Prospects for agricultural development in Indonesia : with special reference to Java

InroductionDue to the usually fertile soil (especially in Java), the prevailing warm and moist climate well-suited to agriculture, and the industriousness of the farmers, just before World War II Indonesia was practically self-supporting in primary articles of food, especially rice, Indonesia's staple. Since 1957, rice imports have risen to an average of about 1,000,000 tons, or 8 procent of the consumption, and it has cost the government about 100 million US dollars a year: a substantial drain on its foreign exchange holdings.Another fact is that Indonesia still depends on agriculture for over 60 percent of her foreign exchange earnings. After the war output of agricultural export crops, with the exception of rubber, decreased. But, unfortunately, in the last few years rubber production, Indonesia's main export, commodity, normally accounting for a third to a half of its export earnings, also shows a decline.The rapidly growing population of Java, and the impossibility to expand the agricultural area, have resulted in a further decline of the average farm size since World War II. As non-agricultural activities have shown themselves unable to absorb the increase of Java's population, the pressure on agricultural land in this island has become more and more severe.Against this background, the need for replacement of food imports, for greater export of agricultural products and for a relief in the population pressure on land in Java, this study of prospects for increasing agricultural production has been undertaken.The present study will focus its attention on specific measures taken, or to be taken, by the government to solve the problems outlined above. It also attempts to analyse why the government's efforts have, or have not, been up to expectations, to arrive at some basic conclusions. Next, the question of how effectively the government had used its agricultural resources is dealt with. Finally the author will try to indicate the perspectives for agricultural development in Indonesia. As two thirds of its population is concentrated in Java and the data for this island are more complete than those for the other islands, this study is primarily concerned with Java.Agriculture in Indonesia has two aspects: the usually small-scale peasant agriculture and the estate agriculture.Peasant farming varies between the extensive type of shifting cultivation and the most intensive culture as exemplified by double cropping in Java and Bali. The concept of a small holding is a relative one, especially before the enactment of the Basic Agrarian Law of 1960: the smallholder in one area of Indonesia may be considered a fairly large farmer in another area, depending on the local agricultural pattern, the crop or crops involved, the amount of available arable land and the type of land tenure. Generally hired labour is little used and not much capital is involved.The peasant primarily produces basic food commodities for himself and his family. Besides that, he produces cash crops for local and export markets, depending on regional circumstances. For local marketing only surpluses are sold, which generally are small. Also the total amount of cash crop product per farmer is usually small. Nevertheless, the number of farmers is so great that their combined surpluses may be substantial.Several crops raised by the fanners, both for consumption and for export are further processed by the farmer himself or in factories which purchase the crop. If such processing requires little, if any, capital or technical knowledge (as copra), this is done by the peasants themselves. If processing needs more capital and wider technical knowledge, the crude product is sold to processing enterprises, sometimes through a dealer. Examples are the remilling enterprises for the peasant's rubber and the processing of cassava-flour.The large-scale production of world commodities on so-called estates is a commercial enterprise. Land, usually comprising a fairly large area, is obtained by renting uncultivated 'waste land' on a regular long-term basis or by purchasing it (in the old days) from the government (so-called 'particuliere landerijen'). Here labour is normally paid in money and substantial capital is employed. Estate agriculture, as a rule, is not limited to the cultivation of crops: in most cases, the crude product is processed in a factory connected with the estate. On the whole, modem and scientifically established methods of cultivation and processing are used. The estates produce cash crops for the international markets.Another form of estate agriculture occurs in the production of sugar. Here the enterprise owns only the factory (mill) and rents its land from the farmers. Thus it would be better if the word factory be used here instead of estates. The same applies to a number of enterprises which process tobacco and other annual crops (such as cassava). The figures of production area and other economic data of the crops grown for these factories are included in the tables for the estate crops.This study is primarily based on data collected from various publications, especially those of the Central Bureau of Statistics. But these statistics are not all equally reliable or complete. For example, no sufficiently detailed studies on the national income and its composition were available. Data from the population census, conducted in October 1961 are still being processed and only some of its results could be included.Results of the agricultural census, executed in October 1963, were even more difficult to obtain. There are good data on production in particular sectors, on some elements of the balance of payments and on retail prices in Djakarta, compiled by the Central Bureau of Statistics. Some of the gaps could be filled by the author's own reports on the aspects of agricultural development planning which he drew up since he joined the Indonesian State Planning Bureau in 1952.Although technical, political, social and other problems will be touched, the nature of this study is primarily economic. The problems of agricultural development are its central objective, and therefore agricultural considerations play a decisive role. Of course the author feels the limitations of such a presentation, but readers