GOVT INTRODUCES CONCEPT OF 'CORPORATION' TO BOOST FARMERS' WELFARE

by Andi Abdussalam

         Jakarta, Sept 13 (Antara) - The Indonesian government continues to seek ways to improve the welfare of over 50 million farmers involved in one of the key sectors of the country's economy.

             Although the share of agriculture sector contribution to the national gross domestic product has declined significantly in the last half century, today it still provides income for the majority of Indonesian households.

             Hence, President Joko Widodo (Jokowi) convened his relevant ministers to a limited meeting in the Presidential Office on Tuesday (Sep 12) to introduce his concept of 'farmers corporation' in an effort to improve the welfare of farmers whose number account for about 41 percent of the total labor force in the country.

             Data showed by  Wikipedia indicated that in 2013, the agricultural sector contributed 14.43 percent to national GDP, a slight decline compared to a decade earlier (2003) which reached 15.19 percent. 

 
       In 2012, this sector provided jobs for around 49 million Indonesians. Currently around 30 percent of Indonesian land area is used for agriculture purposes. Indonesian agriculture sector is overviewed and regulated by Indonesian Ministry of Agriculture.

            Generally, the agricultural sector of Indonesia comprises two types which corresponds scale, namely large plantations either owned by state or private companies and smallholder production modes, mostly traditional agricultural households.

            The large plantations tend to focus on export commodities; such as palm oil and rubber, while the small scale farmers focus on horticultural commodities to supply the food consumption of local and regional population, such as rice, soybeans, corn, fruits and vegetables.

            It is the small farmers for which that the government needs to continue providing guidance to improve their welfare. According to Franky Widjaja, Partnership for Indonesia Sustainable Agriculture (PISAgro), to sustain agriculture and increase crop productivity, big firms are being urged to not only trade with farmers but also to coach them in good agriculture practices and business management.

            "Indonesian farmers need to have a business mindset just like Australian farmers so they can develop the sector better. They need to be at the center of the stage. We need to fix their management and agriculture practices by creating better partnerships," Franky Widjaja was quoted as saying by theJakartapost.com during the 2017 Responsible Business Forum (RBF) on March 15.

             According to PISAgro's research, asistance to farmers can be made through teaching better planting and replanting methods, fertilizer use, trade-traceability systems using technology and real-time price information to ensure fair profit margins for farmers.

             Most of the 50 million workers in the agriculture sector are small farmers with low productivity and profitability levels as a result of lengthy supply chains and a lack of access to financing.

             President Jokowi admitted that most of workers in the agricultural sector are small farmers who own small land. In the agricultural sector, farmers will be able to enjoy added value by forming cooperatives to ensure that they are able to benefit from their agricultural plantations. Yet most farmers in Indonesia have small land holdings, measuring some 0.25-0.3 hectares per farmer.

            Hence, in the limited meeting on Tuesday, the President  introduced his idea on the concept of 'farmers corporation' to change the working patterns of farmers into a more modern system
      "If I speak about the concept of corporation of peasants, it could seemingly be misunderstood that farmers come together under the control of a conglomerate. No, it is not," President Jokowi noted at the opening of a limited meeting (Ratas) at the Presidential Office on Tuesday.

             The Ratas, which discussed the idea to make farmers work under a "corporation" system was attended by Agriculture Minister Amran Sulaiman, Agrarian and Spatial Planning Minister/Head of the National Land Agency Sofyan Djalil, and Minister of National Development Planning/Head of National Development Planning Agency (Bappenas) Bambang Brodjonegoro.

             In addition, other ministers of the working cabinet, East Java Governor Sukarwo, Central Java Governor Gandjar Pranowo and chairman of PT Sukabumi Luwarso, a state-owned enterprise, were also present.

             "The point is to make a large group of farmers (to) apply principles of modern management, applications, and ways of the processing industry and at the same time market it (their products) to the retail industry and consumers by means of online stores, as well as to retailers with good management," the president added.

              This approach will be more profitable for farmers, according to President Jokowi.

             "They will then have their own processing industry, seed industry, production application, modern mill, and modern packaging facility directly at a single location. Farmers should also have a post-harvest processing industry," the president emphasized.

              The processing industry that turns rice into flour is one such example.

             "It is actually these business and agribusiness processes that will provide great added value. Let us teach our farmers to come together under a large group," the president remarked.

             The agribusiness discussion is a follow up to the president's visit to PT BUMR Interconnected Food on September 1, 2017. It is a rice cooperative that processes and packages rice in a modern and attractive way, so that the product can be directly marketed to consumers.

              PT BUMR Interconnected Food processes rice, from upstream to downstream, by cooperating with farmers. The cooperative also offers assistance and helps to provide capital loans.

              During the planting period, farmers always coordinate with the cooperative. The harvest is then processed using modern technology. Later, the proceeds from the sale of rice will be shared with the farmers. The rice is distributed directly to retail stores as well as marketed to customers through social media.

       
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(T.A014/A/A. Abdussalam/A. Abdussalam) 13-09-2017 14:57