LOOKING AT AGRICULTURAL DEVELOPMENT POLICY

Introduction:

Since the early 1970s, the paradigm of agricultural development in United States has

changed drastically in line with the paradigm of capitalistic economic development that relies

on large capital. Within the framework of economic development at that time, the agricultural

development sector was no longer placed as the foundation of the national economy, but was

used as a buffer to succeed industrialization which was used as a locomotive for economic

growth.

As a buffer, the most important thing for the New Order (Orba) government was how

to boost domestic food production without being complicated, fast and politically risky. This

choice was the antithesis of the land reform program of the Old Order (Orla), which was the

main foundation of the Universal Agricultural Development program.

The Orba, which since its birth has adhered to capitalist economic ideology, has

tended to implement agricultural development through a by-pass approach, namely the green

revolution without agrarian reform. The public's expectation of the agricultural sector as the

driving force or foundation for economic recovery is high, especially since the crisis hit

United States. It is feared that this could be counter-productive if the principles and strategies

of development policy are not effectively disseminated to the public.

This paradigm shift has created a missing link in the implementation of agricultural

development from one period to another. Agriculture is no longer viewed in its holistic

aspect, but is reduced to a matter of production, technology and prices. Therefore, increasing

the role of the agricultural sector as an alternative source of income for farmers is an option

that is still relevant and very urgent to be renewed.

Agricultural Development Policy

Basically, policy formulation is based on various considerations including political,

socio-economic, institutional, environmental, resource, feasibility, in addition to technical

factors. As we all understand, agricultural development has a very strategic meaning, not

only for developing countries, but also for developed countries where agriculture continues to

receive very serious attention and protection.

Formulating agricultural policy is not easy. Positioned at the crossroads of many

interests, both economic and political, agricultural policy is often difficult to escape from

various controversies. The strong political color in various policies seems to make it difficult

to improve this potential sector of the United Statesn economy.

The focus of economic development in United States has long emphasized industry,

although it is hoped that there will be a balance of industrial and agricultural growth, it turns

out that the world of agriculture, which is more prevalent in rural areas and is the livelihood

of more than 75% of United States's population, has not experienced pleasant developments.

This is because all state policies and subsidies have gone to industry. Farmers have difficulty

in developing access to natural resources, namely land and water, production facilities and

credit. Entrepreneurs and the business sector are the ones who benefit from agricultural

development, as they control the access.

According to Bustanul (Kompas, 2004), the stagnation of the agricultural sector is

rooted in the government's overly favoring the industrial sector since the mid-1980s.

Following a period of high growth in the agricultural sector a decade earlier, the government

seemed to assume that agricultural development would take care of itself. This assumption

led the government to neglect agriculture in its development strategy. This was inseparable

from the influence of the development paradigm at the time, which emphasized

industrialization. The government devoted its attention to the industrial sector, which was

then translated into various systematic protection policies. Whether consciously or not, this

massive protection has undermined the agricultural base at the farm level.

In addition, agricultural policies since the 1980s have also tended to be distortive. The

excuse of shortening the trade chain was used to create new marketing institutions. However,

instead of improving efficiency, these efforts have damaged agricultural management

institutions. This institutional weakness is exacerbated by weak law enforcement. Without

law enforcement, rent-seekers, both businessmen and bureaucrats, can take advantage of

institutional weaknesses. Short trade systems and centralized authority in the bureaucracy

further open up opportunities for rent-seeking.

According to Tito Pranolo (2000), the national policy of agricultural development in a

country is also certainly not free from the influence of external factors, especially in the era

of globalization characterized by economic openness and freer trade, it will be difficult to

find a national policy of agricultural development that is sterile from the influence of external

factors. External factors that influence the national policy of agricultural development in

United States include; (i) international agreements, such as the WTO, APEC and AFTA; (ii)

agricultural commodity trade policies in United States's trading partner countries; (iii)

international institutions that provide assistance to United States, especially in times of crisis.

In a normal situation where there is no crisis, the first 2 (two) factors are more influential on

agricultural development policies, but in a crisis situation such as the current one, the

influence of international institutions such as the IMF and World Bank will be greater than

international agreements such as the WTO, APEC and AFTA, in coloring national food

policies.

Components of the Agricultural Policy Framework

There are four main components of the agricultural policy framework: objectives,

constraints, policies, and strategies.

