WORKING PAPER 99.16

NOT EVERY CLOUD HAS A SILVER LINING: CROP FARMERS IN TRANSMIGRATION AREAS

Patrice Levang, Baslian K. Yoza, Diana Etty and Haryati

Etty

March 1999

A joint research project on

Linkages Between Indonesia’s Agricultural Production, Trade and the Environment funded by the Australian Centre for International Agricultural Research,

between

CASER (Bogor) • CIES (Adelaide) • CSIS (Jakarta) • RSPAS (ANU, Canberra)

Lead institution: CIES • University of Adelaide • Adelaide • SA 5005 • Australia Telephone (61 8) 8303 4712 • Facsimile (61 8) 8223 1460 • email: cies@economics.adelaide.edu.au

Homepage: http://www.adelaide.edu.au/cies/

CASER/CSIS/CIES/ANU joint research project on

Policy analysis of linkages

between Indonesia's agricultural production, trade and

environment

Rapid economic growth in Indonesia has been accompanied by significant structural changes, including for its agricultural sector and its unique natural environment. Recently questions have been raised about the impact of Indonesia’s agricultural, industrial, trade and environmental policies on sustainable rural development. The nature of interactions between the economic activities of different sectors and the environment are such that an intersectoral, system-wide perspective is essential for assessing them. An international perspective also is needed to assess the impact on Indonesia of major shocks abroad, such as the implementation of the Uruguay Round agreements, APEC initiatives, or reforms in former centrally planned economies. There is increasing pressure on supporters of liberal trade to demonstrate that trade reforms at home or abroad affecting countries such as Indonesia will not add to global environmental problems (e.g., deforestation, reduced biodiversity). Again, this requires system-wide quantitative models of the economy and ecology, because typically there are both positive and negative effects at work, so the sign of the net effects ultimately has to be determined empirically.

To begin to address these issues, the Australian Centre for International Agricultural Research (ACIAR) has generously provided funds for a collaborative 3-year project (to mid-1999) involving the University of Adelaide’s Centre for International Economic Studies (CIES) as the lead institution, Bogor’s Centre for Agro-Socioeconomic Research (CASER) which is affiliated with the Ministry of Agriculture, Jakarta’s independent Centre for Strategic and International Studies (CSIS), and the Economics Division of the Research School of Pacific and Asian Studies (RSPAS) at the Australian National University in Canberra. Being based on Indonesia with its rich diversity of environmental resources (and on which there are relatively good data) and its rapid economic growth, the project could also serve as a prototype for similar studies of other developing countries in Southeast Asia and elsewhere.

The key objective of the project is to assess the production, consumption, trade, income distributional, regional, environmental, and welfare effects of structural and policy changes at home and abroad particularly as they will or could affect Indonesia’s agricultural sector over the next 5-10 years. Among other things, the analysis will focus both on the effects of economic changes on the environment, and on the impacts on Indonesia’s agricultural production and trade of resource and environmental policy changes. The implications of regional and multilateral trade liberalization initiatives and Indonesia’s ongoing unilateral trade reforms will be analysed, along with other potential domestic policy changes and significant external shocks such as the entry of China and Taiwan into the World Trade Organization. The analysis will draw on and adapt computable general equilibrium (CGE) models such as the national INDOGEM Model (built as part of an earlier ACIAR project) and the global GTAP Model.

The project is being undertaken in close collaboration with the Indonesian Ministry of Agriculture and ministries involved in trade, planning, and the environment. A Research Advisory Committee has been established to encourage close collaboration of representatives from those and other ministries.

ACIAR INDONESIA RESEARCH PROJECT

WORKING PAPER 99.16

NOT EVERY CLOUD HAS A SILVER LINING: CROP FARMERS IN TRANSMIGRATION AREAS

Patrice Levang, Baslian K. Yoza, Diana Etty and Haryati Etty

Agronomist, IRD-Orstom Jakarta, Indonesia

Center for Research and Development

Ministry of Transmigration Jakarta, Indonesia

March 1999

For about thirty years, from the late sixties to 1997, Indonesia as most of its neighbours enjoyed an exceptional economic growth. Still the world’s largest rice importer in the sixties, Indonesia became self-sufficient in 1984 and a main exporter of most agricultural commodities (rubber, palm oil, coffee, cocoa, shrimps). Government policies gave the priority to agricultural development but kept agricultural prices low in order to provide the agribusiness sector with cheap raw material and to keep industrial labour cheap. First widely criticised, the policies proved to be right in the long term. From 1987 onwards, Indonesia’s industrial sector experienced an unprecedented boom. The performance was hailed by the world community as the “East-Asian miracle” (World Bank, 1993). In 1997, the miracle turned into a debacle. The boom proved to be built on very week foundations: huge foreign debts, overvalued exchange rates, nepotistic practices, week institutions and total absence of independent control bodies. The great Asian economic crisis affected the whole region but Indonesia was the worst hit of all. In less than a year the achievements of three decades were reduced to ashes. The banking and the real estate sectors collapsed, most industries had to cut down their production and to lay-off workers by the thousands. The number of poor jumped from 22.5 million in 1996 to 95.8 million in 1998. Today nearly one Indonesian out of two lives under the poverty line (Suara Pembaharuan, 1998). While most sectors of the economy experienced a negative growth, quite surprisingly, the agricultural sector was spared from the debacle. To some agro-economists, this was once again the proof of the strength of the agricultural sector against economic and political disturbances. After thirty years of low agricultural price policy, the liberalisation of agricultural prices was considered as the revenge of the farmer over the city dweller. The countryside was no longer in tow of the city but was about to take the lead. In times of crisis, one needs to think positive. It is already well known that the export crops sub-sector was somehow boosted by the crisis. As commodity prices are fixed in dollars on the world market, this is not really a surprise. But what about the food crop sub-sector? The Indonesian food crop sub-sector was already far from being efficient before the crisis. The situation is even worse in transmigration areas devoted to food cropping. How is it affected by the economic turmoil? Can the Indonesian food crop sector become an engine for recovery from the crisis? Which part can transmigration take in this new deal? In order to answer these questions we set up a survey of three transmigration sites in Northern-Lampung. The villages chosen were Tri

