1 Jenderal Soedirman University UNSOED THE IMPACTS OF AGREEMENT ON AGRICULTURE ON ECONOMIC, SOCIAL AND ENVIRONMENT IN INDONESIA: THE RICE SECTOR CASE

2 Brief Description of the Project: Main focus: - Economic, social and environmental impacts of AoA - Effects of interrelationship between AoA and Structural Dev’t Policies on Indonesia’s rice economy Institution involved: Jenderal Sudirman University, BULOG, Wacana Mulia, Ministry of Agriculture Key stakeholders: National Planning Bureau, Ministry of Environment, Ministry of Agriculture, Farmer Groups, Local Governments, Traders

3 Background RICE is: Main staple food Consumed 130 kg/capita/year Shared 21 % of HH budgets Dominating rural employment ______________INDONESIA____________ 1994  Net rice importer : - Economic crisis in Indonesia - Radical trade liberalization

4 METHODOLOGY Stakeholder participation : - Stakeholders meeting: Minst. of Agriculture, Minst. of Industry & Trade, Minstr of Env’t, BULOG, UNSOED, Farmer Org, Land Research Institute, Wacana Mulia - International meeting in Geneva - SC meetings (Deputy Minst: Env’t, Planning, Agriculture, Foreign Aff, Trade & Industry, UNSOED) - Seminar Analytical Method : - Economic Impacts  RRA, Interview, secondary data, I-O - Social Impacts  Interview, secondary data - Env’tal Impacts  Interview, secondary data, RCM & CVM

5 MAIN IMPACTS IDENTIFIED BY IA Economic Impact : - decrease in domestic real price of rice from Rp. 1,316 (1999) to Rp. 996 (2003) (-) -261 respondents: 4% shift to other crops, 18% growing rice with reducing chemical fertilizers, 78% continue growing rice with lower income Social Impact : -Local traditions & indigenous culture (-) - Poverty level (-) - Labor productivity decreased (-) -Urbanization (-) Environmental Impacts : - Land conversion (-), water resource (-), Soil fertility (-)

6 MAIN LESSON LEARNED Main challenges: -Difficult to distinguish the impact of AoA & Stuctural Dev’t Policies -Difficult to understand, measure, & value the env’t services of the rice farming Improved capability in conducting similar/related project Opportunity to adopt env’tal service charge in agric land pricing

7 MAIN RECOMMENDATIONS Government should : increase total rice production & yield because it has significant impact on food security & poverty reduction develop rice marketing infrastructures to reduce marketing costs  higher share of income to the farmers promote small-scale, post harvest tech, & mngmt to reduce losses and increase famers’ income support the development & application of IPM, soil & water conservation to promote sustainable agric dev’t aware in issuing permits for land conversion  incl env’t function Giving input subsidies to reduce production costs should be allowed by AoA since rice production is for domestic rice consumption.

8 MAIN ACTIVITIES TAKEN TO IMPLEMENT RECOMMENDATION Seminar & publication Main actors involve: Dept. of Home Affairs, BPN, Dept. of Agric, Ministry of Env’t, Activities taken  not yet

9 MAIN ACHIEVEMENTS High attention and participation from stakeholders More comprehensive information  awareness Improved understanding & better communication inter-ministerial, inter-institutional, among stakeholders

10 MAIN ACHIEVEMENT Gov’t policy to reduce rice import, discuss ESP, encourage organic farming Policy and stakeholders behaviour move toward more env. friendly Improve capability of researchers in conducting similar projects on integrated assessment Replication is none, but other projects (Green GRDP, NR based dev’t plan, valuation on mining project)

11 CHALLENGES TO MOVE AHEAD Political movement for democracy is on the first priority, env. on the last Intergov. finance system ecourages resource depletion & env. degradation Civil workers underpaid; leads to inefficiency

12 ACTIONS NEEDED TO MOVE AHEAD Continue discussion and dissemination of ideas Government takes the lead for dissemination & policy dev’t (Min. of Env., BAPPENAS, Dept. H.A., Dept.Agr., BPN, Univ.)

13 EXTERNAL SUPPORT Funding studies for application of Env. Service Charges (what, how much, how to implement, institutions involved, stakeholders participation). Encourage governments on the protection of environment and application of env. service charges through international forum.