Objectives are the goals that are expected to be achieved by a policy made by policy

makers. Constraints are circumstances that make what can be achieved limited. Policies

consist of various instruments that the government can use to change agricultural outcomes.

An effective policy will change the behavior of producers, traders and consumers and create

new outcomes for the economy. Strategies are a set of policy instruments used by the

government to achieve the stated objectives. Each strategy is implemented through the

application of various well-coordinated policies. Policymakers' strategies consist of a set of

policies intended to improve economic outcomes (which have been set by policymakers).

These policies in their implementation will face various economic constraints caused

by aspects of supply, demand, and world prices that can increase or hinder the achievement

of predetermined goals. Assessing the impact of policies on the achievement of goals allows

for adjustments to the strategies that have been set if necessary. In short, the government

makes an agricultural development strategy by determining a set of policies to achieve

predetermined goals, taking into account various economic constraints on the agricultural

sector.

Basic objectives of government policy

In essence, government policy has three main objectives: efficiency, equity, and

security/stability.

 Efficiency is achieved when the allocation of scarce economic resources is able to

generate maximum revenue, as well as the allocation of goods and services that produce

the highest level of consumer satisfaction.

 Equity is defined as the distribution of income among the groups of people or regions

targeted by policymakers. Usually, better equity will be achieved through better or more

equitable income distribution. However, since policy is a government activity, it is the

policy makers (indirectly also voters in a democratic system) who determine the definition

of equity. For example, one of the steps according to Awang Faroek Ishak2 to achieve the

goal of equity in East Kalimantan is through the revitalization of agriculture in a broad

sense, namely by making policies in the agribusiness sector in the field of oil palm

plantations. The purpose of this policy is to increase employment opportunities and

community income through plantation development.

 (Food) security will increase if political and economic stability allows producers and

consumers to minimize adjustment costs. Food security is defined as the availability of

food at a stable and affordable price level. There are three components of food security

policy:

 Food Availability: United States generally has no problem with food availability.

National rice production according to BPS in 2008 was around 60,251,073 tons and

consumption is slightly above this production level. For Kalimantan, the province of

East Kalimantan, which ranks in the bottom 3 nationally, according to the results of

the analysis of the study conducted by PKP2A III LAN, is in the bottom 3

Samarinda (2008), was found to be in a moderately food-insecure position, judging

from the level of food consumption and availability, which tended to be balanced

(close to 1.0 per capita).

Some key policies that have an influence on national food availability include:

Rice import ban

Efforts by the Ministry of Agriculture/Department of Agriculture to boost food

production

BULOG arrangements regarding rice stock availability

 Food Affordability: The most important element of a food security policy is

ensuring that the poor have access to adequate food sources. The number of poor

people is a reflection of the population that does not have productive access to

adequate livelihoods. The greater the number of poor people, the lower their access

to food affordability Food Insecurity Map of East Kalimantan Province (2004).

Based on data from BPS United States in the last four years, there is a tendency for

the number of poor people (people below the poverty line) in United States to

decrease.

The way to achieve this goal is to expand economic growth strategies, especially

growth that benefits the poor. A number of important policies that affect food

affordability include:

Raskin program or direct assistance program to the poor

BULOG's efforts to maintain the ceiling price of rice

Trade barriers that result in domestic food prices being higher than world prices.

Meanwhile, in December 2008, the government planned to increase agricultural

subsidies in the 2009 State Budget Plan (RAPBN). This increase is a government

priority to achieve food affordability for the poor.

 Food Quality and Nutrition: part of the policy to ensure food availability is the

quality of the food itself. This means that the population can consume sufficient

micro-nutrients (nutrients and vitamins) to live a healthy life. Food consumption in

each household expenditure group has increased to better quality foods. However, as

noted above, the state of food nutrition has not shown signs of improvement since

the end of the crisis. A number of important policies that affect food quality and

nutrition include:

Efforts to protect a number of important food commodities

Introducing supplementary food programs after the crisis

Dissemination and marketing of nutrition information

Within this framework, every objective that government interventions aim to achieve

will be linked to at least one of the three basic objectives mentioned above: efficiency, equity

and resilience. It is not uncommon for these policy objectives to be achieved only after a

complex phase of trade-offs. If the goal of stability is to be achieved, the goal of efficiency

must be sacrificed. Similarly, the goal of efficiency (growth) is often trade-offs with the goal

of income equality.