Tunggal Jaya (transmigration unit SP8, Manggala C), Kebun Dalam (transmigration unit SP4, Mesuji E) and Sumber Agung (transmigration unit SP1, Rawa Pitu). The two first villages, hereafter referred to as Manggala and Mesuji, are upland food crop projects. Manggala has been opened in 1994 and is still under supervision by the Ministry of Transmigration. Mesuji is part of an older scheme opened in 1982. Their comparison gives a good idea of the evolution of the transmigration units with time. Rawa Pitu is a lowland food crop project opened in 1990. It is part of the huge area of tidal marshes reclaimed by the Public Works and settled by Transmigration in Northern-Lampung as part of the Translok programme1. In the three villages, a randomised sample of 97 farmers was interviewed during the first week of January 1999. Setting the scene The resettlement of forest squatters At the beginning of the eighties, the provincial government of Lampung decided to fully support the Ministry of Forests in its bid to free all forest land from squatters. Since Independence, and even before, encroachments in forest land were commonplace. In some cases the illegal clearing took place so long ago that the farmers even ignored that they were squatters on forest land2. The squatters, generally rather wealthy coffee planters in the mountainous areas of South and West Lampung, were asked to empty the lands they were cultivating so that they could be reforested. In compensation for the loss, the

1 Translok stands for Transmigrasi Lokal (local transmigration), as it involves migration between districts within the same province. 2 The Gunung Balak sub-district was opened in 1963 and the government has been collecting taxes there ever since, even on land auctions. In 1983, local farmers watching TV discovered that they were forest squatters and would have to empty the sub-district as soon as possible.

families were proposed to join transmigration units in Northern-Lampung where they were allotted a two-hectare food crop plot (cf. fig. 1). Squatters were not forced to join transmigration projects but they had in fact no other choice as they had lost all their assets3. Between 1980 and 1995, the local government implemented the Translok programme and resettled 70 000 families of so-called forest squatters in Northern-Lampung (Levang, 1997). Going from bad to worse In the beginning of the eighties, Northern-Lampung was not easy to access and was still covered by forest. But already logged over, not to say overexploited, the local forests were categorised as “conversion forest”. Hundreds of Sumatra elephants were still roaming the area. The settlers, whose profitable coffee plantations on fertile soils were undergoing reforestation, were asked to clear the rather marginal soils of Northern-Lampung in order to grow food crops. The shock was severe. The low yields, due to the very low chemical fertility of the

3 Recalcitrants saw their houses burnt or even elephant-dozed. Some very coercive actions orchestrated by the local authorities and widely publicised decided the squatters to join the Translok programme en masse.

soils4combined with heavy pest infestation, never enabled the farmers to make a living with food cropping. Over the years the yields even further declined and the numerous elephants became the main drawback for agricultural development. To feed their families, the farmers had no other choice than resorting to off-farm labour. At first, illegal logging was the most popular and the most profitable activity. Later, the rapid depletion of the resource forced the settlers to look for day labour at neighbouring plantation companies. Agriculture became a part-time activity. The settlers’ preference went to cassava, as it was the only crop that could be grown without purchased inputs and could still provide for food security and a complementary income. Many settlers lost hope and left the area for good. But all were replaced by spontaneous settlers5. M. Sarmin arrived at Mesuji with the first settlers in 1982. He was born in Southern-Lampung, where his father immigrated in the sixties after leaving Java. One morning he discovered that his coffee plantation and his neighbours’ had been destroyed overnight. Having lost everything, he decided to volunteer for the Translok. Upon arrival in Mesuji his plots of land were still covered with bush. During the two first years, M. Sarmin experienced complete crop failure because of rice bugs. The third and the fourth year he was able to harvest upland rice and cassava. From the fifth year onwards, elephants regularly destroyed his crops. Most of his friends returned to South-Lampung. He became a day labourer at the Gunung Madu Plantation on a routine basis. From 1989 till 1994 the village benefited from the World Food Programme. The help was put to profit to clear the bush and the wastelands around the village where the elephants were taking refuge. In 1994, at last, the elephants were driven out of the area. M. Sarmin became a farmer again. For three consecutive years he could make a living without leaving the village, harvesting upland rice, cassava and maize. He even invested in a young rubber plantation. During the 1997 drought all trees died. In Manggala, the first settlers arrived in 1994. The elephants were already gone. Today, still under supervision of the Ministry of Transmigration, they try hard to make a living from agriculture. Though they did not experience the problems of the Mesuji migrants, they are already bothered by the decreasing fertility of their small plot of land. Most of them already gave up upland rice, soybean and maize cropping for cassava monoculture. Still newcomers in the area, they prefer to stay in the village and look for additional income as day labourers for wealthier neighbours. Some have already been contacted by manpower

4 Very low cationic exchange capacity, low saturation, pH between 4.2 and 4.5, phosphorous deficiency… (Levang, 1997). 5 In Mesuji, 16 years after the foundation of the village the population increased from 600 to 823 families. But only a third of the original settlers remain. All others returned to the area they were expelled from.

