Wednesday, December 20, 2006

On grandma and land reform

by Dewa Wisana

Initially, my “Labor and Human Resources Economics EIE 31005” class discussed about migration theory and somehow relates the issue with poverty. Then, Isya - one of my student - raised a question about land reform as a solution to cope poverty. Since my counter to her argument seems not so satisfied for her (I suspected so), then I invite her to write down again her argument in the form of essay or article. So, here it is. Please welcome this interesting and quite well-written essay of Isya Hanum.

I like her style of writing, and especially her last question “So, where’s the devil Sir?” I guess I will make this kind of invitation again for my other lecture, and selectively published them so the student will have motivation and continue the culture of “free-academic-speech” (read: mimbar bebas!).


Dear Sir,

Someday I would like to introduce you to the Ratman family. Ratman is the eldest of 9 sibilings, his parents came straight from somewhere near central Java. They live not 2 kilometers from my house. Ratman family Sir, is in the garbage business. Their property?a humble shack just beside a dumpster that amazingly (almost magically) fits 11 people (and ironically they are neighbors to an elite private school). This is a question that keeps popping in my head: If the Ratman family get a piece of land back home from the land reform policy how would it be wrong? And if the rest 24.8 million poor people in rural areas and 14.3 million poor people in urban areas get a piece of asset that they could not have/ afford otherwise, wouldn’t they be better off and then wouldn’t they be a valuable economic force? Sir, my grandma would ask the same thing.

So then I orchestrated a simple plan in my mind. First and foremost, whose land to be given away??? There is an 8.15 million hectare empty land [1] (14 times the size of Singapore), that is possible for crop growing and free of ownership. Done ! =).

And now if I were Ratman, who’s finally got a land from the government, I have two choices: trade the land for fast cash, or take the whole family and move out of Jakarta to cultivate the land. Now being the government again, of course I’d want Ratman to go home and cultivate the land, so all I need to do is create a set of law that is strong enough to impede Ratman from selling his new land land immediately.

Now, to cultivate the land Ratman Labor, Machineries, Fertilizers, etc. And how could he afford them? Loan sharks are available and easy. But as the government I have an obligation to save Ratman from loan sharks (or death by loan sharks) by bridging the gap between demand for capital and supply of capital. Thus access to capital must be made easier, collateral need not be obligatory, monthly installments should be moderate and interest should be lower than conventional banks (like Grameen Bank).

After attaining capital, Ratman needs machinery to be more productive (it turns out that his parents, 8 siblings, and 2 cows as a manual tractor is not enough). Again market mechanism could not help Ratman to afford/ buy tractors (just like it could not help ratman afford land). So again I have to make access to agriculture machinery easier. I guess through soft loan, subsidies or grant. I have never noticed the echo of “mechanical agriculture” in Indonesia Sir, or is it just me? I know US has done it a century ago though, and India too, like in the 60s or so. With more land cultivated and more machines in agricultural sector, national agriculture productivity can be boosted. I believe mechanized agriculture is impossible without land reform, because fixed land and more machines means many “buruh tani” will be out of job.

The story goes, now Ratman’s land is very productive, but his village is so remote that only 1 purchaser can afford to access Ratman’s location, moreover Ratman has no access to the bigger market. New problem arises: that purchaser has too much power to set price. Ratman has no choice then, he and his friends would have to sell their bountiful crops to this one guy, with a bad price. To prevent this, I have to make market more accessible to Ratman and his friends. First, build road, bridge, port or airport: infrastructure! Second, when national demand is fulfilled, I have to make foreign market accessible to Ratman and his friends. Lobby foreign countries to lower trade barriers for our agricultural commodities.

That Sir, is my simplistic view on land reform policy. I believe that it could not work alone, definitely should be followed with policies that make capital, machinery, and market more accessible to those who get the land. Only then can it be effective and it can be a rural pull-factor because it reduces rural-urban income disparity and thus will reduce rural-urban migration. It can reduce poverty, it can reduce unemployment. Although the 8.15 million hectare is projected for only 4 million families, it can alleviate the prosperity of 12 million poor people (assuming 1 family= 3 people), not bad.
So where’s the devil Sir?

best regards.

Isya Hanum

[1] Tempo Magazine, 4-10 December: p.46

1 comment:

Anonymous said...

hmm i wonder what was Bapak Dewa's counter argument to this well-presented idea :)