Constraints that Limit Agricultural Policy

Since United States embraced free trade, marked by its entry into the World Trade

Organization (WTO) in 1995, agricultural issues have become increasingly complex as a

consequence of the Agreement on Agriculture (AoA). The problems are no longer just in the

rice fields, gardens and fields, but are also related to other sectors, such as trade and fiscal.

Problems that arise are no longer just about pests, diseases, fertilizers, and climate, but also

about efficiency, imported products, surplus production, smuggling, and others.

The productivity of agricultural products has declined in recent years, due to the many

problems that surround it. There are three main constraints that limit the movement of a

policy, namely:

 Supply and production

Supply and production are constrained by the availability of resources (land, labor,

and capital), technology, input prices, and management capabilities. These parameters are

components of the production function and thus limit the economy's ability to produce

agricultural commodities.

Statistically, it can be seen that agricultural land is shrinking from year to year due to

the conversion of productive land for the development of industrial and residential sites. The

rapid increase in population is one of the factors accelerating the wider use of agricultural

land for settlements. Smallholder farmers who were displaced from their cultivated land

amounted to 24,257 households in 2007 and increased to 31,267 households in 2008.

Landless farmers (farm laborers) and smallholders (farmers with less than 0.5 hectares of

land) are increasing at a rate of 2.2 percent per year (BPS, 2008).

The National Agrarian Reform Program (PPAN), which is a program to redistribute

land to the people launched by the SBY-JK government3 since 2006, has never been realized.

This process of massive reduction in agricultural land has resulted in a decline in national

rice production. This dilemma is further exacerbated by the process of decreasing soil fertility

levels as a result of excessive use of fertilizers and pesticides.

In 2008 the government plans to distribute 332,930 hectares of land under the land

reform program in all provinces, minus DKI Jakarta. The funds prepared for this program

amounted to Rp137 billion. The area of land to be distributed in each province varies greatly,

ranging from 2000 to 15,000 hectares. The largest in North Sumatra is 57,674 hectares

(kaltim Post Online, 2009). However, until now this plan has not been heard from again.

The impact of this agricultural imbalance is the movement of labor from agriculture to

industry. The number of people working in the agricultural sector decreased by 2.18 million

from 42.32 million in February 2006 to 40.14 million in August 2006 in just one semester.

On the other hand, during the period February - August 2006, there was an increase in the

working population in a number of other sectors, including: Services added 0.79 million,

Trade 0.65 million, Construction 0.33 million, and Industry 0.31 million. These additions

were partly due to the spillover from the reduction in the population working in the

agricultural sector. On the other hand, compared to February 2008, the agricultural sector

experienced a decline in employment of 1.36 million people, although agricultural

employment remained the largest at 41.33 million people (40.3%)4 . The movement of

farmers to industry has changed the pattern of their lives.

In East Kalimantan, the number of people working in the agricultural sector continued

to increase from around 370,000 in August 2007 to around 425,000 in February 2008, an

increase of around 55,000. The harvest season is the cause of the increase in workers in this

sector.

 Demand and consumption

Demand and consumption are constrained by population, income, tastes, and output

prices. These parameters are components of the demand function that limit the economy's

ability to consume agricultural products.

Population growth is a very dominant factor in changes in demand and supply. A

growing population will lead to increased demand and consumption of certain commodities.

For example, the demand for rice continues to increase along with the increase in population.

If people's tastes lead to a desire to buy a commodity at a certain price level, there will

be a shift in demand as well as a shift in supply. For example, people are currently compelled

to consume organic rice, resulting in high demand. This symptom results in the demand for

rice, which of course, an increase in demand will result in an increase in supply.

If people's income increases, then there will certainly be changes in the pattern of

demand in the market, as well as changes in supply for certain commodities. For example, an

increase in the salaries of civil servants and private employees will inevitably increase the

income of the civil servants and employees concerned. This increase results in changes in

both demand and consumption of certain commodities at certain price levels.

 Price

The price of traded commodities, both inputs and outputs, determines and limit opportunities

to import in order to increase domestic supply, and export in order to expand markets for

domestic products.