suppliers for plantation companies6. Manggala is following the same way as Mesuji with a ten years’ lag. Rawa Pitu is part of the huge coastal marshland reclamation project in Northern-Lampung. In comparison to Mesuji and Manggala, the soils of the area are rather fertile. Developed from marine alluvium, they are only covered by shallow peat and are not potentially acid sulphate. Prone to permanent flooding, these tidal wetlands are not coveted by local people. Free of any claims, once reclaimed they are perfect locations for transmigration development. In such areas, the key to success is to ensure proper water control. Therefore the Public Works built a 6-km long primary canal perpendicular to the river Way Pedada. Regularly spaced doors along the canal enable the use of the tidal movement to control the water level in the adjacent fields. Unfortunately the maintenance of the canal and of the doors has not been included in the annual budget of the Ministry. Year after year the primary canals silt up and the doors are no longer in working order. Year after year the evacuation of excess water takes more and more time. During the rainy season 1998/99, for the first time since their arrival, the settlers experience a three-month long flood, with water up to the knees. Some parts of the village had to be evacuated water coming into the houses. Before the floods became uncontrollable, Rawa Pitu enjoyed some good harvests at least during the rainy season. The second cropping season is regularly destroyed by swarms of rats. The still rather good results of the transmigration centre attracted many spontaneous migrants. The 500 original families settled in 1990 have been joined by 636 spontaneous migrants. Pak Sunari is one of them. He joined the scheme in 1994 when he heard that irrigated rice fields were available at bargain prices in Rawa Pitu. Officially, the access to 1.25 ha of land under the TSM7 programme is free of charge. In fact, he had to pay 500 000 Rupiah administrative fees to the head of village. He lived with his wife and child in a shaft for one year waiting for the building material to become available. For three years he cultivated his 0.25 ha home plot with two cropping seasons a year. The hectare plot was only distributed in 1997. On average he harvested 800 to 1000 kg of paddy during every first cropping season. The second crop was always destroyed by rats, wild boars, bugs, and birds… In 1997/98 for the first time he harvested more rice than he needed to feed his family. He was thinking of giving up his regular search for off-farm labour to complement his income when his field became flooded. He 6 Estates subcontract most operations to brokers who are in charge of recruiting, supervising and paying the labourers. The estate management controls the work and pays the contractor. Estates are not directly employing the workers. 7 The Transmigrasi Swakarsa Mandiri’s objective is to reduce the cost of Transmigration by attracting spontaneous migrants to already developed sites. Upon arrival these migrants receive a 1.25 ha plot, a few plants and tools, and building material.

feels lucky because his house is still out of water. Most of his neighbours had to flee. They took refuge at relative’s houses, generally in South-Lampung. All of them will probably not return once the flood is over. In a transmigration unit the start is always difficult. Organising agricultural colonisation in remote areas is no sinecure. In food crop projects, when soil fertility is marginal as in Northern-Lampung, the follow-up may even be worse. But pioneers prove very resilient. They get acquainted to the worst conditions. Those who cannot stand the worst are replaced by others. Survival means adaptation and risk avoidance. Thus most migrants become part-time farmers. The bulk of their income stems from off-farm activities. Agricultural activities are generally restricted to low-input farming aiming more at food security than at cash earning. Profitable or not, maintaining farming plays an important psychological role, the social status of a farmer being much higher than that of a labourer. Even he spends most of his time at off-farm activities the migrant always presents himself as a farmer. It never rains but it pours El niño and the 1997 drought The economic situation was just about to improve when the whole archipelago was hit by the worst drought for the last fifty years. In Northern-Lampung, two to three months (July, August or September) with less than 100 mm rainfall may occur one year out of two. Three consecutive months with less than 100 mm happen rarely. In 1997, from June until October, no rain at all fell for five consecutive months. The consequences of the prolonged drought were coped with differently in upland and lowland projects. In Manggala and Mesuji the wells dried-up rapidly and finding drinkable water kept all family members busy from August onwards. No food crop survived but cassava. Many tree crops, especially young plantations wilted. In Manggala, charcoal resellers offered credit to the hungry migrants. In return, the migrants cut down every tree they found on their plots to turn it into charcoal. A day’s work provided a 2,000 rupiah pay, just enough to repay the credit. In three months the whole area was cleared and burnt. In Mesuji, as all forest remains had already been cleared in the early 1990’s to get rid of the elephants, transmigrants had no other choice than leaving the village to look for daily wages at neighbouring estates. But the drought had also its good side. Generally transmigrants wait ten or more years before opening their second plot of land. In Manggala, thanks to charcoal making all the plots were cleared and ready for cultivation by the end of the third year. In Mesuji, thanks to

the prolonged drought, all weeds and shrubs wilted in the lands lying fallow and could be cleared in the easiest and cheapest way: by means of fire. Thus, in Manggala and in Mesuji, the cultivated area nearly doubled the year after the drought. In Rawa Pitu, the drought had only positive effects. Firstly, in the lowlands the wells never dried out, secondly the absence of floods enabled the migrants to cultivate upland crops like soybean, maize and peanuts8. As they were the only ones to enjoy harvests at that time, they even got the highest prices for their crops. In November 1997, the first rains came again. The hard times were over. The migrants proved able to take advantage of the prolonged drought. By clearing all their plots, they considerably increased their cropping area. For the first time for years Imperata cylindrica was pushed back by crops. Transmigrants felt hopeful again. The krismon: a complete reshuffle of prices The drought was not yet over that the monetary crisis — the infamous krismon — started to make headlines. Speculators’ attacks against the Thai bath started in July 1997. Through contagion effect the Thai crisis spread to the other East-Asian countries. After a long period of stability, the Indonesian rupiah progressively lost ground to the US dollar (cf. fig. 2). At first, transmigrants were not affected. Most of them never saw a greenback. But when the financial market panicked, the rupiah collapsed and the Indonesian manufacturers were no longer able to import the raw materials required by their industries. Hyperinflation set in and prices began to soar. Prices of agricultural commodities followed the general price increase with a little lag. Figure 3 compares the relative evolution of farm gate prices for paddy, cassava (fresh peeled tuber), maize (grain) and soybean. The price of cassava increased relatively most, reaching an unprecedented high of 275 rupiah/kg in February 19989. Prices remained high until September 1998 but since started a free-fall. The prices of paddy, maize and soybeans increased in the same way, slightly from October 1997 until April 1998 and then sharply until September 1998. Since October, prices tend to fall but not as much as for cassava. Up to now, with the exception of cassava, farmers benefited little from the increase, as prices were highest when no product was available. Now that harvest time approaches they are afraid that prices will fall again.

