Agriculture Reference
In-Depth Information
donesia. In the beginning, the government's objective was to develop a mar-
keting system over which it had control, as a strategic response to preventing
hunger and political unrest. With a turmultuous economic history and persist-
ing threats of famine and hunger, a popular perception within the society was
that rice was the barometer of the economy. Many resources were mobilized to
back up this perception and gain public confidence. Suharto's New Order gov-
ernment consolidated those interests into modernizing the rice economy.
The approach had three components: (1) investment in rural infrastruc-
tures to build the foundation for a dynamic rural economy; (2) development and
dissemination of technological packages of high-yielding rice varieties, fertil-
izer, pesticides, and technical advice throughout the country; and (3) imple-
mentation and enforcement of price policies to balance the interests of rice
farmers (who wanted profitable prices), rice consumers (who wanted affordable
rice), and rice traders (by allowing them to benefit from seasonal fluctuations
in prices but avoiding serious distrortions and smuggling) (see Timmer 2000).
The ultimate outcome was a remarkable increase in rice production in the
country. Rice production grew by 4.6 percent per year during 1969-90, signif-
icantly faster than the population growth of 2.1 percent. The rice yield rate grew
by 2.7 percent per year. The considerable growth in land productivity was
achieved by massive government expenditures, including irrigation operation
and maintenance, subsidized pesticides and fertilizers, subsidized credits for
rice and secondary food crops, intensification programs, and buffer stock pro-
grams (Arifin 2001).
In general, the growth performance of Indonesian agriculture can be di-
vided into five stages: (1) consolidation (before 1978), (2) the fast-growing
period (1978-86), (3) beginning of transformation (1986-97), (4) economic
crisis (1997-2001), and (5) post-crisis (after 2001). This performance is closely
associated with the performance of rice production (Figure 6.1). In particular,
1978-86 experienced an agricultural GDP annual growth rate of 5.7 percent.
All subsectors of food crops, cash crops, livestock, and fisheries contributed to
this growth, which was caused by the favorable environment created by the gov-
ernment's refocus on making the agricultural sector a main basis for economic
development. Part of this growth was brought about by a 5.6 percent annual
growth in yield, a result of the Green Revolution technology in rural areas,
which offset the declining land:labor ratio. More importantly, agricultural la-
bor productivity in this sector also increased to 4.1 percent per year, demon-
strating the important role of agriculture in poverty alleviation, particularly in
rural areas (see Mellor et al. 2003).
The success was a showcase made possible by the package of changes
based on biochemical technology in the agricultural sector. The rate of land ex-
pansion and intensification continued to increase because of high growth in the
agricultural labor force. Production constraints imposed by unfavorable re-
source endowments in backward regions were offset by the introduction and
spread of new biochemical inputs and investment in land infrastructure (Hayami
Search WWH ::




Custom Search