The basic grain price concept, which could no longer be maintained because it

required tools, both financial support and other policies, finally had to surrender to the world

trade system. At the very least, a new form of price protection must be sought that does not

burden the budget.

These three economic parameters determine the market for an agricultural commodity

and are major forces in influencing price formation and resource allocation. These economic

constraints can lead to trade-offs in policy making.

In addition to the constraints from the economic side, Iskandar Andi Nuhung (2003)

details the problems of agricultural development as follows:

 Technology Issues.

Technology in agriculture has not been well developed, resulting in very low agricultural

productivity. It is estimated that the loss of income from low agricultural productivity reaches

Rp 200 trillion/year, not including fisheries and forestry.

 Institutional Issues

Supporting institutions for agricultural development, such as market institutions, financial

institutions, and commodity institutions, have not been well accessed by farmers.

Comprehensively, institutional weak points start from the provision of fertilizers, grain

purchase and the application of government purchase prices (HPP), rice distribution, and

agribusiness management.

 Marketing Issues

At the grassroots level, marketing is still very difficult for farmers, so they are highly

dependent on middlemen who will of course buy agricultural products at low prices. The

difficulty in marketing is due to the lack of adequate road infrastructure to support the

marketing journey of products from producers to consumers, resulting in farmers having to

incur high transportation costs to market their products.

In the export market, there is a trend that the trade surplus in agricultural products continues

to fall, both due to the influence of export/import volumes and due to the influence of prices.

 Information Problem

For farmers, weather and climate information is very helpful as crops are very sensitive to

changes in weather and climate. In Thailand, as soon as there is information about this year's

drought, the local government has asked farmers not to plant rice during that season. In Italy,

daily weather information is so fast that it is even sent via radio so that farmers can anticipate

damage to crops. For East Kalimantan, which has a tropical humid climate, with a not-so-

distinct difference between the dry season and the rainy season, it is quite difficult for the

local government, especially the Agriculture Office, to determine the start of the planting

season.

There are two most important things besides the classic human error (KKN), namely:

 There is no sustainability of each program that has been prepared in every change of

decision and policy holders. Always changing activities following the change of

leadership.

 In the structure of the department or agency that takes care of agriculture, it is formed

based on the number of people who want to be appointed, and not based on work

capacity. so that in every policy there is always overlap, which in the end the decisions

found are always searching not conical. I think the cause of failure is human resources,

both morale and productivity. These two components have a strong influence on the

development of the agricultural world.

Policies Affecting the Agricultural Sector.

The agricultural sector clearly cannot stand on its own, especially if it must be used as

a burden on the political economy of non-agricultural sectors such as manufacturing, service

industries, and so on, which have grown and developed in a very false and distortive context.

There must be concrete efforts to restore agricultural policies in the national interest. Policies

that can affect the agricultural sector can be classified into three categories as follows:

Agricultural Price Policy

Agricultural commodity price policies are commodity-specific. Each policy is applied

to one commodity (for example, rice). Price policies can also affect agricultural inputs. Each

agricultural price policy instrument will lead to transfers either from producers to consumers

of the commodity, the government budget, or vice versa. Some price policies affect only two

of these three groups, while other instruments affect all three groups. In general, at least one

group suffers losses or is victimized, and at least one other group benefits from the policy.

There are three common types of policy instruments: taxes and subsidies, international trade

barriers, and direct controls.

 Taxes and subsidies on agricultural commodities result in transfers between the state

(public) budget with producers and consumers. In the case of taxes, the resource

transfer flows to the government while in the case of subsidies the resource transfer

comes from the government. For example, fertilizer subsidy is a transfer from the

government budget to fertilizer. The government will prepare fertilizer subsidies for

farmers amounting to Rp16 trillion-Rp17 trillion for 20095 (Amirul Hasan, 2009).

 International trade barriers are taxes or quotas that restrict imports or exports. By

imposing trade barriers, this price policy instrument changes the domestic price level.

Import barriers can raise the price of domestic agricultural commodities. For example,

the government set an ad valorem tariff on sugar imports of 25% to protect the

domestic economy local sugar products in the country6 , in addition, SNI can also be

imposed as an import barrier. While export barriers lower domestic prices to be lower

than world prices. For example, the reduction of CPO export tax to zero percent aims

to reduce export barriers, previously the CPO export tax was 7.5%7 .