8 Because of unexpected floods and improper water control, the second cropping season is usually also devoted to rice cultivation in Rawa Pitu. Unfortunately, rats and other pests regularly destroy this second crop. 9 This sharp increase was probably caused by the temporary intrusion of a new buyer (Indofood) on the local market.

Table 1. Evolution of sembako prices Item January 1998

(rupiah / unit) April 1998 (rupiah / unit)

December 1998 (rupiah / unit)

Rice (white) (kg) 900 1200 3000 Sugar (kg) 1600 2000 6000 Salt (kg) 300 300 300 Dried fish (kg) 3000 3000 3500 Kerosene (l) 350 350 400 Soap (kg) 700 1000 1000 Wheat flour (kg) 750 1600 4000 Cooking oil (l) 1600 3500 4000 Textile (piece) 5000 5000 5000

Source: Departemen Tenaga Kerja, Prop. Lampung, 1999 On the contrary, prices of agricultural inputs will certainly remain high. Since the outburst of the crisis the price of most agricultural inputs increased fourfold (cf. tab. 2). The quantities available dropped dramatically, as local resellers did not have enough capital to buy the inputs at the new prices. The phenomenon was even amplified as wholesalers (and producers) started hoarding inputs, anticipating price increases. Some fertilisers like KCl are no longer available locally. The situation is close to a sharp penury. But as most farmers are no longer in a position to buy at the new prices, most agricultural inputs are still available.

The price of labour followed the same trend as the price of basic goods with a few months’ lag. At village level, the daily labour wage remained at 3,000 Rp until April 1998 when it increased to 4,000 Rp. It only increased to 6,000 Rp in September-October 1998. At the provincial level, the worker’s minimum monthly wage (kebutuhan hidup minimum pekerja, KHMP) as calculated by the local office of the Ministry of Manpower shows a rapid increase between April and August 1998 (cf. fig. 4). Though standardised and in theory updated monthly, the figures of the KHMP are somehow massaged in order to keep industrial labour cost low. Thus, officially at least, minimum wage requirements less than doubled between January and December 1998 while the prices of basic commodities increased threefold. Table 2. Evolution of the prices of agricultural inputs

Items 1997 (Rp/unit)

1998 (Rp/unit)

1999 (Rp/unit)

Seeds (kg) Paddy Way Rarem Maize Pioneer 4

600 2400

1200 4400

2200 8400

Fertiliser (kg) Urea TSP/SP36 KCl

300 500 500

340 640 640

1200 2000 n.a.

Herbicide/pesticide (l) Round-Up Polaris Vastrax

12000 7000 60000

20000 15000 95000

50000 27000 240000

Source: IRD-Orstom field survey, 1999 The economic situation in the villages by the end of 1998 When driving across Northern-Lampung’s transmigration area by the end of 1998, the most striking to an experienced observer is not poverty. Transmigration areas are seldom wealthy and transmigrants are used to utter destitution. As usual, humble huts alternate with better looking houses in tidy villages scattered along bad roads. What strikes most is that the whole area looks cultivated. As far as the eye can see, cassava has replaced Imperata. That the economic crisis rendered agriculture profitable again is the first assumption to come to the mind.

But it doesn’t take long to check that the crisis had little effect on the extension of the cropping area. The benefit goes to the prolonged 1997 drought, which enabled the farmers to clear all their plots in a very cheap way making use of fire. In Manggala, the migrants who produced charcoal during the drought took advantage of the operation to plant upland rice and cassava in the newly cleared plots. In Mesuji, the wilted shrubs in plots lying fallow for long years were easily burnt and regained for cassava cultivation. After the pleasant surprise of seeing uplands cultivated, the vision of the vast lowlands lying fallow is even more disappointing. Flooded for nearly three months now, the once promising rice fields of Rawa Pitu look disastrous. Along the silted main canal, all village roads are under water. In some hamlets, most inhabitants already fled. Others rebuilt their house closer to the dyke.

Activities and average income at village level But the first impressions are misleading. In fact, forgetting the flood, the situation is rather better in lowlands than in uplands. The figure 5 compares activities and average incomes at village level in 1998.

In Manggala, the average annual income per household reached 2.3 million rupiah in 1998. Agricultural activities made up 65 % of the total income. Cassava was the main income-earning item, followed by upland rice and various secondary crops (mostly maize). Animal husbandry (goats and chicken) was important to some farmers but not meaningful at village level. Off-farm activities were mainly restricted to day labouring in the neighbourhood. Only very few farmers were seeking labour outside the village. Some families received postal orders from grown up children, generally girls working as housemaids in Jakarta. Some craftsmen and grocers, very limited in number, enjoyed additional revenue from their activities. On average, the whole surface granted to the migrants was cultivated. The house plot (0.25 ha) and the first plot (1 ha) were generally cropped with cassava only, while the newly cleared plots (0.75 ha) were devoted to upland rice intercropped with cassava. Because of the strong locust attacks of 1997/98, most farmers renounced to crop maize. The soil is tilled with a hoe or with the help of a single draught animal in the already cultivated plots. In the newly opened once,

