and other imported crops. The only weakness in this option is how to change food habits. However, such as what have happened with noodles such as Indomie, appropriate marketing strategies can be used to influence consumers.

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Figure 9.3. Alternatives for future development of food and agriculture

(1)

(1) Promoting industrial diversification for existing conventional agriculture

(2)Promoting food diversification with mainly using present underutilized crops

It will increase demand for existing conventional products. Major constraints will be in new investment and dependency on automobile industries, for the case transportation energy. If technologically and economically feasible, this is a good alternative for both increasing farmers income and harnessing global effects of food surplus.

These can be combined if there  are   available   resources.  However,   in   the   short   run  promoting   food   diversification  with   mainly   using   present  underutilized   crops   will   be  more probable. Major constraint  here   is   how   to   change   people  habits.

(A)

(2)

See (B)

It   can   be   treated   as   priority   for  reaching food sufficiency and other  purpose such as poverty alleviation  and   regional   development.  Sustainable   technology   should   be  applied.

(C) (D)

The above option will reduce food dependency of Indonesia and other countries that applies similar strategy to developed countries supplies of food. This option will also reduce developed countries burden to watch and to take care of developing countries need for food. Supports from developed countries are called for especially in technology and in investment. Now the problem is easier to solve than continuing what have been practiced in more than 30 years.

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Interpretative Summary In this chapter we have tried to discuss some possible lines of thinking and try to derive alternative solutions that seemingly possible to be undertaken. The basic line of thought is to how can we reach win-win possible outcomes among participants in different contextual settings. We found that theoretically there is a possible win-win outcome among parties in all contextual levels. However, reaching this outcome calls for deep reorientation of our mind in order to reach new spirit, new values, and new awareness of our problems. To reach that stage of mind we have to use freedom as our basic frame of values. Justice, welfare, and equality dimensions of values will come automatically as we accept freedom as our foundation. There are already common understanding about the problems we face in food and agriculture in all context of development. However, we still have difficulties to solve the problems because we use insufficient foundation. Green revolution, market concentration and government failures to attack the problems are mainly due to seeing farmer’s jus as object of development. Therefore, the faith of farmers is not improving even though agriculture is developing. World food surplus and growing wealth of food and agricultural industries in one hand, and farmers’ declining welfare on the hand are paradox of the world. Farmers have contributed to humanity such as solving the world’s famine and hunger but at the same time, farmers themselves have no improvement in their welfare. Therefore, farmers’ freedom is also declining. It also means that the world has done injustice to farmers. Widening inequality between farmers and other parts of societies, particularly multinational corporations are a strong indicator of injustice. Investing in mind and institutions that can improve our mindset is the key. Market, locally or globally, should be harnessed by developing new institutions that enable farmers to broaden their ownerships as a means of control. A system that integrate farmers bank, farmers trading house and farmers education in general should be established. This is the only way to increase bargaining power in the market. The new roles of government and global institutions, including multinational corporations are the keys. Conflicting interests between developed and developing countries in food and agriculture can be approached by developing new interdependencies among them. Developing countries should be supported to develop new sources of food, income, and employment as a part of poverty alleviation, food security, environmental sustainability, and regional development through developing present underutilized crops. One of the most important determinants to make the impossible becoming possible is visionary leader and leaderships that should become a part of all institutions.