Macroeconomic Policies Affecting Agriculture.

Macroeconomic policies cover the entire region of a country, so they will affect all

commodities. Producers and consumers of agricultural commodities are greatly affected by

these policies even though they are often not involved in the national policy-making process.

There are three categories of macroeconomic policies that affect the agricultural sector,

namely:

 Fiscal and monetary policy are at the core of macroeconomic policy, as together they

influence the level of economic activity and the rate of inflation in the national

economy, as measured by increases in the consumer price index and producer price

index. Monetary policy is defined as government control over the supply of money and

hence aggregate demand. If the supply of money increases at a higher rate than the

growth of aggregate goods and services, inflationary pressures will arise. Examples of

government policies in the monetary sector that are closely related to efforts to develop

small businesses, especially those related to the development of agricultural businesses

include sustainable credit policies that are appropriate and suitable for the needs of the

small business community. Fiscal policy deals with the balance between government

tax policies that raise government revenue and public spending policies that use that

revenue. If government spending is greater than its revenue, the government runs a

fiscal deficit. This situation will cause inflation if the deficit is closed by increasing the

money supply.

 Exchange rate policy directly affects output prices and costs.

agricultural production. The exchange rate is the conversion rate of a domestic currency

against a foreign currency. Most agricultural commodities are traded internationally

and most countries import or export a portion of their agricultural commodity needs or

products. For internationally traded products, the world price will equal the domestic

price if there are no trade barriers. By itself, the exchange rate directly affects the price

of agricultural products because the domestic price (valued in domestic currency) of the

traded product is equal to the world price (valued in foreign currency) multiplied by the

exchange rate (the ratio of domestic currency to foreign currency).

 Domestic factor price policies directly affect agricultural production costs. The main

domestic factors consist of land, labor and capital. Land and labor costs usually account

for the largest portion of agricultural production costs in developing countries.

Governments often implement macroeconomic policies that affect the rental value of

land, labor wages, or the level of capital interest rate that applies across the country.

Other domestic factor policies, such as minimum wages or maximum interest rates,

affect one sector more than another. Some countries implement special policies to

control land use or control the exploitation of natural resources, such as water and

minerals. Such macro policies may also affect the cost of agricultural production.

Public Investment Policies Affecting Agriculture

Public investment policy in the form of capital goods on infrastructure, human

resources, and research and technology development can be described as follows:

 Public investment in the form of capital, namely by allocating investment (capital)

expenditure sourced from the state budget (APBN). One of the problems faced by

United Statesn farmers and fishermen is the difficulty and shortage of working

capital. To overcome this problem, the government provides interest-free working

capital credit from the state budget amounting to RP.

3 trillion to farmers and fishermen through BRI, not through the Ministry of

Cooperatives. Farmers and fishermen do credit contracts individually, not per farmer

group or fishermen group. So it is clear to each individual farmer and fisherman how

much credit they take, and it is clear to them that the loan must be returned at harvest

time8 .

 Public investments in infrastructure are essential capital goods, such as roads, ports,

and irrigation networks to increase the income of agricultural producers or lower

production costs. Such capital goods are known as "public goods", the costs of which

are sourced from the government budget. Investments in infrastructure are region-

specific and the benefits will mostly accrue to producers and consumers in that region.

Public investment policy is complicated because the infrastructure must be maintained

and renewed over time. For example, in 2009 the government has inaugurated the

Suramadu Bridge that connects the city of Surabaya with Madura Island with the aim

that the economy on Madura Island is not left far behind with the rapid economy of

Surabaya. In the short term, the agriculture and livestock sector, which is the primary

sector, will develop because Madura's economic activities still rely on the primary

agricultural sector including food crops, livestock, fisheries, plantations, and forestry9

 Public investment in human capital includes various types of public expenditure to

improve the level of expertise or skills as well as the health conditions of producers

and consumers. Investments in agricultural schools (SPMA), training and extension

centers (BPTP, BLPP), Agricultural Field School Internships (SL) are examples of

public investments that can increase the capacity of human resources human resources

in the agricultural sector. Such investments are crucial for long-term development, but

the results will only be visible over a long period of time.