zero tillage is the rule, with or without the help of herbicides. Seeding is sometimes organised on a mutual aid basis between neighbours but most operations are carried out manually by family labour. Maintenance is limited to two weedings. Pesticide applications are reserved to rice and vary much according to the means of the farmer. Rice is generally harvested on a mutual aid basis (bawon) with a share of one fifth for the harvester. Cassava in large stands is directly sold in the field and harvested by the buyer. In plots closer to the house, the farmer often harvests by himself. He then delivers a hundredweight every fortnight to the closest factory in order to provide for his family’s basic needs. As cassava is cultivated without resorting to fertilisers, yields rarely exceed 8 tons of fresh roots per hectare. Many farmers only enjoy 5-ton yields as they sell their crop at six months (instead of eight). They assert that the loss of earnings is somehow compensated by a more frequent harvest. In fact, being totally out of cash, they generally have no other choice than selling their crop before maturity. Upland rice yields are low, around 1,250 kg paddy per hectare. According to the area cultivated, on average a family disposes of 880 kg of paddy per year, which is clearly insufficient. The diet is complemented with cassava in various proportions. Most families are barely surviving. The only rich ones are those enjoying the benefits of the capital they brought along from their village of origin. They generally still own coffee plantations in Southern-Lampung and try to invest their earnings in their new home. In Mesuji, the average annual income per household reached 2.7 million rupiah in 1998, a little more than in Manggala. But agricultural activities only contributed to 33 % of the total income. Cassava was the main income-earning item. Rice and other crops contributed little to the farmer’s income as the cropped areas were small in size (0.25 ha) and the yields around 1,100 kg paddy/ha. Animal husbandry (cattle, goats and chicken) was important to some farmers but again not meaningful at the village level. Off-farm activities constitute the bulk of the households’ income. Most families present a regular off-farm income (labourer, craftsman, grocer, and wage earner) and only practise farming as a part time activity. Generally, the whole holding is cultivated. The average size of the holdings is smaller (1.23 ha) than in Manggala as many plots were sold to spontaneous migrants over the years. The house plots are all covered with trees and can no longer accommodate food crops. Apart the lower lying parts, which are cultivated in rice, the plots are devoted to cassava monoculture. The soil is tilled with the help of a team of oxen. Manual soil preparation is reserved to lowlands. Planting is often organised on a mutual aid basis between neighbours. Weeding is carried out manually, by family labour for poor families and by wage labour for

richer families. As a rule, cassava is directly sold in the field and harvested by the buyer. Yields rarely exceed 5 tons per hectare. Only richer families (grocers or wage earners) resort to fertilisers. Only one family out of two benefits from a 450-kg paddy harvest, which is far from sufficient to feed the family. Richer families buy their rice, while all others complement their diet with cassava. After 16 years of settlement, the economic situation of Mesuji is not much better than that of Manggala. It does not necessarily mean that Manggala is better off, but rather that it is heading the same way as Mesuji. In Rawa Pitu, the average annual income per household reached 3.7 million rupiah in 1998, much more than in Manggala and Mesuji. Agricultural activities contributed to 65 % of the total income. The income from rice alone is close to the average total income of Manggala. No other crops were grown in 1998 as the fields were inundated all year long. Animal husbandry also contributed to the agricultural income, but this result may be biased as two families of our sample sold all their cattle at once. Off-farm activities are carried out on a regular basis. Once the rice is planted, most head of family quit the village to look for additional income at neighbouring estates or at far away coffee plantations (Southern-Lampung). During the first cropping season, the whole holding is generally cultivated. Holdings vary much in size (from 0.25 to 4 ha), as the wealthiest farmers were able to buy plots from neighbours in financial difficulties. The spontaneous migrants under the TSM scheme only received 1.25 ha and many more newcomers are still waiting for their plots. Small plots are prepared manually with a hoe. When the size of the plot exceeds 1 ha, the farmer usually resorts to motorised preparation. Some farmers earn comfortable additional income by renting out their hand-tractor. Depending on the water level, the rice farmers either plant or seed the rice. Direct seeding is the quickest and cheapest way, but is not possible when the fields are flooded. The operation is generally carried out on a mutual aid basis. Most farmers resorted to fertilisers in 1998 (100 to 350 kg/ha) and some to herbicides. Weeding is generally carried out manually by family labour. Harvesting is done collectively (bawon) with a harvester’s share of one fifth. Net yields10 average 2,500 kg of paddy/ha for the first cropping season. The second cropping season is more problematic. As a rule, risks are higher and complete crop failure is frequent. As many farmers reduce the area cropped, pests tend to concentrate on the only plots cultivated, thus increasing crop failure risk. Risks being higher, farmers avoid using fertilisers and pesticides. Only one farmer out of four gets a

10 The farmers always announce net yields, which means not including the harvester’s share. Thus, the real yield is around 3 tons/ha.

net yield of 2,000 kg paddy/ha for the second cropping season. Three out of four experience a total crop failure, which puts the average to around 500 kg paddy/ha. The economic situation in Rawa Pitu is much better than in Manggala and Mesuji. In Manggala, nearly all families are poor. In Mesuji, only grocers, craftsmen and wage earners are rich. In Rawa Pitu, the income level is very heterogeneous. Contrary to other villages, in Rawa Pitu, farming families may earn more than grocers. Though many remain poor, at least there is a potential for agriculture. If only water could be controlled properly.

The typology of households Though in a first approximation everybody looks poor, the appraisal rapidly shows that there are enormous differences between families. Even in transmigration centres where everybody starts on the same basis with equal land size and similar manpower, there is a quick differentiation between families. The figure 6 plots every household of the three villages surveyed according to its annual income and to the percentage of this income stemming from agricultural activities. On this figure, families can easily be grouped into four types.

