Category Archives: Food and agriculture

International Seminar: “AFTI 2014: The University of Adelaide – IPB Policy Forum on Agricultural and Food Sectors Transformation in Indonesia”

IPB (Economics postgraduate program & INTERCAFE), supported by the University of Adelaide has successfully organized International Seminar “AFTI 2014: The University of Adelaide – IPB Policy Forum on Agricultural and Food Sectors Transformation in Indonesia” on 18 December 2014 at IPB campus in Baranangsiang, Bogor, Indonesia. The seminar presented four keynote speakers: Dr. Arief Daryanto (Director of MB IPB), Dr. John Ackerman (Regional Manager for Indonesia of Meat and Livestock Australia), Dr. Nunung Nuryantono (Director of INTERCAFE, LPPM-IPB), and Prof. Dr. Rick Baricello (University of British Columbia, Canada). The seminar was convened by Dr. Nunung Nuryartono and Dr. Risti Permani (Global Food Studies, University of Adelaide).

Dr. John Ackerman

Dr. John Ackerman

Dr. John Ackerman delivered his presentation titled “Sustainably Feeding 9 Billion People: Self-sufficiency, Research and Trade”. He stated that agriculture is showing signs of supply constraint. These signs are more limited to land & water for agricultural production, and the declining of agricultural productivity rates. A number of governments are pursuing self-sufficiency as a reaction to potential future food shortage. He asserted that food sufficiency is not equal with food security. He suggested a rather controversial policy issue by not pursuing self-sufficiency. A narrow focus on self-sufficiency has high economics and social cost, given the example of Indonesia’s beef sufficiency policy that has lead to the increase of beef price.

Dr. Iman Daryanto

Dr. Arief Daryanto

Dr. Arief Daryanto presented his paper on“Dairy Industry in Indonesia: Challenges and Opportunities”. He identified key driving forces in dairy sector transformation consists of demand drivers (increased demand for food products, diversification toward higher value food, food spending shifting, and more emphasis on food security and improved nutrition) and supply shifters (investment in agricultural research, value chain development, increase scale production, climate change, less market protection.) He emphasized the importance of increasing the dairy sector value chain and removing the constraints along the value chain. Constraints across the dairy value chain were identified starting from the inputs (breeding), production (low productivity & adoption of technology), collection (lack of infrastructure, quality standard), processing (seasonality of production and fluctuating supply), market/consumers (unorganized market, heterogeneous consumer requirements). Dr. Arief Daryanto suggested one of the solutions for dairy industry development is to develop the inclusive growth business model, such as Cimory Model, Nestle Model, PisAgro Model, and Gapoknak Sugih Mukti Mandiri Model.

Dr. Nunung Nuryantono (middle)

Dr. Nunung Nuryantono (middle)

Dr. Nunung Nuryantono presented on the topic of “Agriculture Transformation: Who Is the Winner and the Loser?” According to him, from the studies that have been done, agricultural transformation has impacted on the smallholders farmers (farmers with land less than3 ac). He highlighted the case in Jambi Province, agricultural transformation happened when farmers shifted their main crops from food crops& horticulture into plantation estate crops (palm oil). This transformation has impacted on the economic growth of Jambi Province that was always higher than the national economic growth (2004-2013). However, the rate of poverty headcount in Jambi is not declining as fast as the national level, rather it tends to be stagnant from 2011-2013. So, the question then is who benefited from the agricultural transformation in Jambi Province? IPB researchers in collaboration with Gottingen University is working on the answers for this issue.

Prof. Rick Barichello

Prof. Rick Barichello

Prof. Rick Barichello delivered his presentation titled“A Framework for Agricultural and Food Sector Transformation in Indonesia”. He introduced two dimensions of transformation at a framework level:

  1. The process of shifting resources from agriculture to the industrial / service sectors
  2. The transformation of the agricultural sector to increasing competitiveness and productivity within the sector.

