Agriculture Reference
In-Depth Information
cent are net producers of rice. Given this composition, a 10 percent increase in
the price of rice would lower the purchasing power of urban households by 8.6
percent and that of rural households by 1.7 percent, which is equivalent to an
increase in the poor population by nearly 2 million people (Ikhsan 2001). Be-
cause of inelastic demand for rice, these poor households generally suffer the
most when rice prices increase. This situation implies that a rice policy to alle-
viate poverty cannot be limited to distributing subsidized rice to poor house-
holds. Food security policy in the future should be designed to also provide in-
come opportunities.
OPK, later replaced by RASKIN, is relevant. The program is designed to
reduce the impact of severe economic crises by providing 10 kilograms of
medium-grade rice every month to the targeted poor households or is equiva-
lent to a cash transfer of Rp 15,000 (about US$2) per household. Food-for-the-
Poor program is jointly implemented by BULOG and the State Minister of
Social Welfare and local governments in all of Indonesia's 27 provinces, using
a complete database compiled by the National Family Planning Agency to iden-
tify the neediest households. The data focus on five indicators of overall stan-
dard of living and social affairs: food intake, housing, clothing, and medical and
religious practices. In the first 6 months of implementation, the program suc-
cessfully provided a monthly rice ration to approximately 9 million households
using more than 30,000 distribution points. RASKIN has reached around 64
percent of poor households in Indonesia, compared to OPK, which reached only
57 percent of poor households. Unfortunately, RASKIN has generally been per-
ceived as unsuccessful (see World Bank 2003).
Even though RASKIN was designed as an emergency relief measure, it
has operated like an alternative to rice price stabilization. In the near future,
however, the challenge is to sharpen the cost effectiveness of the program: to
concentrate more of the assistance in urban areas, tighten eligibility criteria, in-
crease public awareness, improve beneficiary reporting, and ensure that the pro-
gram is extended and placed on a financially sound footing. To reach the large
numbers of excluded urban poor, the government plans to involve NGOs in the
distribution of subsidized rice and other foodstuffs. A better public-private part-
nership in relief distribution could extend the outreach of RASKIN as long as
standards of program accountability are well maintained. The crisis has drawn
attention to the fact that assuring food security is largely an income problem,
that income levels can change rapidly, and that even some of the most prosper-
ous parts of the country have large numbers of households without food secu-
rity. The experience in the program should improve food security policies in the
field by suggesing a better design for medium-term measures that provide
assistance to vulnerable households in the country. These measures might in-
clude a combination of targeted food subsidies, ration shops, village granaries,
food stamps, and subsidized food stalls.