Poor farmers: living in Manggala or Mesuji, these households only carry out agricultural activities. The heads of these families are generally too old to look for off-farm labour or refuse to become daily labourers. These stubborn farmers insist on making a living from agriculture even if the conditions are not favourable. They practise subsistence agriculture on small plots of land, work the soil manually

and use as little inputs as possible. Average yearly incomes range from 600,000 Rp to 2,000,000 Rp. They live in a state of utter destitution. They make up 21 % of our sample. Rich farmers: except for a few rare Manggala or Mesuji farmers, this type essentially groups wealthy Rawa Pitu farmers. Most of them are well educated and experienced farmers. They were already well doing in their village of origin and joined transmigration with a substantial starting capital. Generally well connected to village officials, they were in a position to take the best of government development programmes and to increase their holdings by purchasing land. Today they own between two and four hectares of rice paddies. They employ

poorer farmers as daily labourers, rent out hand-tractors and make additional income by lending money or inputs and by buying rice still in the blade. Their average yearly income is over 2.5 million rupiah and may exceed 20 millions. They make up 19 % of our sample. Part-timers: present in all three villages they make up the typical transmigrant family. Whenever possible they complement their agricultural income by off-farm work. The heads of family are still young and active but generally inexperienced in agriculture. Absent most of the time, their agricultural results are not particularly stunning. They generally spend three to four weeks far from their family as daily labourers. The meagre wages they bring home are just sufficient to pay back the debts contracted at the grocer’s during their absence. After a rest of a week or two in the village, they must leave again. Most of them make quite a living, but none is in a situation to break this vicious circle. They earn between 700,000 Rp and 3,500,000 Rp and make up 38 % of our sample. Occasional farmers: also present in all villages, this type is made of families with regular non-agricultural incomes such as civil servants, employees, small shopkeepers and craftsmen. In the same way farmers try to complement their income with off-farm work, they try to complement their income with farming. Generally well educated and experienced, they practise a rather capital intensive agriculture. They are the main employers of day labourers in the village. They get generally good results in terms of yields, but very low returns for the capital invested. But as the only employers in the village, they benefit from a high social status and from the consideration of their neighbours. They make up 21 % of our sample. But no matter to what type they belong, all families were severely hit by the crisis. Only very few were in a position to take advantage of it. The impact of the crisis: changes during 1998 The impact on farming systems The impact on farming systems depends directly on the respective price increase of materials, labour and agricultural commodities. Tables 3 to 5 compare figures before and after the outbreak of the crisis for lowland rice, upland rice and cassava cultivation. On average, agricultural inputs increased fourfold while labour increased twofold. As the price of paddy also increased fourfold, in theory the crisis should have little impact on rice cropping systems. As the cost of labour increased less than the cost of materials, farmers employing wage labourers should even enjoy a substantial bonus.

But these figures are only theoretical. In fact, from one cropping season to the other, the farmer has to buy more expensive inputs while his income is still generated at the former prices. For instance, up to now, no farmer enjoyed a 1380 Rp/kg for the sale of his rice. At the last harvest, the average price of paddy was still around 500 Rp/kg. It is all but certain that the price will remain at the present height until the next harvest. Thus, by increasing all prices, the crisis also increased the risks for the farmers. A total crop loss, which is not unusual in transmigration areas, would thus become an unbearable burden. The figures presented also assume that yields remain at the same level. Nothing is less certain. The soaring prices of inputs decided most farmers to reduce fertilisation and pesticide treatments. Some, usually resorting to tractors for land preparation can no longer afford the cost (though this cost increased the less) and decided to resort to manual preparation again, thus reducing the areas cropped. As a result, the outputs will probably be also consistently reduced and no farmer will be on the winning side. The less efficient pest control and the reduction in the cropped area will probably result in a high increase of crop failure. Already very risky, food cropping will become a dangerous gambling to farmers in Northern-Lampung. As they generally grow cassava without resorting to fertilisers, cassava farmers are not really concerned by the price increase of agricultural inputs. But as the selling price of fresh tubers only increased twofold11, while basic commodities increased threefold or more, cassava farmers are definitely on the loosing side. In constant rupiah, their already low income decreased dramatically. The overall impact of the crisis on the local farming systems has been negative. In uplands, because of marginal soil fertility and lack of capital, farmers had no other choice than cropping cassava. And yet it was the food crop whose price increased the less. In the lowlands, the farmers didn’t have the means (or didn’t want to take the risk) to keep inputs at the same level. The worsening of the water control was part of this decision. The increasing risks of crop failure do not allow any increase in production cost.

11 Considering the price of cassava in January 1999. Logically, considering the substantial offer in Northern-Lampung, the price of cassava should fall further during the coming months.

A tremendous increase in poverty Far from being able to take advantage from the crisis, many transmigrants got caught in by poverty. According to the standards of the Table. 3. Lowland rice: input-output analysis

Item 1996/97 (Rp / ha)

1998/99 (Rp / ha)

Increase (x times)

Seeds (40 kg) 24000 88000 3.67 Urea (200 kg) SP 36 (100 kg) KCl (50 kg)

60000 50000 25000

240000 200000 100000

4.00 4.00 4.00

Herbicide 20000 67500 3.38 Pesticide 30000 120000 4.00 Sub-total materials 209000 815500 3.90 Soil tillage (tractor) 100000 145000 1.45 Seeding/planting 22000 50000 2.27 Fertilising/pest treatment 12000 24000 2.00 Weeding 60000 120000 2.00 Sub-total labour 194000 339000 1.75 Total costs 403000 1154500 2.86 Gross return (2500 kg) 875000 3450000 3.94 Net return 472000 2295500 4.86 Input/output ratio 46 % 33 % 0.72 Return to labour 666000 2634500 3.96

Source: IRD-Orstom field survey, 1999 Table. 4. Upland rice: input-output analysis

Item 1996/97 (Rp / ha)

1998/99 (Rp / ha)

Increase (x times)

Seeds (30 kg) 28000 120000 4.29 Urea (100 kg) SP 36 (50 kg) KCl (50 kg)

