Getting the right balance in food policy

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Irawan Ronodipuro INDEPENDENT OBSERVER

IO – For too many years, Indonesia’s agriculture experts and policy makers have viewed food security through the lens of farmers’ income and rice production. This has serious consequences: because the government has been focused primarily on price support policies for smallholder rice farmers, incomes can be protected, but it also means that too many Indonesians suffer unnecessarily from undernourishment. 

There is a better way of approaching food security–not only in terms of farmer welfare, but also ensuring consumers have access to affordable and nutritious food. 

A simple way of looking at Indonesia’s food security problem is to think about what happens when the government keeps rice prices artificially high (in fact, Indonesia’s rice prices have been well above world prices for over a decade). This might sound like a good idea for some–after all, what’s wrong with making sure that Indonesis’s rice farmers can have a sustainable living and provide for their families? 

The problem is, artificially high prices for rice act as a disincentive for farmers to diversify into higher value and more nutritious crops, such as fruits and vegetables. The result: Indonesia ranks third in the world for rice production, but it consumes less fruits and vegetables than any other country in Southeast Asia with the exception of Cambodia. 

It should never have been this way. Indonesia has everything it needs to become a world-class agriculture producer: huge swathes of arable land, rich volcanic soil and a varied tropical climate for counter-seasonal cultivation. 

Yet poor policy choices have meant that Indonesia finds it difficult to reach its potential. For example, restrictions on individual land ownership have made it difficult for family-run farms to expand their holdings beyond the current limit of 25 hectares, which means the relatively sophisticated and expensive equipment needed to run a modern horticulture farm would be rendered uneconomical. Compounding the problem on land ownership restrictions is a lack of government support for guaranteeing cheap and accessible credit for smallholder farmers and educational programs so they can afford to buy the technologies they need and learn how to use them. 

Instead of providing the means for farmers to expand their operations and produce higher value crops, the government has taken a protectionist approach through trade restrictions. Coming back to the example of horticulture, these restrictions only create import supply constraints but do nothing in terms of improving farmer and consumer welfare. Because of these restrictions, the prices of imported fruits and vegetables are beyond the reach of the average consumer, and with smallholder farmers being incentivized to produce rice instead, the supply side of the equation suffers, as well. 

Another key to improving farmer welfare and making sure Indonesians are better fed is to improve the entire ecosystem for bringing food from the farms into markets, not just into local markets but including distant markets within the archipelago. This includes the rural road system, toll roads and highways, cold storage facilities, ports and ocean-going vessels so that produce can be transported efficiently and affordably. This would provide larger markets for farmers and hence improve their income. It would also give Indonesians a wider access to food, and at lower prices. 

Finally, Indonesia can improve its food security not only by enabling its farmers to produce more nutritious and higher value foods, but also by making more land available for agrucultural uses. Not counting land set aside for conservation purposes, the Ministry of Forestry and Environment is estimated to control somewhere between 10-20 million hectares of arable land. 

One could only imagine what would happen if the government were to decide to make those lands available for smallholder farmers and give them the means to properly utilize them. Within a space of years, Indonesia could transform itself and not only feed itself better without having to import as much as before, it could also become a net exporter and put more food on the tables of overseas households. 

Getting the right balance in Indonesia’s food policy is not complicated. How to improve Indonesia’s food security is pretty much well understood by the experts. What’s needed now is the political will to make it happen.