Both dimensions are very important yet focus on different issues and suggest different policies.Prof. Barichello suggested several policies that can be adopted in the agricultural / food sector transformation, which are:

  1. Technology and human capital improvement
  2. Choose policies that foster competition, innovation and comparative advantages
  3. Remove regulatory barriers (e.g. in transport & logistic, taxes)
  4. Exploring export markets and developing products better suited to consumers

Furthermore, He also stated that some policies do not work, such as:

  1. Subsidies that just raise prices (e.g. rice tariff)
  2. Import barriers such as high tariffs and import quota
  3. Any policy action that reduces competition
  4. Any regulatory measures that limit farm consolidation & limit innovation.

At this international seminar, GoLive Indonesia representation, Farda Eka Kusumawardana (GoLive’s online administrator), also introduced and explained projects, objectives and activities of the coming year 2015 to the seminar audiences. He also invited the audiences to contribute an article to be published in the GoLive Indonesia blog.

Speakers and Audience of the Seminar

The Speakers and Audience of the Seminar

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Filed under Agriculture, Food and agriculture, Indonesia

The 2014 IPB-GoLive Indonesia Conference to promote Indonesian development agenda

Group photo at the end of the conference

Group photo at the end of the conference

GoLive Indonesia collaborating with Bogor Agricultural University organised the 2014 IPB-GoLive Indonesia conference “Driving change through research on the Indonesian development agenda” on 14 March 2014. The conference presented a keynote speech by Dr Iman Sugema, a senior researcher at INTERCAFE and five outstanding early career researchers from IPB. Dr Nunung Nuryartono, Director of INTERCAFE, officially opened the conference. This is the second conference that GoLive Indonesia has organised outside Adelaide. The first conference was held in Canberra collaborating with Indonesia Synergy.

Dr Nunung Nuryartono in his opening speech highlighted the potentials that Indonesian young researchers have to promote the Indonesian development agenda. He also hoped that the event could be continued in the future.

Dr Iman Sugema in the keynote speech identified a challenge faced by Indonesian researchers, that is to publish at reputable international academic journals. He hoped that this conference can inspire early career researchers to contribute to policy discussions in Indonesia as suggested by the conference’s theme and would be followed-up by a program to facilitate joint-working papers writing between IPB and the University of Adelaide researchers.

The first invited speaker, Dr Amzul Rifin, who completed his PhD at Tokyo University, presented his research on the impacts of export tax policy on cocoa farmers and supply chains.  He concluded that there is no change in marketing channel due to the implementation of export tax. Dr Rifin, concluded that with the export tax, margin of exporters decreased because of increased competition in obtaining cocoa beans from farmers.

Dr Muhammad Najib, also a Tokyo University graduate, presented his research on rural development and food processing SMEs in Indonesia. The SMEs contribute to more than a half of the total GDP. Food processing industries have potentials in Indonesia but they are facing challenges including limited supply of raw materials, knowledge about marketing and access to capital. Support for SMEs is needed as its development will contribute to rural development.

Dr Jaenal Effendi presented his work on the role of Islamic microfinance in poverty alleviation and environmental awareness in Pasuruan, East Java, Indonesia. Dr Effendi highligted positive effects of microfinance institutions on reducing poverty and a potential role of Islamic microfinance institutions in promoting environmental awareness.

Dr Sahara gave a presentation on “the transformation of modern food retailers in Indonesia: opportunities and challenges for smallholder farmers”. The Indonesian agricultural sector is denominated by the presence of smallholders, those who have land less than 0.5 ha. Using the chili sector as a case study, Dr Sahara identified challenges facing farmers participate in modern channels including education (which can affect innovation), distance to road and storage facilities. Opportunities from supermarket channel participation include higher prices, more access to inputs and higher per capita incomes.

Dr Eka Puspitawati presented her research on “patterns, determinants and effects of farmers’ participation in the modern channels: a case of Indonesia potato farmers”. Dr Puspitawati suggested that the government should improve access to infrastructure, input production and credits to assist farmers entering into modern channels.

