New corporate farming in question

The State-Owned Enterprises Ministry recently announced a new strategy for national food security and food self sufficiency called the Food Production Movement under Corporations System (GPPK).

Farming systems under a new corporation system of food production are likely to adopt the principles of corporate farming. The term is generally used to describe an agricultural operation that involves the production of food and food-related products on an exceptionally large scale.

In practice, the equipment used in the cultivation, nurture, harvest and processing of the food is considered part of farming efforts.

In the Indonesian case, even though the main goal of the program is national food self sufficiency, commonly the concern of the Agriculture Ministry, the proposed program was arranged seperately by the State-Owned Enterprises Ministry, which will request the involvement of related state-owned enterprises under its control.

The proposed program is different from the previously hotly debated food estate program that will be implemented on state-owned lands. The principle of the former is to lease individual farmland and manage those plots under a profitable corporate farming management system.

Targeted areas of corporate farming are fertile irrigated farmland in several provinces such as Aceh, East Java, West Java and South Sulawesi. The State-Owned Enterprises Ministry expects this program to involve 570,000 hectares of farmland for rice cultivation, 2650,000 hectares for corn cultivation and 50,000 hectares for soybeans.

The core state-owned enterprises that will be directly involved in the implementation of the program are PT Pertani, PT Sang Hyang Seri, PT Pupuk Sriwidjaja, Perum Jasa Tirta I dan II, Perum Perhutani, PT Inhutani, PT Perkebunan Nusantara and PT Berdikari. PT Pertani and PT Sang Hyang Seri will be in charge of providing modern seeds, PT Pupuk Sriwijaya will support fertilizers and Perum Jasa Tirta I dan II will manage irrigation systems.

The others state-owned enterprises such as Perum Perhutani, PT Inhutani and PT Perkebunan Nusantara will provide farmland. PT Berdikari will operate corn production and feed production for livestock, while state logistics company Bulog was assigned to manage produced farmed crops.

With the implementation of corporate farming, the government expects to produce an additional 3.7 million tons of dried unhusked rice, or about 5 percent of the national rice production, targeted at 70.6 million tons in 2011.

The program will cost an estimated Rp 4.1 trillion (US$479.7 million) for three and a half years of implementation until the end of 2014.

Many have expressed worries about the implementation of corporate farming for food production and its impact on the stability of household farming incomes. Another main concern is the potential impact on social and cultural relationships, including working relationships, among farming households.

The government claims the program will involve farmers in the acquisition of leased farmland. Farming households will receive appropriate rental fees and will be recruited as farming laborers. They will also receive a share of the surplus.

In the case of farmland owners, the scenario of three potential income sources is possible. However, we should also consider that millions of farming households in the country, including those in targeted areas for corporate farming, are landless people, manage share tenancy systems and work as wage laborers. They have no formal access or ownership rights to farmland.

While the general principle of corporate farming is economy of scale, recruiting all the previously involved farmers into a new system is likely unrealistic.

There will be a labor surplus, therefore there is a big possibility that a large proportion of farmers should move out from direct operations of corporate farming.

The implementation of corporate farming without providing new job alternatives for the labor surplus from farming will be problematic and possibly create new problems and conflicts in the farming community. However, the development of rural industries either related to off-farm or non-farm areas will be crucial and strategic.

From the perspective of the political economy of the peasant, leasing out all of farmlands to other parties, including state agencies, may weaken the sovereignty of farming households.

Transferring the rights to farmland even temporarily means those peasants will lose the right to manage and to have bigger potential benefits from their land.

By renting out farmland, for sure, farming households will be delineated from their very worthy property or production tools as a basis of their life and relationships with community members.

Without strong guarantees of income stability such as in the case of failed harvest due to pests or disasters, farming households may face serious uncertainties in the future.

As peasant communities have been practicing particular socio-economic and cultural relationships that overlap with their daily farming practices for a long time, the implementation of a new culture of corporate farming will interrupt the stability. Immediate changes will create social and cultural shocks and instability.

Among strategies for empowering farming households is giving and facilitating appropriate chances for farming households to create collective decision and actions in expanding their assets and capabilities to participate in, negotiate with, influence, control and hold accountable institutions that affect their lives.

In relation to farming practices and management, collective farming will likely give peasants greater room to improve their welfare without sacrificing their social and cultural life. Collective farming is a type of collective decision to realize independent farm businesses based on community rules, competitiveness, sustainability, effectiveness and efficiency through farm management under principles of economy, collectivity and participatory.

Central and local governments could introduce efficiency and high productivity principles of corporate farming to facilitate viable collective farming using various mechanisms that are related to farming inputs, financing, information and technology, marketing and processing and group management.

The writer is a lecturer at the school of agriculture at Gadjah Mada University in Yogyakarta and earned his doctorate from the University of Tokyo.

Nama Media : JAKARTA POST
Tanggal       : Sabtu, 18 Juni 2011 h. 6
Penulis        : Subejo
TONE           : POSITIVE