Food supply and economic development in Indonesia, problems and prospects

Abstract

The general purpose of this study is to evaluate the role of agriculture in Indonesia in supplying food to the country's economy. Analysis of the general inter-relationship between the agricultural and non-agricultural sectors of a developing, densely-populated economy, and the sectorial interdependence viewed in relation to the supply and demand for food during the development process, provides a general framework of reference for the analysis of the food problems in Indonesia. The data originate from two basic sources: (1) Primary data from the various institutions involved in and responsible for the food economy in Indonesia. Much of these data were collected in Indonesia, and in part they were an outgrowth of the writer's work there. (2) Secondary data from published sources. Use of the food balance sheet shows that the common pattern of the Indonesian diet is characterized by a high starchy staple ratio and staples, rice is the most important. Through a comparison of these results with the nutritional standards calculated on the basis of methods suggested by the Food and Agriculture Organization of the United Nations, the nutritional status of the Indonesian people is evaluated. By both qualitative and quantitative standards, the average diet of the Indonesian people is poor. Demand for food in Indonesia will increase significantly in the near future, primarily due to the population and income effect. From use of Okhawa's demand equation, major shifts are expected toward the consumption of more rice and more protective foods. Any rise in per capita income will bring strong pressure to increase the proportion of starches that are supplied by rice. To meet this growing demand, the need is to increase domestic production rather than commercial imports. Trends in the production of the six major farm food crops have been constructed and analyzed for the period of 1950 - 1965. With the exception of groundnuts, per capita production of these crops kept up with population growth. However, for the main food item, rice, the rate of increase of per capita production was lower than that of the per capita consumption. This gap resulted in the importation of huge amounts of rice. Analysis of the conditions of food production leads to the conclusion, that three factors are mainly responsible for the production gap: First, the prevalence of disguised unemployment in the food industry; second, the lack of adequate credit facilities and capital in the rural areas; third, the lack of an efficient marketing organization. Because of the inadequacies in these three important aspects of the institutional framework, the process of adapting new technologies and inputs to the production of food is slow. Speed is crucial. In view of the population problem, the longer the present trends are permitted to continue, the more difficult it will be to close the production gap. Analysis of these three factors leads to the following conclusions: (1) Industrialization is a necessary condition for expanding food production and over-all economic development, in order to absorb the surplus agricultural labor force. (2) Marketing reform is needed to improve the institutional framework in the producing areas, in order to maximize the rate of growth of food production. This reform includes providing adequate and efficient credit facilities, promoting competition in the food market at the local level, and improving the infrastructure.