GoLive Indonesia is grateful to the support that IPB especially the INTERCAFE staff Dr Nunung Nuryartono and Dr Lukytawati Anggraeni Putra and the financial support provided by the Australia Indonesia Institute at the DFAT. Both IPB and GoLive Indonesia hope that the conference can be continued in the future.

 

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2013 Food Security Regional Dialogue-Medan: Inter-economy perspectives of food security scenarios

As part of promotion of evidence-based policy making, decision makers and researchers have applied a wide range of modelling to evaluate the effectiveness of food security programs. One widely applied model is a multi-country computable general equilibrium model or known as the GTAP.  Anna Strutt (University of Waikato) and Signe Nelgen (University of Adelaide) shared their work entitled “Food security scenarios for the Asia Pacific – inter-sectoral and inter-economy perspectives”.

Anna Strutt (University of Waikato)

Anna Strutt (University of Waikato)

Strutt and Nelgen’s study focuses on CIPTTV countries, namely China, Indonesia, Philippines, Chinese Taipei and Viet Nam aiming to capture the impact of potential policy changes and other external shocks. The study uses an economy-wide framework using a computable general equilibrium model, a global trade model GTAP. Some important features of the modelling include: attention is given to the structural detail of the economy and inter-relationships between sectors; Prices and quantities are determined simultaneously with markets usually are assumed to clear; Incomes are endogenously determined; There is optimising behaviour by consumers and producers, with prices inducing adjustment. The CGE model imposes constraints e.g. availability of factors of production.

The GTAP model and the latest available GTAP version 8.1 data base with a base year of 2007 for 134 countries/regions and 57 sectors are used. Aggregation is implemented to derive 25 sectors and 28 regions in the study. The data are first projected to 2015. Agricultural distortions by Anderson and Valenzuela (2008) are updated and mapped to the GTAP sectors. Bilateral preferences from the GTAP database are maintained. To better capture food security aspects, the study augments the GTAP with food nutrition data using kilocalories per day per person.

Signe Nelgen (University of Adelaide) to explain about agricultural distortions dataset

Signe Nelgen (University of Adelaide) to explain about agricultural distortions dataset

Five scenarios are being simulated for the CIPTTV region: 1) improved agricultural productivity (land consolidation may lead to a 5 per cent increase in TFP in land-using sectors; 2) increased rice self-sufficiency through increasing tariffs imposed on imports from all regions thus eliminating 99 per cent of rice imports; 3) Combination of 1) and 2); 4) increased rice self-sufficiency and retaliatory tariffs from a key rice exporter; and 5) natural disaster harming land productivity which is assumed to lead to a 5 per cent reduction in land productivity in the region.

The study concludes that policies to promote self-sufficiency through the use of protectionist trade policies such as tariff may lead to a worsening of key food security indicators such as household food consumption. But if agricultural productivity improvements are part of the policy mix, the impacts will be less severe. However, retaliatory trade policies are likely to worsen conditions.

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2013 Food Security Regional Dialogue-Medan: The Quiet Revolution in Staple Food Value Chains in Asia

Professor Tom Reardon of Michigan State University has lead research in the past 10 years on staple food value chains in China, Bangladesh, India, Indonesia, Philippines and Viet Nam where nearly 10,000 farmers and supply chain actors being surveyed. He gave a presentation over the Skype on Day 2 of the 2013 Food Security Regional Dialogue, Medan.

Modern supermarket in Medan, Indonesia

On eve of Green Revolution, there has been debate in these countries on development to choose the following. First is a large-farm development path where supporters saying large estate farms mean fast development. Moreover, there are no good technologies for small farm and small farms wont adapt new technologies.

The second is small farm development path where supporters saying Green Revolution provides technology that makes small farmers as or more productive than large estate farms.  Also, small farm path fits land scarce, labour abundant situation.

All six countries adopted small farm development path starting with the Green Revolution in the 1970s now have massive investments in rural infrastructure. But what progress have they made in small farm modernisation and in developing supply chains from small farms to domestic market (95 per cent of the food market in Asia), especially the rapidly growing cities (urban areas are 75 per cent of food market in Asia).