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CHAPTER TEN: EPILOGUE: The Teak and The Oak The teak cannot grow in temperate climate. At the same time, the oak cannot grow in tropical climate. The teak and the oak have their own ecosystems for their life. They make rich in themselves. Nature gives them their boundaries. However, they are growing at the same place, in the earth planet and they produce the same elements of nature: wood, oxygen, water, living place for insects, birds, and so on. All are valuable for all living creatures including mankind wherever we live, in tropical region or in temperate areas. Nature also teaches us there are possible types of relationships among living species. First, autotrophic namely living as an independent organism, making its own food such as teak or oak, or wheat or rice. Second, saprophytic, a living organism that living on and obtaining food from dead or decaying matter in the soil or from the dead parts of living plants. Third, relationship, which is called parasitic, that one grows on or in living tissues of plants or animals, obtaining nourishment at the expense of the host. Fourth, epiphytic, is living attached to or supported by another plant, but obtaining food independently. And, fifth mutualistic, is living intimately with another plant (or animal) to their mutual benefits173. For sure we are mankind, neither oak nor teak. Neither oak nor teak can move and travel around the world. We are sure they cannot speak using human languages. However, they speak in themselves: giving life to other beings. They are not only autotrophic in themselves but also serving life to other beings. Therefore, they do not make wars or humiliating to each other. Their ideology is one: living together independently in nature but mutualistically in nurture. As mankind, can we imitate what the oak and the teak show to us? It is a time for us to ask ourselves about our superiority over nature or over other human being that we feel they are not a part of us. We just shocked by Tsunami that caused the dead of more than a hundred thousands people in Aceh and North Sumatra. We are also shocked by millions of people dead because of poverty, famines, and wars in our history. There are much more man-made severity than the sadness due to shocks by nature. In fact, what nature has done to us is just reflecting what we have done to nature. Therefore, finally nature never does bad things to us, whatever we get is just consequences whatever we have done to nature. Therefore, superiority over nature or over other human being that we feel they are not a part of us is just an illusion. Illusion is not a right foundation to be used as our ground for establishing mutual relationships. If I am telling you that I am an Indonesian and you are a citizen of other country, for example, is not meaning that we are different man. What made the differences is just a citizenship associated with us and such a citizenship is not natural properties. It is a part of institution, a creation of mankind, not mankind itself. It doest not mean citizenship is not important. In fact, in our modern world, a citizenship is becoming determinant of our life. Holding citizenship of certain country, even we do something goods for others we can be expelled, jailed or had severer punishment. We see that borders we create may do more harm and good. The most important things by making borders we establish our own traps, especially if the borders we make are just illusions.

173

See Carl L. Wilson, W.E. Loomis, and H.T. Croasdale, 1962. Botany (3rd). Holt, Rinehart and Winston, Inc. USA.

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Does nature teach us about borders? No. What nature teaches us is about hierarchy, position, function, power, and uniqueness. The earth is one in totality. Therefore, all things we know in the world are just a part of the world. Human beings make all kind of borders as product of human institutions. So, why we make borders? Because we realize that, we have our own limitations. It is beneficial to set up a limit that says it is mine and the rest is others. Any people or any country has their own limit. A limit is function of power. The higher the power, the more possible the limit can be expanded. Because the earth is almost constant in size, then one’s limit expansion will reduce the other’s limit. Power, especially military power, even though it is useful in one sense, if it is used wrongly will destroy or even eliminate humanity on earth. History of colonialism or neo-colonialism is a part of consequences of using power in such away that the power advantage nations took benefits from less power disadvantage people. Evolution of mankind should evolve to higher degree of humanity. If we start from subject of limit that used as basic element of mankind to develop or de-developed themselves, do we have such a thing, is unlimited? In the short run, we have none. Nevertheless, in the long run everything is changeable. Economics definition of short or long run does not involve time in it. It says that in the longer runs everything becoming variable, no fixity problem. If we use this frame of thought then there is no limit. In the long run, we will all be dead. Yes, but we expect society will remain in a sustainable ways. What is our major cause of fixity? It is our mind. In the short run, our mind is limited but in the longer run, it is unlimited. If we realize that, our mind is limited in short run what is the most dangerous thing to do? It is killing our future because of our present interest is too high. One of the most dangerous practices in killing our future is killing freedom on us or of other parties’ freedom. In an interdependence context, freedom is actually putting limit to ourselves. It is self-control that conveys us into cooperation or mutualistic relationships that will give rooms for us to learn from each other. So, independency within a social context is socially granted because we do not start with “a blank white paper” but at the beginning we start with asymmetric power distribution. At a deepest meaning, freedom must be socially granted and warranted, so freedom should not be sold or bought by power, especially military power. Let us think what was in the mind of Carl Sandburg when he wrote his “Private Property” in 1936 such as follow: Private Property174

By Carl Sandburg “Get off this estate.” “What for?” “Because it’s mine.” “Where did you get it?” “From my father.” “And where did he get it?” “He fought for it.” “Well, I’ll fight you for it.” I thought Sanburg had made a cynical criticism on private property. He question about the origin of 174

Carl Sanburg, 1936. The People, Yes. Harcourt, Brace and Company, Inc. In H.C. Harlan (ed). 1966. “Readings in Economics and Politics (2nd). Oxford University Press, New York.

