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Price increase of unhulled rice is not right

Kompas - January 27, 1997

Jakarta – Observers and farmers evaluated government's policy to increase the price of fertilizers at the same time with the price increase of unhulled rice (gabah) and rice as something that is not right. The more the price increase of fertilizers with around 20 percent, which causes trouble for the farmer because fertilizers take up to 30 percent of the paddy production cost.

The farmers of a number of rice production center which were approached by Kompas also stated that the announcement of this fertilizers price increase is not at the proper time. Because at this moment the farmers just entered the planting time, so they need fertilizers in big amounts.

They also admitted that the increase of gabah with around 16 percent is still not satisfying yet. With the price increase of gabah with 16 percent only, which is accompanied with a price increase of fertilizers of around 20 percent, they still have to look for additional capital for production costs which are now increased. This pushes the farmers to make debts with banks or money lenders.

While the Minister for Agriculture Sjarifudin Baharsjah brought forward on Saturday (25/1), that the increase of fertilizers, particularly ZA abnd SP-36 was because the price of raw material which has to be imported, also increased.

He did not say why the price of urea which is mostly used, was also increased. Urea was increased with 21.1 percent from Rp 330 to Rp 400/kg, while ZA increased with 26.76 percent from Rp 355 to Rp 450/kg, and SP-36 increased with 14.28 percent from Rp 525 to Rp 600/kg.

Pity for the farmers

The lecturer of the Institute for Agriculture in Bogor (IPB) Prof Dr Bungaran Saragih regretted the fertilizers price increase until 20 percent. The government should actually consider not to increase the price of gabah and rice together with fertilizers. This price increase of fertilizers has this time a big influence on the farmers.

"Have pity for our farmers. They are even not given the chance to get a rice price which will refresh their hearts," said Bungaran Saragih when contacted in Bogor last Saturday (25/1).

While the economic observer from Universitas Hasanuddin, Hamid Awaludin MA LLM who was contacted separately, stated that this increase clearly reflects that the government does not care for the fate of the farmers, particularly the insignificant farmers. The increase should actually be postponed, because the fertilizers are produced at home by state-owned corporations.

Acording to Bungaran, the fertilizers increase of around Rp 70 has of course no meaning for the minister or big entrepreneurs. But for the insignificant farmer, it has a very big value. Because it means a very significant increase of the production price. The more if taking into account that fertilizers take a big segment of the production cost.

"This must be brought forward so that we will not be not sensitive anymore for the problems of the insignificant farmer," said Prof Bungaran in a calm tone.

He said that the increase could make the farmer take extreme actions, namely decrease of fertilizers use and substitute it with manpower. In other words, manpower will more be used to work on the wet rice fields, water for the rice fields, control of weeds etc. Only, with increase of manpower, is not yet known whether the rice production will decrease or not.

Regarding the price increase of rice [purchase by the Logistics Bureau (Bulog) from the Village Unit Cooperatives (KUD) 15.99 percent and Bulog purchases from non-KUD to the amount of 16.16 percent], he said that the increase has not much meaning for the farmers, as it would not certainly increase the rice price which at present is already above the government's standard price.

While the fertilizers price increase is directly felt by the farmers who have to buy it. Hamid Awaludin has the same opinion as Prof Bungaran, stating his concern because the fertilizers increase scattered the expectations of the farmers to get better income.

At a glance the price increase is high indeed, compared with the inflation of 1996 of 6.47 percent. But the fertilizers price increase foiled the wish of the farmers to improve the exchange value.

As an example Hamid mentioned that in the '70's a hand tractor could be obtained for 8 tons of rice. At present a farmer has to change one hand tractor with 23 tons of rice. In the '70's a farmer had to sell 4 kg rice for entering a first class cinema. Now for entering Planet Hollywood he has to sell 13 kg rice.

Hamid who lived for 10 years in Washington said that Indonesia should not feel awkward to subsidize its farmer, the hero of development and self support of rice. Other advanced countries for hundreds of years subsidized their farmers. "America even till this day is subsidizing its farmers, feeling that it is a proper price for the farmers, the heroes of mankind."

Not the proper time

The farmers from Indramayu, Subang and Cirebon evaluated the time of the fertilizers price increase not proper, as it should be done during the harvest, when the farmers do not need fertilizers.

At the moment the planted paddy in West Java is 1-30 days where they need much fertilizers. Fertilizing is done three times with spreading urea, namely two days before planting, and when the paddy is 15 days and 35 days old. While with tablet urea is done once only. Fertilizing of one ha was first Rp 180,000 per season, needs now an increase of Rp 40,000, which is the same as 100 kg gabah according to Tukiman (50), a farmer from Wanakersa village, Pegaden Baru, Subang Regency.

In the Subang regency the price of fertilizers is already higher than the government price. Urea is average around Rp 500/kg (Government Rp 400). A retailer of fertilizers at the District of Pamanukan, Regency Subang, explained that the distributor already sold above the price of Rp 400. While ZA was sold for Rp 550 (Government Rp 450) and SP-36 for Rp 700 (Government Rp 600) per kg.

"Before the price increase fertilizing per ha was more than Rp 100,000. Now it has become Rp 135,000, not yet included cost for the workers," said Waslim, a farmer from Bulakamba to Kompas, Sunday (26/1). This was separately confirmed by Moh Sueb and Sukendi, farmers from Wanasari.

Sukendi said that even before the increase he had a bank debt of Rp 600,000 for production costs at end November 1996. "The middle of this month is actually the due date but I have asked postponement of payment because I have no money," he explained.

Many farmers in the Brebes Regency are forced to stuck in their credit, said the village chief of Pakijangan, Atmo Sidik. This month three farmers average per day came to him for a recommendation letter to extend their stocked credit at the BRI Unit Bulakamba Bank. "While usually the credit is below Rp 1 million with the land of the house (letter D) as collateral," said Atmo.