Tom’s project found some surprising findings. Small farms are rapidly becoming small businesses who sell 70-90 per cent of output such as rice farms in India, China, Vietnam and Bangladesh. They are very responsive to the improved contacts. There has also been rapid intensification of small farms where they shifted into high use of new varieties, purchased seed, fertiliser, pesticide and herbicide. Some examples include shrimp and mangoes in Indonesia where they use new commercial varieties and high use of inputs.

Tom’s project also observed rapid mechanisation of small farming. There was rapid shift to high use of farm machinery to free labour from grain farming to higher income activities (horticulture, rural non-farm jobs). Rapid diversification of small farms was also observed where small farms ‘climbed the value ladder’ shifting from rice/wheat into vegetables, fruits, fish, livestock, dairy,etc and providing them 4-8 times earnings; or shifting from low-quality to high-quality rice with 50-100 per cent higher returns as in Vietnam and China.

Tom’s project also reported ‘quiet revolution’ in food supply chains. It was mainly grassroot revolution by small/medium enterprises and driven by private sector (not government intervention).  There was rapid spread of ‘cold storages’ and  modernisation of wholesale markets and traders and rice mills. Spread of supermarkets in all six countries was also significant. This all supply chain development is important because it forms 50-70 per cent of food costs to consumers.

The role of the government has been extremely important. In all six countries except grain in Indonesia, government role in direct intervention is very small. There was minimal role in input supply and crop marketing. The role of government in enabling farmers and grass-roots private sector was very large. This includes agricultural research (eg seed varieties), investments in roads, ports, electricity grids, permitting cell phone expansion and promotion of information and extension.

*This summary was written by Risti Permani (University of Adelaide) and may be subject to her personal interpretation of the presentation.

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Filed under Agriculture, East Asia, Economic development, Economic Integration, Food and agriculture, Trade, Transport and logistics

2013 Food Security Regional Dialogue-Medan: Food Security in Philippines

Challenges facing Philippines’ food security programs have become more evident in recent years. Salvador Catelo of College of Economics and Management, The University of Los Banos explained challenges and opportunities faced by Philippines to achieve food security.

Salvador Catelo

Salvador Catelo

Between 2012 and 2010, there has been 5 million population increase or 208,000 newborn each month! In addition, income per capita continues to grow. Rice consumption increases by 1.43 per cent per annum between 2000 and 2009 and 5.08 per cent per year increase in consumption of poultry meat. In addition to increase production demand, there has also been increasing demand for safer, healthier and better quality food. It is expected that there will be a significant change in food baskets.

Food staples sufficiency program 2011-2016 has been to enhance agricultural productivity and global competitiveness. Agriculture and Fisheries Modernization Act of AFMA of 1997 defined broad strategies for and basic principles of rational use of resources, poverty alleviation, and social equity, global competitiveness as well as food security.

Whilst the contribution of agriculture to GDP continues to decline in Philippines, its role in poverty alleviation especially in rural areas is still significant. Productivity, however, has been growing at a slow rate despite various government support schemes although sectoral variations exist.

In general, Philippines is a net agricultural importer. The main issue is whether the world can produce enough food, at reasonable prices and provide the poor access to food, and not destroy the environment in the process?

*The summary was written by Risti Permani (University of Adelaide) and may be subject to her interpretation of the presented materials.

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2013 Food Security Regional Dialogue-Medan: Urban shopping patterns in Indonesia and implications for food security

Indonesia has undergone transformation of diets. The country observes declining importance of rice and other staples and growing importance of processed food products and high-value food products including meat, dairy, eggs, fish, fruits and vegetables. Two main causes may include growing income and urbanisation. Nicholas Minot of IFPRI presented his work on retail transformation to search for determinants of the use of modern retail in Indonesia.

Nicholas Minot

Nicholas Minot

Indonesia also experiences growth in modern food retail sector with 12 per cent annual growth in number of supermarkets and hypermarkets. There is even much faster growth among minimarts.