30000 25000 25000

120000 100000 100000

4.00 4.00 4.00

Pesticide 15000 60000 4.00 Sub-total materials 123000 500000 4.07 Tillage (draught animals) 100000 160000 1.60 Seeding/planting 50000 100000 2.00 Fertilising/pest treatment 12000 24000 2.00 Weeding (1 x) 60000 120000 2.00 Sub-total labour 222000 404000 1.82 Total costs 345000 904000 2.62 Gross return (1250 kg) 437500 1725000 3.94 Net return 92500 821000 8.88 Input/output ratio 79 % 52 % 0.66 Return to labour 314500 1225000 3.90

Source: IRD-Orstom field survey, 1999

BPS12, the poverty line in rural Indonesia was at 27,413 Rp per capita per month in 1996 and increased to 41,588 Rp in 1998 (Suara Pembaharuan, 1998). If we compare the incomes of the families of our sample to these levels, we observe a dramatic increase in poverty in all three villages. The results are even worse if we use the standards of the KHMP13, with about two thirds or more of the population of the three villages living under the poverty line (cf. tab. 6). Table 5. Cassava: input-output analysis

Item 1996/97 (Rp/ha)

1998/99 (Rp/ha)

Increase (x times)

Sticks (free) Urea (50 kg) SP 36 (50 kg)

15000 25000

60000 100000

4.00 4.00

Sub-total materials 40000 160000 4.00 Soil tillage (draught animals) 100000 160000 1.60 Planting 25000 50000 2.00 Weeding (2 x) 100000 200000 2.00 Sub-total labour 225000 410000 1.82 Total costs 265000 570000 2.15 Gross return (5000 kg) 350000 750000 2.14 Net return 85000 180000 2.12 Input/output ratio 0.76 0.76 1.00 Return to labour 310000 590000 1.90

Source: IRD-Orstom field survey, 1999

Table 6. Percentage of households under poverty line

Location BPS KHMP 1996 1998 1996 1998 Manggala 48% 71% 48% 81% Mesuji 33% 45% 33% 67% Rawa Pitu 9% 36% 12% 64%

Source: BPS, 1998; DepNaKer Lampung; IRD-Orstom field survey Survive if you can: strategies to overcome the crisis In order to overcome the crisis, the transmigrants developed more or less the same strategies in all three villages. These strategies all tend to reduce costs and expenses. No one dared to take risks in order to

12 Badan Pusat Statistik, Central Bureau of Statistics. 13 Kebutuhan Hidup Minimum Pekerja. The “ minimum wage for a worker ” is set up monthly by the regional bureau of the Ministry of Manpower.

make the best of new opportunities. The only ones benefiting from the crisis are those taking advantage of other people’s distress. Reduce production costs: In response to the soaring prices of agricultural inputs, most farmers decided to reduce drastically their production costs. In uplands, the already very low amounts of fertiliser and pesticide used by farmers were further reduced. The percentage of farmers using fertilisers on upland rice dropped from 69 % to 27 % in Manggala and from 75 % to 20 % in Mesuji. In Rawa Pitu on lowland rice, the percentage of farmers using fertilisers dropped from 94 % to 26 %. Only 10 % and 29 % of farmers were fertilising cassava, respectively in Manggala and Mesuji. The use of pesticides is also on the free-fall. The number of pesticide users (not to mention quantities) on lowland rice dropped from 73 % to 24 % in Rawa Pitu. Another way to reduce production costs is to reduce the area cultivated. In Rawa Pitu, for instance, 48 % of the farmers reduced substantially the area cropped in lowland rice. Some farmers reduced the cropped area because they had to resort to manual soil preparation, being no longer able to rent a hand-tractor. For others, the permanent flooding of part of their plots caused the reduction. Reducing production costs is only interesting if the returns remain at the same level. Here, in all cases, the returns will be lower. The only positive side is that the financial loss will be reduced in case of crop failure. But the reduction in the cultivated area and in pesticide use will heavily increase the risks of total crop failure. Reduce any expenses Reducing the purchase of agricultural inputs is generally not sufficient, as most farmers never bought large quantities of inputs. When the prices of basic goods increase and your income doesn’t, you first postpone non-essential expenses, like leisure activities, housing, clothes and expenses of social nature (circumcision, wedding, and invitations). Craftsmen, for instance, have hard times as nobody calls them any more to carry out improvements to houses. Many families confessed that for the first time for many years they would not be able to buy new clothes for the coming lebaran14. After having reduced non-essential expenses, you have to reduce essential expenses. As many families can no longer afford expensive medicine, traditional drugs and remedies make a surprising comeback. Schooling expenses have also been seriously reduced. Poor families can 14 Poor families generally buy new clothes only once a year for the Muslim New Year or Aid-el-Fitr.

no longer afford to buy new uniforms15. Fortunately, as teachers decided to accept pupils even with worn out uniforms, no kid had to drop out of school for financial reasons. Expenses are limited to the purchase of basic goods (sembako). In our sample, 72 % of the families did not reduce their daily consumption. On average they spend three times more on cooking oil, sugar, coffee, tea, cooking ingredients… Where 3,000 Rp a day were sufficient before the crisis, today 10,000 Rp may be short. Civil servants and employees, for instance, could save one third of a 300,000 Rp monthly wage before the crisis. Today, the whole wage ends in the grocer’s cash desk. But 28 % of the families of our sample even had to reduce their consumption in basic goods. They save on cooking oil, sugar, coffee, tea, onions and chilli. And most badly received, they must save on cigarettes. At last, when there is nothing else left, you have to save on the staple. Even in the rice producing areas, rice is no longer the staple food of the migrants. As one can get 10 kg of cassava for 1 kg of paddy, the rice growers prefer to sell their rice and buy cassava instead. Except for a few rich families, tiwul — a mixture of rice and cassava — has become the everyday fare. To tell the truth, transmigrants did not discover tiwul with the crisis. Cassava regularly complements the diet of most families. But the difference lies in the proportions: one glass of rice for three kilograms of cassava. Some families even reserve the rice to the small children. All others eat cassava tubers supplemented with cassava leaves. Borrow as much as you can When money is out you can still borrow. At least you may try. Most families can no longer borrow, as the grocers already reached their lending limits. The ijon system, where the farmer sells his crop long before the harvest at rock-bottom prices, has made a worrying comeback. A new idiom is thriving: yarnen. Yarnen is short for bayar sesudah panen or “paid at harvest”. Presently, the purchase of agricultural inputs, the renting out of hand-tractors and even the purchase of staple food is done on a yarnen basis. At harvest, if they don’t experience complete crop failure, the farmers will just be able to repay their debts… and start all over again. In no case will they be in a position to get out while the going is good.

