Indonesian farmers: beyond help?

Price hikes are always golden opportunities for producers to exploit. As prices of food products rise due to the increasing popularity of bio-fuel research, countries in Latin America are investing increasing amounts of money in their agriculture; the European Union is now facing raging debates on whether or not to produce genetically modified crops in order to fill the void in the world food supply; and yet, Indonesia, as a country with 44% of its workers in agriculture, doesn’t seem to be doing much.

And yet, a question arises in my head: even if the government were to do anything, would it have much of an impact on the farmers themselves?

Indonesia’s agricultural industry is rife with asymmetric information. Rice distributors, wholesalers, and exporters, usually city folk with access to urban market prices and world market price data, have always seemed to have the upper hand over the rice farmers, rural folk who do not enjoy the same access to information. As a result, farmers suffer from a weaker bargaining position, causing them to undersell their rice almost every time.

With the growing food price hike, pundits are urging the government to make use of this “golden opportunity” to drag Indonesia’s farmers out of poverty, by investing more in the agricultural industry. However, what people fail to see is that the existence of this asymmetric information means that the positive welfare effects of rising rice prices will not be felt by the farmers themselves, but by the wholesalers and middlemen.

How do we fix this information asymmetry? For starters, most Indonesian farmers are too poor to afford the technology to access this information. They simply cannot afford to purchase cellular phones and laptop computers. Add on to that, the fact that infrastructural developments in Indonesia’s rural areas are going at a snail’s pace. Let alone cellular phones and internet access, many farmer villages barely have access to electricity!

Government institutions need to step up and take the responsibility of insuring informational symmetry. If necessary, government officials from the Ministry of Agriculture should give farmers weekly updates on prices, as well as giving them institutionalized protection from distributors and middlemen who seek to exploit.

Whether this would actually happen in the future is quite unlikely. Maybe some government officials have vested interest in this asymmetry (I say maybe, so I don’t get sued for insulting government institutions like the band “Slank” did). Perhaps (just perhaps) they have deals with the rice distributors, or perhaps they double as the middlemen themselves. All I know is, nothing that I’ve written here is news. It’s probably been talked about ad nauseum. But nothing’s been done.

Well, that’s our government. Go figure.