One effect of transformation on food security is on urban consumers they are provided with greater access to processed food with higher levels of sugar, salt and fat. This may potentially affect diet and obesity. Farmers are also affected. Supermarket chains establish structured supply chains. They require regular supplier (sometimes with contracts) demanding stable and high quality produce. This reflects opportunities as well as challenges for farmers.

An ACIAR-funded project called “Markets for high-value commodities in Indonesia: promoting competitiveness and inclusiveness” was to survey 1180 urban households in three cities, Surabaya, Bogor and Surakarta. The fieldwork was conducted between November 2010 and February 2011. The study finds that per capita expenditure is positively associated with the use of modern outlet but at a decreasing growth rate. The household size, education of head of household, and fridge ownership are positively associated with the use of modern and spending at modern outlet.

The project predicts that even though retail sectors continue to grow, in the next ten years urban food spending at modern retailers will not be more than a quarter of total spending.

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2013 Food Security Regional Dialogue-Medan: Food security situation and policy in Indonesia

Rice in Indonesia has been considered to be not only main staple but also perceived as a cultural symbol of prosperity. Lumbung or rice barn was often used as a symbol of food security achievements. Current government approaches to food self-sufficiency still puts rice self-sufficiency as a key part of its national agenda. Ronnie Natawidjaja and Irlan A. Rum of Center for Agrifood Policy and Agribusiness Studies (CAPAS) – Padjajaran University reported food security situation and policy in Indonesia.

Ronnie Natawidjaja's session was moderated by Randy Stringer (University of Adelaide)

Ronnie Natawidjaja’s session was moderated by Randy Stringer (University of Adelaide)

New Food Law 2012 explicitly states that food security in Indonesia has to be based on domestic food availability and food sovereignty. Food self-sufficiency is defined when 90 per cent of consumption can be met by local production. The logistics agency or BULOG imports 10 per cent to stabilise the rice price. Unfortunately, there is no clear rule about when and how much Indonesia must import rice. As a consequence, policy responses are often coming late and this issue often creates policy debate and uncertainty in markets. Also, the rice domestic market is isolated although rice price has been generally stable (but higher than the international price level). Data from Coordinating Ministry of Economy also suggest that food subsidy for the poor has been increasing since 2007.

According to the Food Law 18/2012, food security is defined as a situation when individuals at all times have physical, social and economic access to sufficient, diversified, safe and nutritious food that meets their dietary needs, food preference and religious requirements for an active and healthy life. However, food security is often misunderstood as securing or protecting our food need and food self-sufficiency is often seen as the only solution.

Data from Statistics Indonesia (BPS) suggest an increasing trend in expenditures on prepared food (as a share of total household expenditure) and decreases in rice expenditures. The trend is related to urbanisation, supermarket transformation and increasing middle income class in Indonesia.

Whilst there has been a decreasing trend in rice import, rice prices continue to increase in the last years. In addition, regional variations exist. Eastern part of Indonesia, in particular Papua, has the biggest challenges to achieve food security due to the lack of infrastructure and low production. Ronnie views that some policy options to achieve food security should include effective trade policy, input and food subsidies, price stabilisation policy, government procurement and reserve stock policy and rice for the poor policy (Raskin).

Two issues that have not been discussed at the session are the following. First, given the increasing role of regional govenrments whether food security is seen as a ‘regional agenda’ where regional (provincial) governments have responsibilities to ensure their regions achieve food security, often be expressed as food self-sufficiency. If it does, regions with low production or with problems accessing food from production areas (due to distance and the lack of infrastructure) will be at risks. Secondly, whilst rice remains the main food commodity there is increasing demand for other food commodities such as animal-based protein sources such as beef and dairy products. One major concern is whether the Indonesian government uses the same quite costly self-sufficiency approach to these commodities. Early observations suggest that the government does.

*This summary was written by Risti Permani (Global Food Studies, University of Adelaide) and may be subject to her personal views.

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