Public investment in research and technology development is another example of a public

good that directly benefits agricultural producers and consumers. Countries that experience

high agricultural growth usually invest heavily in agricultural research to adopt technologies

produced by international research institutions, such as the use of improved seeds for both

food and perennial crops. These improved seeds often require the use of new technologies,

better water management, and the use of more inputs. For some commodities, technological

breakthroughs financed by public funds are usually more about processing technology than

farming or cultivation technology.

Strategies for Agricultural Policy Makers

In order to facilitate the implementation of agricultural development, synchronization

between subsectors and across sectors, as well as coordination between the center and the

regions, an integrated management is developed that includes aspects of planning,

implementation, control, monitoring, evaluation, reporting and supervision in accordance

with the principles of good governance.

The issue of agriculture is also not only related to consumption and production, but

also to the comprehensive carrying capacity of the agricultural sector. There are four aspects

according to Syaiful Bahari10 (2004) that are prerequisites for implementing agricultural

development, namely:

Access to land ownership

When reflecting on the success stories of agricultural development in Japan, Thailand,

South Korea, Taiwan, China, and Vietnam, all of them are inseparable and begin with an

overhaul and rearrangement of the unequal land tenure structure through agrarian reform

programs. When the industry has produced a surplus, some of the profits are returned to the

agricultural sector. This is not the case in United States. In the case of United States, after

agriculture is squeezed out, it is then abandoned. Industrial surpluses are instead used for

luxury consumption, property development, and some are taken abroad (capital outflow).

Meanwhile, agriculture is only placed as a subordinate to the industrial sector so that there is

never a socio-economic transformation in the countryside or at the national level.

Land reform itself includes land redistribution to small farmers and farm workers,

production structuring through the development of agricultural infrastructure, capital

facilities and appropriate technology, strengthening farmers' institutions/organizations in the

form of cooperatives or farmers' associations, and protection of agricultural products.

The real purpose of land reform to foster justice in the structure of land tenure and

ownership is still far from expectations. Even though our constitution mandates that the

recipients of land redistribution in land reform are poor farmers, tenants, farm laborers and

other subjects (UUPA 1960).11

The government must understand that the land reform program is part of a grand

strategy for economic development. This program actually aims to overhaul the economic

system, from a system that relies on agricultural companies, to a system that places farmers

as the pillars of the national economy supported by cooperatives.

Perhaps our weakness in addition to land reform that is less favorable to farmers is the

policy of land consolidation and land use that is less organized. Developed agricultural

countries have long been consolidating land to support the sustainability of their agricultural

development and improve farmers' living standards. On the other hand, the use of land for

agriculture is strictly for agriculture. Thus, agricultural land as an asset for agricultural

development is maintained.

Agrarian resources are an important factor in agricultural development. Therefore, it

is necessary to guarantee legal certainty over the control, ownership, utilization and

management of agrarian resources for the people. To realize this, a serious "political

commitment" is needed from all parties to provide the basis and direction of agrarian reform.

One of the political commitments needed is to review various laws and regulations related to

agrarian affairs in order to synchronize policies between sectors for the realization of more

equitable agrarian laws and regulations. So it can be said that land reform is by far the best

way for agrarian countries like United States to carry out socio-economic transformation and

development. We should not build agriculture like building a 'house on the wind', without

providing the foundation first.

East Kalimantan with an area of 24,523,780 ha has a lot of natural potential including

in the form of mining materials to be the target of mining entrepreneurs. One type of mine

that exists is coal. During this time, mining locations are usually far inland, but currently

mining locations have penetrated into rural and even urban areas. For example, coal mining

activities in Kutai Kartanegara are getting out of control. No less than 1,000 hectares of

agricultural land has been displaced for the benefit of this mine (Sinar Tani Online, 2009).

The rate of conversion of agricultural land to mining land in rural areas is difficult to prevent

because farmers have no other choice because some locations around agricultural land have

been stripped for mining activities, so they have no choice but to release their land, which is

also purchased at a high enough price. At least

5,000 ha of agricultural land has been reduced in the last five years due to coal mining

activities and sadly this reduction has occurred in a number of potential areas.

