I believed the expression made by Sidney Harman and Klaus Schwab in the December 2010-January 2011 edition of Newsweek with its selected front page titled “The key to power” was true.
The article said the roots of the world crisis “was a symptom of a broader dysfunction in our global political, economic, and social order. We are now paying, and continue to pay, for the sins of the past”.
I believe the cause of food crisis now is a result of sins of the past. There has been no World War III but there were a large number of people dead, dying, starving or becoming poorer. The world economy is growing but poverty is expanding at an alarming rate.
Increasing prices of food are deemed the prime factor of food crisis. No. It is the impact of a global multidimensional crises that has pushed food prices to increase. And, if the world communities cannot solve the problems associated with the global food crisis then the world situation will worsen.
So, reducing the inflationary factor of food, which reached nearly 50 percent of a general inflation index for Indonesia in 2010, is not solving the food crisis. For Indonesia, food contributed 3.5 percent out of 6.96 percent of inflation in 2010.
We have to overcome the roots of the problem: our sins of the past. The first sin was we let agriculture be good for civilization but bad for farmers. We knew from economic theory that agriculture primary products were price inelastic. So, if the agricultural product price declines then farmers’ income will decline too.
Our sin was we let or are even happy (for consumers particularly) to see agricultural product prices decline over time from after World War II up to the early 2000s. That is why farmers are getting poorer and poorer especially those in developing countries.
The economy of developing countries has been mainly trapped by a heavy burden of population and lack of capacity of their economy to earn foreign exchange from non-agricultural sectors.
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The fundamental source of the sins of the past is our long-held culture that condones the conquest of others by whatever means.
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Spurring foreign exchange earning capacity by investing in agricultural traditional export commodities such as palm oil or rubber without promoting their production of processed products have deprived developing countries of capacities to grow and to pay their foreign debt without endangering their balance of payments.
All added values have been taken by developed countries, for example, only about 10 percent out of the total retail added value margin of coffee was enjoyed by exporting countries.
Imagine we pay for a cup of coffee in a five star hotel for US$3 which is composed of 2 grams of coffee, but farmers received only a small amount of money per kilogram of beans.
The danger from the phenomenon was shown by the shortened period between the global economic crises. Excessive public or private debts that cannot be repaid finally should be heard by society. An economic crisis that hit Asia in 1997 had reduced the wealth of this region and this wealth has been transferred to other wealthier regions.
The situation had worsened due to the case of destabilization of the sociopolitical condition. In the case of Indonesia, the crisis in 1997 that ousted president Soeharto should be paid by a weakening of agricultural systems.
How bad do macroeconomic and trade policies weaken the food and agricultural sector? The gap of labor productivity of agriculture in terms of its value between developed and poor countries was very wide — it could be more than a factor of 75. The main reason was the differences in the size of the farm land holding per farmer.
In developed countries, farm land holding size is not only increasing but also nominally large. In the US for example, the size of land holding nears 200 hectares per farmer. On the contrary, in developing countries such as Indonesia, the land-holding size has declined over time and has reached less than 0.5 hectares per farmer.
Letting the deteriorating farmers’ land occur is the big sin.
Creating a system that makes the rich become richer but impoverishes the poor is another sin. Data shows that consumers pay higher prices for food over time but farmers receive lower prices over time.
It means the widening margin goes to traders, processors, bankers and other organizations above farmers.
The fundamental source of the sins of the past is our long-held culture that condones the conquest of others by whatever means.
Do we have sufficient knowledge, determination and confidence to abolish those sins?
The labor productivity gap among developed and developing countries’ agriculture indicates that there are no normal roads to achieve future global welfare available.
So, we have to be able to provide extraordinary jobs to individuals, communities, states or global levels. We should also emulate Mahatma Gandhi’s teaching of swadesi (using own products) or Sukarno’s berdikari (self reliance).
Of course, we hope our world leaders can redefine and create a better future for us and our children. Globalization should be stirred and spurred toward better world cooperation in the area of food and agriculture in order to keep the next generations from what Harman and Schwab feared the most.
The writer is a researcher and chairman of the Union of the Association of Indonesian Farmers (Gapperindo).
