Agriculture Reference
In-Depth Information
sufficiency has been criticized as no longer having 'a serious macroeconomic justi-
ication' in Indonesia (McCulloh and Timmer, 2008). his goal is seen to increas-
ingly conlict, and competes for resources, with other government goals, suh as
poverty alleviation, decentralization and diversification of the agricultural sector to-
ward higher value crops.
As the points above indicate, the structure of the Indonesian economy is under-
going a process that may be tentatively referred to as de-agrarianization. According
to the national employment survey (SAKERNAS), agriculture (broadly defined to in-
clude aligned sectors suh as forestry and isheries) constituted the primary source
of income for 41 per cent of all households in Indonesia during 2009 and only 15 per
cent of GDP (BPS, 2010). he hanging structure of the Indonesian economy away
from a dependence on agriculture, and rice in particular, has hallenged the pro-poor
assumptions of rice protectionism. It is estimated that only seven per cent of the
total population of Indonesia is engaged in rice production (Warr, 2005). Even though
most of Indonesia's poor live in rural areas and work in agriculture, two-thirds of
farmers are actually net consumers of rice (McCulloh, 2008). Relecting this trend,
the share of agricultural value-added from rice production has shrunk from 46 per
cent in 1971 to 31 per cent in 2000, while higher-value fruit and vegetables increased
from 14 per cent to 22 per cent and livestok from 0.6 per cent to 5 per cent (Fane and
Warr, 2009). According to these studies, policies (suh as import restrictions) aimed
at artificially raising domestic rice prices to encourage production and ostensibly ad-
dress national food security are actually counterproductive in terms of poverty alle-
viation and food security at the household level. As the opening quote from the 1964
Time Magazine
article suggests, Indonesians have, for many years now, sought solu-
tions to food insecurity problems (at the household level anyway) in urban centres,
or at least through diversified rural incomes rather than through household-level
self-sufficiency.
Do these structural hanges in the Indonesian economy require a new strategy
for food security? Throughout the 1980s and 1990s, ensuring that the resources held
by the poor (their own labour and sometimes their own land) could be conver-
ted to profitable economic activities through prudent macroeconomic policy was
a key strategy to ensure pro-poor economic growth in Indonesia (Timmer, 2004).
Agriculture was obviously an important part of this equation. But subsidized fer-
tilizers, primarily intended for rice farmers, were easily applied to other, more luc-
rative crops. Over time, poverty alleviation in rural areas was increasingly ahieved