The East Kalimantan Provincial Government has finally made a policy towards coal

mining companies and other types of mining that use agricultural land, which is required to

replace twice the area of converted land. The policy was made to avoid the reduction of

agricultural land, along with the increasingly widespread mining business activities. So far,

the conversion of agricultural land into mining land has been carried out only for land

compensation to farmers, which has an unfavorable impact on the economic growth of the

community. For example, a number of farmers who selling his land to the mining company

directly used the proceeds for business activities but it was unsuccessful. Because they have

no other skills except farming, these farmers end up becoming farm laborers with low

incomes. Therefore, in order to support the above policy, regulatory support is needed and for

this reason a number of districts/cities are encouraged to make rules in the form of Regional

Regulations (Perda) or other binding rules.

Access to inputs and production processes

Efforts to improve access to agricultural production inputs require concrete actions

from local governments, including: (l) the preparation of production input needs per year in

each region so that it will facilitate the provision of these inputs, (2) the creation of a

distribution flow for each type of production input needed and at the same time containing

the agency or institution responsible for each stage of provision, (3) the development of

support facilities and infrastructure to support the distribution of production inputs, such as

transportation and warehousing facilities and (4) the provision of incentives to farmers who

apply the use of production inputs as recommended.

Access to market

Smallholders - farmers with small plots of land, landless tenant farmers and casual farm

laborers who are only looking for a quick wage - are entangled in multiple shackles: land that

does not meet economies of scale, underdeveloped skills and technology, no access to

sources of finance, an inadequate physical infrastructure environment, and no access to

markets.

From the list of constraints above, the most difficult issue to deal with is the lack of

market access. Either because of the bonded chain or because there are no other marketing

opportunities available. The reality faced by farmers reads: price is fate. Improvements in

technology and financing facilities have done little to change this harsh reality.

Therefore, improving the fate of farmers is determined by whether or not we are able to

build a system that provides more direct market access to farmers, either individually or

through farmer groups. One of the credos of modern agriculture reads "put your hands on the

plough but put your eyes on the market" In the context of the warehouse receipt system, there

are two prerequisites needed to break the isolation of farmers from the market: First,

warehouse receipts issued must be tradable instruments, and second, the provision of a liquid

and transparent secondary market for warehouse receipts. Only then will efforts to improve

technology, improve the quality of crops and form farmer groups to achieve minimal

economies of scale have the opportunity to improve the bargaining position of farmers, which

in turn allows for improvements in the quality of life of smallholders. Efforts to improve the

fate of farmers cannot be done piecemeal. We must open doors that allow them to obtain the

cheapest sources of financing. And equally important, the doors that provide access to

markets that are willing to pay a fair price for the fruits of their labor.

Access to freedom

The strategy of revitalizing agriculture has long been launched by President Susilo

Bambang Yudhoyono at least more than 4 years ago. However, according to Bustanul Arifin

(2005), the comprehensive policy strategy that is still abstract still needs to be translated into

operational policy steps that are more 'ground'.

First, the constraint at the strategic level is that the agricultural revitalization

document is not strengthened by binding legislation, either in the form of government

regulations (PP) or presidential regulations (Perpres). In fact, in essence, some of the

substance in the agricultural revitalization document is not explicitly included in the Political

Document on the 2004-2009 Medium-Term Development Plan (RPJM) which has been

contained in Presidential Regulation No. 7/2005.

The solutions that can be offered for strategic-level constraints are somewhat open-

ended. The government needs to immediately formulate some more thematic policies, as

listed in the document and adjusted to the priorities, urgency, or calendar of activities at the

national level and global level.

There was an idea to finalize the agricultural financing policy during the Microfinance

Year 2005 so that it could be more operational. The land management policy needs to be

finalized, at least to provide certainty over the pros and cons of Presidential Regulation No.

36/2005, which has become increasingly unclear to date.

Agricultural infrastructure policies concerning the rehabilitation of agricultural

irrigation, village roads, farm roads, and so on. Food security policies, international trade

policies need to be prioritized.

Agricultural development strategies must be elaborated in the form of programs that

are concrete, realiable, workable and implemented gradually and sustainably. For example,

according to Hanung (2003), an agricultural development program may include:

 production improvement program

 HR development program

 Facilities and Infrastructure Development Program

 Business Development Program

 Agricultural technology and engineering development program

 Program for structuring agricultural assets and institutions

 Program to increase added value, competitiveness, distribution and marketing

 Agriculture Development Program for Remote, Border, KAPET and KTI Areas