Topic Area: Agriculture
Geographical Area: Indonesia
Focal Question: How has Indonesia's desire for food self
sufficiency in rice compromised it's ability to address the issues of
sustainable agricultural development?
Sources:
(1) Barbier, Edward B., 1989. "Cash Crops, Foods Crops, and
Sustainability: The Case of Indonesia." World Development,
vol. 17, no. 6, pp. 879-895.
(2) Panayotou, Theodore, 1993. Green Markets: The Economics of
Sustainable Development. San Fransisco, CA: Institute for
Contemporary Studies Press.
Reviewer: Marc Small, Colby College '96
Review:
Agricultural policy in Indonesia has been primarily concerned with
implementing production based policies designed to pursue food self
sufficiency. Since 1967, Indonesian agricultural development polices
have focused on achieving food self sufficiency in rice. This goal
was reached in 1984, when, for the first time, domestic rice
production exceeded domestic rice consumption. Unfortunately,
achieving this goal came at the expense of sustainable agricultural
development.
The economic costs of gaining food self sufficiency in rice were
extremely high. The Government of Indonesia (GOI) achieved food self
sufficiency in rice through extensive government investment and
through the implementation of subsidy programs for fertilizer,
pesticides and irrigation. Over the period 1970-84, the total
irrigated land area increased from 3.7-4.9 million hectares; the use
of subsidized fertilizers increased from 0.2-4.1 million tons; and
the use of subsidized pesticides increased from 1080-14210 tons
(Barbier 886). In 1986-87 the total cost of these input subsidies
reached US$725 billion (Barbier 886).
In order to increase rice output, the Indonesian government was
forced to expand cultivated land area. This expansion was
accomplished by investing large amounts of government funds into
infrastructure projects, such as the building of roads and processing
facilities, and the development of new irrigation networks. The
strategy to expand cultivated land area also relied on Indonesia's
transmigration program. This program involved moving families out of
crowded cities and resettling them on previously undeveloped marginal
lands. The economic costs of this program were extremely high-US$9000
per family (Barbier 887).
Input subsidies also generated significant economic costs. For
example, "until 1985 the Indonesian government subsidized pesticides
at 82 percent of the retail price, at an annual cost of US$128
million" (Panayotou 64). In addition, fertilizer subsidies to farmers
reached US$220.7 million in 1986-1987 (Barbier 888). Because farmers
were not forced to pay the full cost of their fertilizer and
pesticide use, inappropriate application of these toxic chemicals
resulted. These costly subsidies resulted in a government induced
market failure, which caused farmers to use more pesticides and
fertilizer than was economically efficient.
Since most of the irrigated land in Indonesia was, at the time,
devoted to rice production, maintaining and improving the irrigation
network was extremely important for increasing rice output. A large
part of this maintenance and improvement was paid for through
government financed subsidies. These irrigation subsidies imposed a
heavy financial burden on the GOI. It was suggested that, in order to
irrigate 4 million hectares of land, a government subsidy of US$440
million was needed (Barbier 888). Because farmers were not
responsible for paying the full cost of their water consumption,
irrigation water was overused and wasted.
Not only were the monetary costs of achieving food self sufficiency
in rice significant, the external environmental costs proved
considerable as well. Some of the environmental costs affected only
the farmer. For example, the input subsidies for fertilizer,
pesticides, and irrigation along with the expansion of cultivated
land area imposed costs on the cultivator in terms of reductions in
agricultural productivity and depletion of resources. Some
unfortunate non-user externalities also emerged from such a
production-led approach. These external costs resulted from
fertilizer and pesticide pollution, as well as from the depletion of
natural resources (i.e. water resources).
The negative impacts of the pesticide subsidy in Indonesia have been
well documented. The inappropriate use and overapplication of
pesticides by Indonesian farmers led to the evolution of pesticide
resistant pests, and the elimination of natural predators that help
control pests. For example, in 1986-87, an estimated 50-60,000
hectares of cultivated rice were lost to an outbreak of a pesticide
resistant brown planthopper species (Barbier 889). This loss of 1
million tons of rice was equivalent to US$180 million (Barbier 889).
In addition to these direct user costs, contamination of surface
water by pesticide runoff resulted in the decline of fishing
productivity and in costs to human health.
The expansion of cultivated land area into marginal lands produced
severe erosion problems. Increased rice cultivation on marginal lands
by poor, subsistence farmers seeking to meet their basic food needs
caused particularly high levels of soil erosion. Losses of fertile
topsoil brought about significant declines in agricultural
productivity. "Given an estimated 903,092 hectares of critical upland
farming area on the island of Java, a rough estimate of the loss in
farmers incomes from the failure to control soil erosion was US$139.8
million per year" (Barbier 891). Surface water sedimentation from
erosion runoff produced harmful environmental externalities as well.
Sedimentation of surface water disrupted irrigation networks, dams
and other water systems (i.e. residential water supply systems). This
disruption resulted in losses to agriculture, aquaculture and
fishing, and losses from diminished navigation and hydropower.
Clearly, Indonesia's production-led approach to achieving food self
sufficiency in rice was not sustainable. It has been stated that
sustainable agricultural development occurs when "both the real
economic costs of production and the real environmental costs of
production are expected to remain constant or to fall as production
expands" (Barbier 880). In order to increase rice output, Indonesia
greatly increased both the economic and environmental costs of
production. Indonesia's failure to adequately consider the monetary
and environmental impacts of it's production-led policies resulted in
an unsustainable outcome.
In recent years, the government of Indonesia has realized the
importance of sustainable agricultural development. The GOI has
become aware that sustainable agricultural development requires
integrating natural resource management strategies into agricultural
development policies. This is illustrated by the fact that in
November 1986 President Suharto issued a decree which banned 57
brands of pesticide, and established the integrated pest management
(IPM) program. This program involved controlling pests through the
use of the pests' natural predators. Three planting seasons after the
decree, the Food and Agricultural Organization (FAO) reported that
pesticide use had declined by 90%, while average rice yields had
risen from 6.1 tons per hectare to 7.4 tons per hectare (Panayotou
65). Indonesia's IPM strategy has served as the first step in the
country's quest to achieve sustainable agricultural development. If
agricultural development is to become sustainable in Indonesia,
development strategies must continue to be modified so that the
economic costs as well as the environmental costs are taken into
account.