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Lost in the field: Political interests blocking agriculture development

Jakarta Post - July 26, 2011

This is the first of two reports on agriculture development in Indonesia an alleged victim of political misappropriation in many rural areas, where efforts to increase productivity for the greater public good have been sidelined by vested interests. The Jakarta Post's Nani Afrida explores the issue:

As the nation's main staple food, rice has always been a political commodity, and this also translates into policies aimed at improving Indonesia's rice output.

Pork-barrel policies and rent-seeking businesses related to fertilizer subsidies and rice imports are among areas politicians allegedly manipulate to secure resources to buy new voters or maintain support in rural areas.

The rural agribusiness development program, known locally by the acronym PUAP, is a stark example of a pork-barrel strategy applied by politicians to garner rice farmers support.

After launching the program in 2008, the Agriculture Ministry a government department that has been headed by the Islam-based Prosperous Justice Party (PKS) since 2004 has spent around Rp 1 trillion (US$116 million) annually to entertain farmers.

Critics have pointed out the lack of accountability of the policy since the funds are not awarded competitively and most farmers that have received them (in the form of soft loans) have failed to pay them back.

"It's hard for farmers who have no political affiliations. If we take the fund, we must support a certain political party in the next election, including in its campaigns," said Mae Azar, a rice farmer from Gereged district in Cirebon, West Java.

Around 44.1 million people work as farmers, accounting for 42 percent of the country's total workforce of 105 million people.

Political expert Arbi Sanit from the University of Indonesia says the PKS has gained most from the agriculture policy by using Agriculture Ministry resources to garner support.

"Traditionally, PKS constituents are mostly people at universities and in cities. And now they're trying to win the hearts and minds of farmers by giving out agriculture equipment and funds," Arbi said. "They're using state facilities to bribe farmers."

As a coalition member of the President Susilo Bambang Yudho-yono camp, PKS appointed its member Anton Apriantono as agriculture minister during the 2004-2009 term, and senior politician Suswono for 2009-2014.

According to Arbi, while the party has been attempting to expand into rural areas since 2004, it has had limited success in doing so. "They have to compete with other parties, particularly Golkar and the Indonesian Democratic Party of Struggle [PDI-P], which already have strong footholds there."

During the 2009 general election, PKS secured 7.89 percent of the ballot, up slightly from 7.34 percent in 2004.

Deputy agriculture minister Bayu Khrisnamurti denied the allegations that his institution was facilitating political activities. "I assure you we're very professional in carrying out our job," Bayu said.

PKS legislator Makmur Hasanuddin also denied that the party was using the Agriculture Ministry to expand into rural areas.

"We have additional votes from rural areas, but that's not because of facilities provided by the ministry," said Makmur, who is also a member of House of Representatives' Commission IV overseeing agriculture, fisheries and food. "The party just makes sure the ministry realizes its pledge to provide assistance to farmers."

But the PKS is not the only party vying for a slice of resources from the agriculture policy.

Most politicians have long maintained a whopping subsidy for fertilizer despite the fact that the assistance program has been deemed ineffective and mired with allegations of embezzlement.

The Vice President's office has also noted its suspicion that the huge subsidy is being maintained because there are rewards given to politicians from businesses that benefit from it.

Legislators have the final say in determining the amount of the subsidies allocated, albeit against the government proposal. Makmur denied the allegations, saying that discussions over the subsidy were initiated by the government.

Fertilizers were not subsidized until the 1998 financial crisis. The policy to grant the subsidy was then introduced as a temporary measure to help farmers cope with the crisis. As the price of chemical fertilizers has declined, farmers are now held hostage by an irrational use of the commodity.

But farmers, at the same time, are also confronted with difficulties in getting access to fertilizer during rice planting seasons, due to hoarding by speculators.

This year, the government and the House agreed to earmark Rp 16.3 trillion for the fertilizer subsidy, less than the Rp 18.4 trillion allocated last year. According to Suswono, the subsidy will be gradually reduced as there are indications of graft and mismanagement in the distribution of the fertilizer.

The subsidies are given to five state-owned fertilizer companies so they can sell the fertilizer at below market prices. But at a distribution level, the fertilizers have been regularly siphoned off to ineligible recipients, such as big plantation companies, here and overseas.

Vested interests are also at play in a protracted rent-seeking business at state logistics agency Bulog, which this year has around Rp 16 trillion to spend on securing rice and sugar reserves, as well as keeping their prices stable to avoid spiking inflation.

Over the past 10 years, the graft-infested company has claimed the fall of several top politicians and high-ranking officials.

Golkar patron Akbar Tandjung was sentenced to four years in prison for bribery related to Bulog in 2001, but was later acquitted by the Supreme Court in 2002. Former president Abdurrahman "Gus Dur" Wahid was impeached by legislators in 2001 following allegations in another bribery case related to Bulog.

Despite its notorious record, Bulog's charm as a cash cow remains. And now, the contentious point of debate between politicians and government officials is related to a decision to allow Bulog to import rice this year to help secure its reserves.

Rice imports have always been a controversial issue, since they are allegedly plagued with graft. Importing rice is also said to hurt local farmers because it reduces the price of rice. If approved, the import is estimated to be worth more than Rp 3 trillion, and is scheduled for delivery in September.

The Agriculture Ministry has rejected the import policy, arguing that the country's rice reserves should be sufficient with a rice surplus of an estimated 4 million tons.

"If there's a possibility of a surplus, I think it'll be wise for Bulog to terminate any import plan," said the ministry's director general of food crops, Udhoro Kasih Anggoro.

The ministry's stance has been supported by most legislators on House's Commission IV. However, Bulog has insisted otherwise, claiming the company has had difficulties buying rice from farmers and filling its reserves because there was actually not enough rice available.

"I know many people don't like me [because of the rice import policy], but I have to do what the President has told me to do to prevent a possible famine," said Bulog president director Sutarto Alimoeso, Yudhoyono's high school pal.

Agriculture analyst Bustanul Arifin from Lampung University said the policy related to rice production and management had always been mired with vested interests.

"Policy makers tend to take benefits from unstable rice prices. Instead of resolving this by improving agriculture infrastructure, they prefer to take a shortcut and import, which we believe is always beset with rent-seeking," he said.

Bustanul said the government had successfully banned rice imports in 2008, when it relied on domestic output to keep prices stable. "But I believe the decision was made more to lure rural votes just ahead of the 2009 election by creating an impression that the administration was siding with local farmers."

What's at stake this year?

[Source: Central Statistics Agency]

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