who are interested in Indonesian agricultural development in a broader context should consult other studies. The most important are included in the bibliography.As to the set-up of this publication the following scheme has been followed.Chapter 2 gives in brief the theoretical background of why agriculture should be developed and how this applies to the Indonesian situation. The next three chapters contain a brief description to the historical development of agriculture in Indonesia since 1815 up till now: Chapter 3 indicates the development of the whole of Indonesia with special emphasis on the islands outside Java (the so-called Outer Islands), Chapter 4 is focussed on the agricultural development in Java, and Chapter 5 treats the effects of population pressure in Java.Chapters 6 to 9 describe the approaches, the policies and the measures adopted by the government to face the problems after World War II as outlined in the previous chapters. They briefly discuss the successive agricultural development plans launched after World War II (Chapter 6) and the measures to relieve pressure on land in Java by agricultural resettlement (Chapter 7); the attempts to increase agricultural exports and the rehabilitation of the sugar factories as an example are given in Chapter 8, whereas Chapter 9 discusses the measures to improve peasant's agriculture with special attention to rice production.Chapter 10 analyses the significance of the failure of the agrarian policy of the Indonesian government to overall agricultural development in Java.Chapter I I identifies the need to integrate the agricultural development of Java in the economic development of the whole of Indonesia. Finally Chapter 12 summarizes the main conclusions of the study.ConclusionsThe present study reviews the main aspects of the agricultural development in Java.The main conclusions emerging from it are the following.1 . Increasing productivity of peasant agriculture is of crucial importance in the initial period of economic growth of a country.2. Therefore, the central problem of agricultural development in Indonesia is how to get peasant agriculture moving in Java, where we face the problem of an already excessive yet still increasing agricultural population. The government has taken several measures to relieve this unfavourable situation, such as:(a) To transfer Javanese farmers to the sparsely populated Outer Islands.(b) To pay special attention to the rehabilitation of the sugar factories which are mostly under state management.(c) To increase the productivity of peasant agriculture by applying more fertilizers, better seeds and other improved agricultural techniques.But the results have not been up to expectations due to various factors, as will be explained in the following point.3. In Chapter 10 it is shown that agricultural development in Java has been retarded by the following three main causes:(a) The political instability of the country.(b) The multitude and inconsistency of government's objectives in pursuing agricultural development.(c) The non-existence of any clear doctrinal concept in the government's agrarian policy as regards the political attitude towards the peasants.Other constraints on recent agricultural growth are:(a) The more rapid population growth after World War H.(b) The diversion of some economic resources for non-economic development purposes.(c) The weakness of the first attempts in comprehensive agricultural planning.4. It is evident from the study that increasing productivity of the peasant's agriculture on a revolutionary scale requires technical, economical, attitudinal and political transformation of the rural society that cannot be brought about quickly. The transformation of peasant agriculture requires a series of interlocking changes in so many different aspects of rural life that a perspective for a period considerably longer than the eight years anticipated in the Overall National Development Plan 1961-1969 is required.5. Next, an identity of purpose and common responsibility between the government and the peasants is necessary to accelerate agricultural development.6. Another important conclusion of the study, which is also stressed by Joosten and others, is that expansion of the markets for the agricultural products is necessary for agricultural development.Such an increase would certainly alleviate the situation of Javanese farmers for a time, but ultimately it would not solve their problem. Only if most of that increase can be siphoned off into industrial investment does it seem that the application of more and better agricultural inputs will really contribute something dynamic to the general economic situation. If it cannot be drawn off, it will merely further the process of 'involution', not just in agriculture now, but throughout the whole of the Javanese society.7. It is also shown that Java's rural economy is simply unable to absorb population growth without falling standards of living. In Chapter 11 it is illustrated that a solution of Java's problem requires that the 1,600,000 persons or 360,000 families added each year to its population should be absorbed elsewhere in the economy, into industries in Java or the Outer Islands, or into agriculture in the Outer Islands.Only an effective policy of agricultural resettlement to the Outer Provinces and industrialization could enable Java to provide employment for its annual population increase. Such a policy, vigorously applied and accompanied by an adequate educational program, will give the government a breathing space to reconstruct the national economy. Then it might be obligatory for the government, in order to achieve rapid economic development, to persuade the population to stop looking on the maximum of babies as a 'bliss'.8. Looking at Indonesia from these perspectives, the final conclusion is that it is unwarranted to expect that economic (including agricultural) development occurs easily and quickly. Accordingly, economic development is a long-term goal and the program to carry it out must be equally long in term.However, natural and human resources, climate and location are such that, when the government does succeed to prepare the basis for the 'plane to take off' (to use the familiar metaphor of economic growth as introduced by Rostov), it has the potential 'to fligh high and fast'.