Agriculture Reference
In-Depth Information
rigation, increased production significantly by making a shift away from highly
flood-susceptible deepwater aman cultivation in the monsoon season to boro
cultivation in the dry season, which reduced the length of time between major
crops from 12 to 6 months. Substantial investment in infrastructure, some of
which was done through food-for-work programs, improved the structure of
roads and bridges, and the electricity and telephone networks.
And perhaps unique among the countries under review, in 1994 Bangladesh
liberalized trade policy to permit imports by private traders. This policy reform,
subsequently, has become a major component of its stabilization policy.
Indonesia
Traumatic events—the downfall of the Sukarno government in the late 1960s—
triggered an aggressive public approach to food security in Indonesia. The
economy was in shambles, characterized by negative growth and runaway in-
flation. The new government was especially sensitive to social unrest gener-
ated by high rice prices that had created political instability under the previ-
ous government. The fear of failure of domestic rice markets to arbitrage
across time and space, weather-induced production changes, and volatility in
international prices were considered the prime reasons for instability. Food
policies were motivated by concerns for both consumption and production of
foodgrains, primarily rice.
A key element of the New Order approach under President Suharto was
heavy investment in the rural economy to increase rice production and sustained
efforts to stabilize the price of rice. Government investment strongly supported
the agricultural sector. Improvements in rural infrastructure—irrigation systems,
roads, schools, market places, healthcare facilities, communications, electric-
ity, clean water, and the like—built a foundation for a dynamic rural economy.
Packages of technological change in the forms of high-yielding rice varieties,
fertilizer, pesticides (followed by integrated plant management), and technical
advice were developed and disseminated throughout the country. Agriculture
had clear first priority in the early development plans.
Evolving from its role as the logistics agency for the military, the Food Lo-
gistics Agency ( Badan Urusan Logistik, or BULOG) implemented a price band
on rice. A floor price kept farmgate prices of rice above production costs.
BULOG served as a stabilizing agent by buying rice production not absorbed by
the market, especially during the harvest season. A ceiling price policy main-
tained the affordability of rice for lower-income consumers, especially in the ur-
ban areas; when the price of rice increased sharply during planting seasons,
drought, and similar situations, BULOG sold cheap rice to targeted consumers.
BULOG was the sole importer of rice; a “big country” justification—Indonesia,
being a large country, could have a large influence on prices in what was then a
thin international rice market—was used in part to support that monopoly role.
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