15 School uniforms (three every year) represent the bulk of the schooling cost at primary school level.

Increase off-farm work The only way to come to cash quickly is to go for off-farm work. Fortunately, opportunities remain. In Northern-Lampung, all export crop producing estates still employ numbers of daily labourers. But such opportunities are only open to families with young and strong labour force. And yet, these families already resort to off-farm labour as much as they can. The only possibility would be to give up farming for good and become a full time estate worker. But estates don’t wish to employ full time workers. Employing full time workers always involves additional costs: sickness benefits, housing facilities, sick and home leave, government taxes… Full time workers have to be paid even if there is no work, they always ask for more facilities and they even might organise trade unions. To estates, it’s a much better bargain to employ semi-proletarian peasants. Many families have sent their grown up children to Jakarta where they became housemaids. Malaysia is still a favourite destination, at least in dreams. Some may take advantage of the crisis The only ones to be able to take advantage of the crisis are well-off usurers, shopkeepers and employers. Usurers always thrive in times of crisis. Opportunities are good, as farmers are obliged to sell their crops long before harvest. Shopkeepers and large retailers where less hit by the crisis as they could pass the price increase on to the customers. But as the purchasing power of their customers decreased, they had to sell more on credit. Most shopkeepers already reached their lending limit. In many cases they are no longer certain to get their money back. But refusing credit to a customer might upset him. And in these times of reformasi it might even become dangerous. Local entrepreneurs could take advantage of the crisis, as its main result was to decrease the cost of labour in real terms. But this would necessitate investments and bank loans. Better not think of it. Conclusion In 1998, all reports about Indonesia were predicting the worst doomsday. Indonesia was going to lack rice, soybean, meat, eggs and medicine in a very short future. Quite surprisingly, the disaster did not happen. By the end of 1998, one can still find rice, soybean, meat, eggs and medicine at local stores. This was enough for reports to switch from doom watch to excessive optimism (Lingle and Larsson, 1999). As stated in a recent and controversial World Bank report: “The Indonesian

economy had proven to be very resilient and its population far more resourceful than expected”; “While Indonesia is suffering a severe crisis, it is not the universal disaster some would have it” (Iritani, 1999). There is no doubt that the forecasts of dramatic increases in levels of poverty, unemployment and school dropout rates were probably inflated because of inadequate data and improper assumptions about the crisis. Desperately looking for international aid, the Indonesian government probably pushed in the same way. In fact, that one can still find basic products in sufficient quantities in local stores has nothing to do with a better than predicted performance of the Indonesian economy. These products only remain available because a large part of the population can no longer afford to buy them. Transmigrants, and the Indonesian peasantry as a whole, proved to be very resilient. They have always been. Yet they thought they would never be hungry again. Thanks to cassava, they survive. But they only survive. They are absolutely not in a position to take advantage of the present turmoil. The dramatic increase in price of agricultural inputs forced the most progressive farmers to revert to subsistence farming. Falling back into poverty leaves them in a state of shock. To overcome the crisis, all farmers in our sample only developed survival strategies. None of these strategies (low-input farming, reducing the cropping area, increasing off-farm labour) will help to reverse the present situation but rather worsen it. The Indonesian economy is not yet recovering. The agricultural sector, and more specifically the food crop sub-sector, is not in a position to become the engine for recovery from the crisis. At least, cassava roots and cassava leaves work as an efficient shock absorber. The Indonesian food crop sector is not about to collapse. But it needs help to avoid that farmers revert to subsistence agriculture again. The present trend towards low-input cropping will result in lower yields and thus in permanent food shortages at the national level. Without subsidising inputs for a while, Indonesia won’t become rice self-sufficient again. The maintenance of irrigation networks is another priority. Rawa Pitu has the potential for becoming Northern-Lampung’s rice granary. If only primary canals were properly maintained. Presently, in the Northern-Lampung Translok area, the former forest squatters remind the good times they had in their mountains. Their relatives still in Southern-Lampung are enjoying peak prices for their coffee. Some migrants even heard that the areas they emptied once were colonised again by newcomers. In the flooded houses of Rawa Pitu, desperate migrants think of returning to their village of origin. In these times of reformasi they are no longer afraid of guns.

References Iritani (E.), 1999— Indonesian fiscal crisis now seen as less severe. The

Los Angeles Times, January 23, 1999. Levang (P.), 1997— La terre d’en face. La transmigration en Indonésie.

Paris, Orstom, 419 p. Lingle (C.), Larsson (T.), 1999— Indonesia’s economy is doing

reasonably well. Journal of Commerce (Washington DC), January 21, 1999.

Suara Pembaharuan, 1998— Akhir 1998 penduduk miskin jadi 118 juta. Suara Pembaharuan, 3 Juli 1998.

The World Bank, 1993— The East Asian miracle. Economic growth and public policy. New York, Oxford University Press, 389 p.