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property and he shows us people fighting for property. The world of fight itself has not reflected any beautiful thing in mind. It is a matter of physical power just like a tiger to catch a deer or a deer run away to avoid a tiger. Off course, there are many advance knowledge and technology used in weaponry production but the purpose behind making weapons are for killings. If this set of mind is used, everything can be made as weapon, including food. Therefore, surely our ends will be the extinction of humankind if we follow the above set of mind. Fighting has been becoming our culture along our history. Rummel, among others, has recorded and analyzed that kind of historical behavior of mankind. However, again and again there are wars. Of course, now wars are as source of good business through selling weapons, but it is wrong things to kill people. When we relate wars and evolution of mankind, we might propose that even though agriculture have evolved for more than 7000 years and we have evolved for about 2005 years after Christ borne, because of we have too many conflicts or wars among us, then the world has evolved so slow. Of course, if we measure our civilization by what developed countries can do now, the world of developed countries has evolved very fast. However, if we measure by how large poor people in developing countries and how wide inequality between developed and developing countries, the evolution of the world is not only slow but also show a dangerous trend. Concentration of power in a few people, corporations, or nations will mean that there are most of people in the world under control of the few. This kind of institutions, just like in the case of monopoly market in economics, will halt the progress of people civilization. Creativity will decline or will even be dead in that kind of the world’s structure because our basic values, namely freedom, equality, justice, and welfare are violated. The progress of development of agriculture in developing countries are good example of a product of concentration of power and monopolizing of interest under auspice of national government which is also under direction and control of international organizations. One may say that there are no other alternatives to develop poor country rather than to apply what have been done in developed countries175. Kay mentioned that little attention was paid to economic history by development economics. According to Kay, all innovations and scientific knowledge in the modern world were available immediately to poor countries since the industrial revolution era. Through direct contact between developed and developing countries, developing countries will accelerate their growth. In Indonesia, for example, there were intensive debates in the issues of how developing countries should interact with developed countries that the latter was viewed as a modern world. In fact, such debates were conducted before Indonesia reached independence from the Dutch colonialism in 17 August 1945176. We observe, in fact, there were not only direct contact between developed and developing countries but were much more than that. Development processes in developing countries have been directed, watched, and guided by developed countries. We are all aware with what have been done by IMF that went very deep into determining what should be done in Indonesia, for example. We discussed in this volume that globalization is unavoidable. It is part of evolution of human interactions in our world affairs that cannot be stopped, and we do not want this happen. What we should avoid is repeating history that the powerful advantage parties taking benefits from the disadvantages one. If it is the case, then we will arrive with worsen situation than that of what we have now. Agriculture, which we used as an instrument of analysis in this volume, suggested that farmers’ crisis takes place in developed and developing countries. Among many causes of farm crisis that is one that is in common between developed and developing countries, namely concentration of market power in the hand of view of multinational corporations. Farmers in developed countries are lucky because their government still care for them by giving huge subsidie for them. Meanwhile, consumers and taxpayers should bear the costs. In developing countries, however, farmers should find ways for their survival. The situation of agriculture in a global context is 175

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See, John Kay, 2004. Culture and Prosperity. HarperBusinessNew York. See debates between (1) Sutan Takdir Alisjahbana, 1935. Menudju Masjarakat dan Kebudayaan Baru. And (2) Sanusi Pane, 1937. Jagat Besar Jagat Kecil, in E. Ulrich Kratz, 2000. Sumber Terpilih Sejarah Sastra Indonesia Abad XX. Kepustakaan Populer Gramedia dan the Ford Foundation. Jakarta. (In Bahasa Indonesia).

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unrealistically understandable, namely global net export of agriculture is negative for both developed and developing countries. Therefore, we are really in difficulties just like a fish in a fish trap. Logical answer to this problem is obvious: developed countries eliminate subsidies and then market will adjust allocation of resources all over the world following price mechanism that reflect opportunity costs of resources. However, we already showed that in practice solving over supply is much more difficult especially where uncertainties are high. I come to believe, as I have mentioned several times, the source of solution is creativity. Social environment should be developed to induce creativity. It is more probable to come to our goals, spurring productivity, rather than asking ones to be creative without dealing with his/her environment177. Freedom is the roots for making people to be creative hand in hand with justice, equality, and welfare. The case of sugarcane farmer association described in this book is a light for further understanding on how designs agricultural development in developing countries. Freedom for farmers is freedom for all.

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See Mihaly Csikszentmihalyi, 1996. Creativity. HarperPerennial, New York.

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