Liberalization: The era of cheap food is vanishing

Liberalization: The era of cheap food is vanishing Anonim ;  A Researcher at the Center for Asia Pacific Studies, Gadjah Mada University, Yogyakarta, Pursuing a PhD Degree at the Institute of Cultural Anthropology and Development Sociology at Leiden University, the Netherlands

JAKARTA POST, 17 Oktober 2012

The Food and Agriculture Organization (FAO) of the UN chose the theme for this year’s World Food Day, which fell on Oct. 16. The theme was “Agriculture cooperatives — key to feeding the world”, which was very strategic considering the rapid increase of food prices that contributed significantly to food crises and food insecurity across the globe. In the context of Indonesia, the impact of soaring food prices on food security and poverty in both urban and rural areas shows contrasts and linkages. In daily life, we can easily see that affected households must dig deeper in their pockets to buy food. For the poor, rising food prices aggravate poverty. The fact shows that the government’s efforts to stabilize food prices are more intensive in urban areas than in rural areas as the former serves as political barometers for the rest of the country. Urban dwellers, even the poor, do not face the full force of price hikes as the government, through the State Logistics Agency (Bulog), continues to conduct market operations (selling cheap rice and other basic commodities), import rice when prices rise beyond predetermined levels, and implement a rice-for-the-poor program. Meanwhile, in rural areas, skyrocketing food prices exacerbate poverty virtually in all households. This is because of people’s relatively low education levels and unstable employment situations (most of them do not have permanent jobs and seek whatever job is available). Moreover, most households in rural areas earn low income but spend much of it on food items. This implies that any increase in food prices hits poor rural households harder compared to their urban counterparts. One would expect farmers in rural areas to fare better than rural dwellers. However, this is not the case because despite the high prices of the commodities that they grow, the price they get for selling their produce is just a small fraction of the retail price in traditional and modern food markets. The government still implements a minimum price policy for essential commodities such as rice, which is aimed at stabilizing prices in urban areas where unionized workers, economic and political elites, civil servants, the military and the police live. Such policies keep farmers’ prices lower than spot market prices. This is why rising food prices translate into incidences of high poverty in rural areas. It seems that economic liberalization is bound to contribute to high prices and, hence, positively influence expenditure on food for households in Indonesia. The reduction of subsidies in the agricultural sector has affected food prices as farmers have to pay market prices for all their inputs. There is an urgent need to use food security as an entry point to revitalize the role of Bulog in ensuring stable food prices. However, farmers cannot sell their commodities such as rice, sugar, maize, soybeans, and six others that are categorized by the government as essentials at market prices. Instead, they have to accept predetermined prices, which are set based on other considerations such as food stability for salary earners, national food security and political stability, rather than on the well-being of farmers. There is little doubt that dependency on rice is still one of the major causes of vulnerability of many households to food insecurity. This is the case in urban areas as well as in rural areas. Rising food prices, especially in terms of rice, have forced many to seek alternative foodstuffs (often poor quality in terms of nutrients, to reduce the quantity of food eaten per meal) and to change their purchasing habits. Considering the adverse impact of fully-fledged liberalization of agriculture on ensuring sustainable food security, there is an urgent need for the central and local governments to use food security as an entry point to revitalize the role of Bulog in ensuring stable food prices. In times of price uncertainty, opting for a food security policy that leaves everything to the market mechanism is no longer tenable. Food buffer stocks should be revitalized and decentralized in regional centers, with stocks of various food staples rather than storing only rice. If the government is serious about promoting the diversity of food consumption, it should allow rice prices to gradually increase while at the same time encouraging the production, distribution, storage and consumption of alternative food crops. However, farmers should be the cornerstone of the new food policy, as without them, increasing output and the quality of horticultural commodities, food crops and livestock products will be difficult to achieve. Food price stability should not be at the expense of farmers who are predominantly small-plot holders/owners or low-income rural dwellers. Both farmers and consumers need subsidies, if their incomes are to rise to the point where they are strong enough to serve as an engine of sustainable economic development. Food security has been a practice that most people used to take for granted. This is because old generations used to teach young generations the secrets of storing food in barns for long periods, using the fallowing method to disrupt the pest life cycle, and intercropping to reduce the exposure of soil to wind and downpours, which take away the most fertile parts of the soil. To enhance food security and mitigate the effects of climate change, there is a need to revisit the current methods of farming to ensure that the sustainability of land, water resources and biodiversity are taken into consideration. Additionally, food security should be integrated into a multi-sector rural development strategy. The overriding goal should be to increase off-farm activities in rural areas as a prerequisite to increasing land productivity, and land reform to increase returns for those tilling the land, hence, stimulating their interest in making investments that improve land productivity. ●