Liberalization vs. Food Sovereignty

The President's brilliant decision to promote a food sovereignty policy in his Nawacita work program must be appreciated.

He has shown good work performance through creating the yearly program of Special Effort to Increase the Production of Rice, Corn and Soybean in 2015 and 2016 with assistance from the army, comprising the rehabilitation of 2 hectares of irrigation network, expansion of 220,000 hectares of rice field, utilization of agricultural machineries to accelerate harvesting, and soil tillage, planting, and processing of yields.

As a result, Indonesia did not import rice even after a strong El Nino hit the archipelago in 2015, resulting in a rise of 2.4 degree Celsius in sea surface temperature. Compare this to the 1997 El Nino, which increased the sea surface temperature up to 1.8 degree Celsius and resulted in Indonesia having to import 7.1 million tons of rice. Consequently, Indonesia will harvest rice from a total of 6.9-million hectares of rice field in the great harvesting period of March-June 2016. Ironically, the food cartel still demands the government to import rice. 

The question is, where will the rice from local farmers go?

Power struggle in the crop market

The power struggle between liberals and pro-food sovereignty in the national crop market worsened. The rice cartel as the main element of the liberal school-of-thought accused that the domestic rice production could not fulfill the national demand, resulting in rising prices and the increasing need to import rice. Adding fuel to the fire, Vietnam and Thailand, faced with the problems of increasing storage fees and decreasing quality of their respective rice stocks, surely tried to persuade Indonesia to open the import tap.

Observers and state officials belittled Central Statistics Agency (BPS) data. They were asking, where is all the rice if we are indeed having a surplus? The question was answered by the 52,000-ton rice stock at the Cipinang Wholesale Rice Market during the drought as of February 9, 2016. The average price was Rp 7,500 - Rp 8,500 (US 57 - 64 cents) per kilogram of rice. In the period of January 2013-2015, the rice stock was only 30,000 tons with an average price of Rp 10,000 per kg. This means that the accusations on BPS's food production data was inaccurate and baseless.

On the other hand, the rumors of rice cartel hoarding rice and manipulating its market price were unproven. The accusations by local academics that the price of Indonesian rice was the most expensive in the world was also untrue. Based on a survey in Ho Chi Minh city in Vietnam on December 13, 2015, the price of regular-class rice was between 18,000 and 24,000 Vietnamese dong, roughly equal to Rp 10,711 - Rp 14,282. This is more expensive than Indonesian rice.

The Indonesian food market is a highly valuable one, so much so that its seizure can be seen as equal to taking control of the global rice market. Our purchasing power is relatively high, in line with our per capita income of US$3,415m, higher than the Philippines' US$2,170, India's US$1,688 and Vietnam's US$2,170. This increases our market's attractiveness.

Regarding the imports leading to our great harvesting period, this is done by the food cartel to destroy the farmers' selling price of rice and unhusked rice (gabah). The lives of our farmers will be ruined and they will be ensnared by loan sharks. Consequently, the national rice production system will be controlled by speculators, of whom the farmers will be turned into nothing more than labors. Then, the youth will have no interest of becoming farmers, the rice paddies will be sold off and turned into factories, and the youth will become factory workers.

As the national rice production system is ruined, price will be manipulated to soar as Indonesia has no other choice but to buy rice at any cost. This has already happened to our soybean industry ever since Indonesia signed the letter of intent with the International Monetary Fund. We become a permanent importer.

In the 1970s, Indonesia imported beef. Excessive importation ruined the local cattle industry. Local cattle raisers went out of business and the nation became a permanent importer. The government should be firm in shutting down food cartels and protect the weak so that the farmers and the consumers are free from the traps of their economic exploitations.

One-roof and online tariff system

Management and transparency of our rice trade is a necessity in achieving food sovereignty. Next, food importation with a quota system leading to the creation of cartels must be stopped and changed with an online tariff system under one roof. This transparency will shut down the bases of food cartels. Management of domestic production, imports, and the government's food reserves; consumption and diversification data; and market trading system and storage must be done. Rice procurement by the State Logistics Agency (Bulog) must be done directly from the farmers to increase the farmers' profit up to its maximum level. 

If Bulog keeps buying rice from organizational partners, the agency will have consciously surrendered the State Budget to the whims of the food cartel, strengthening their market position and enabling them to dictate the supply and food prices. If the cartels can enter the rice market, surely Bulog can too, as the agency is facilitated by the government and can obtain many privileges.

We have to be able to monitor the spatial and temporal data on our rice field area, planting, vegetative phases, and harvesting area all the time so that production can be secured and food price can be constantly updated. BPS reformation in human resource and supporting infrastructure is an absolute must. Utilization of independent satellite channels with detailed spatial and temporal resolutions is also a must so that the data of production, flooding and drought can be measured, tracked down, and compared.

The a priori understanding is that food cartel is more dominant than Bulog in controlling food supply and price so that the drama surrounding these issues will always occur. Farmers sell their corn for Rp 3,200 per kg, and it was bought at Rp 6,000. Shallots are originally sold at Rp 8,000 - Rp 10,000 per kg and it is Rp 25,000 per kg at wet markets. Unhusked rice are sold by farmers at Rp 3,500 - Rp 4,000 per kg and average rice price is Rp 7,500. In the market, the price is Rp 10,000 per kg. Cartel gained up to 40 percent in profit while farmers get only 10-15 percent. Governmental aid of more than Rp 100 trillion is therefore disbursed to strengthen the food cartels' bargaining position.

An honest, just, and transparent trade system is needed so that producers, traders and consumers can gain profit in line with their sacrifice. The government through regulations must be able to put cartel players in jail for hoarding crops and manipulating the price for their personal momentary gain. This format has yet to be adopted by Indonesia since its independence because in our importation policy, the government always bears the burden of price fluctuation instead of arresting the culprits and putting them behind bars.

Indonesia should set as example how the US, EU, and Japan protects their food production, crop market, and farmers from the invasion of imported food. Why is Indonesia so intent in liberalizing its food market? The state should be present at the forefront in protecting our food sovereignty. Regarding our highly competitive export commodities, such as palm oil and cocoa, we have to penetrate markets globally. If we achieve food sovereignty, we will be able to solve 75 percent of our national problems. We have to be able to directly hear "the voice of the people, the voice of God", so that we can truly hear their pulses and their sufferings.

by Gatot Irianto

source Kompas, Thursday, March 10, 2016