19 September 2010

Poverty-stricken fields ripe for reforms

Jakarta Globe - September 16, 2010

Teddy Lesmana -- Poverty remains a serious problem in Indonesia, despite the country's improved economic performance and robust economic growth in recent years.

The Central Statistics Agency (BPS) recently showed that 13 percent of the population lives below the poverty line, still far behind the UN Millennium Development Goal to lower the number to 8 percent by 2015.

Over half of our nation's poor are small farmers (those who own less than 0.5 hectares of land) and farm laborers in rural areas.

And their numbers are growing, even with economic growth – agricultural census data in 2003 showed the number of small farmers to be increasing by an average of 2.6 percent per year.

The same census also showed farming households increasing from 20.8 million to 25.4 million in a single decade.

Speeding up the rate of poverty reduction calls for more rural development, especially in matters of land reform.

The Indonesian government has made efforts to alleviate poverty through anti-poverty programs and credit schemes aimed at improving the lives of farmers and their families. But land access and land ownership problems remain.

This issue is particularly significant when we consider that many farmers today are losing what little land they have. 2003 data showed the land owned by the average small farmer had shrunk in total area from 0.26 hectares to 0.17 hectares in 10 years.

The gap in ownership is also wide, with 11 percent of households controlling more than 45 percent of Indonesia's total land area. The National Land Agency, said in 2009 that there were about 7.3 million hectares of unproductive land as a result of hoarding.

Many factors contribute to fragmentation and decreasing access to land ownership, including cultural pressures, economic pressures, land conversion and massive land ownership by corporations.

The combined result is that many citizens today are denied the opportunity to own land, and that many of the ones that do are seeing the size of their farmland decline.

To overcome fundamental problems associated with poverty reduction efforts, it is worthwhile to consider China's success in reducing poverty through land reform.

After the failure of collective farming, which decreased the country's agricultural production, China adopted the Household Responsibility System in 1970, providing each farming household with "use rights" to farm land.

The policy sparked rural development, as farmers were given the chance to produce surpluses. It played an important role in reducing the number of Chinese people living below the poverty line from 84 percent in 1981 to 16 percent in 2005.

There are two key factors in the policy's success. First, the state introduced a program that provided broad-based access to land for all farming households.

As a result, the percentage of farmers with no land dropped to near zero. Second, the government guaranteed land ownership rights for farmers.

With gradual changes to the legal system, Chinese farmers today can have land, sell their agricultural products freely, and transfer land ownership rights to their children.

The implementation of land reform in China was not always smooth, but several key factors contributed to its eventual success.

A political consensus supported by research designed the land-tenure systems and there was an emphasis on grassroots implementation. Pilot projects helped to work out agreements on land ownership rights.

Learning from China's experience, Indonesia can alleviate poverty through similarly comprehensive land reform programs.

To do so, first there must be advocacy for poor farmers to form independent organizations, based purely on their aspirations and needs.

Second, the government should have the political commitment to advance the interests of poor farmers.

Third, there should be state support in the form of public investment, financial assistance, and technical support.

And finally, there should be a genuinely pro-poor, development-oriented growth strategy. The state should aspire for economic growth that does not leave poor people behind.

Ultimately, the country must improve land access and strengthen rural development efforts. This cannot be postponed any longer, considering that 60 percent of the nation's poor live in rural areas. If Indonesia wants to reduce the poverty rate, it must act now.

One hopes that future measures to alleviate poverty will be less about charity and more about giving the poor what they truly need: an opportunity to make their own way, on their own land.

[Teddy Lesmana is a researcher at the Center for Economic Studies at the Indonesian Institute of Sciences (LIPI) and a USAID Indonesia Forecast Scholar at the University of Maryland.]

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