T

he House of Representatives on Tuesday passed a bill that will provide protection for farmers in the form of more subsidies, import restrictions on agricultural produce, and easier access to loans.

Agriculture Minister Suswono said the newly endorsed, protection and empowerment of farmers bill, will help local farmers and cattle breeders obtain land, and to receive financial, post-cultivating and marketing assistance.

'€œWe hope this bill can help protect farmers from the burden of uncertainty as a result of volatile prices,'€ he said.

Among crucial provisions for subsidies, the bill will include an obligation for the government to provide agricultural insurance to cover losses caused by harvest failures due to natural disasters, pests and weeds, infectious crop disease outbreaks and climate change.

Suswono said a state-owned insurance company would be assigned to handle the matter and that the government was still discussing the details of the plan, adding most of the insurance premiums will be
covered by the government.

A pilot project had been launched earlier this year in West Java, where farmers were charged only 20 percent or Rp 36,000 (US$3.61) out of the total Rp 180,000 premium cost per hectare, he explained.

In contrast, under the existing program, the government provides only social aid in the form of seeds and fertilizer to compensate for losses caused by harvest failures.

Under the bill, the government is also required to provide subsidies for farmers to purchase tools and seeds, as well as covering their loan interest.

Other essential provisions are stipulated in Articles 28-30 that regulate imports of agricultural produce.

Imported products will be allowed to enter the market through specific entry gateways that will be set by the government.

The entry gateways need to be a certain distance from any areas that produce the imported commodities. The gateways should be equipped with quarantine facilities.

The articles also prohibit importers from bringing in agricultural produce when local supplies are sufficient.

As imported produce often overflow the domestic market during harvest periods, time and again local farmers have suffered from deflating prices attributed to heavy competition and excessive supply.

The newly endorsed bill also guarantees better financial access for the agriculture sector, which has long been considered '€œnot bankable'€ due to its climate-dependant production, through a state-owned bank appointed by the government and an agricultural funding body.

The bank, along with the financing body, is expected to provide funds through simple requirements and procedures.

Bogor Institute of Agriculture (IPB) economic and agriculture expert Hermanto Siregar applauded the new law for encapsulating what farmers need to keep cultivating their land. '€œThe government has to protect farmers to empower them and to make sure they can keep producing. This is indeed a significant move,'€ Hermanto said.

Giving farmers insurance and subsidies, he said, will be much better than providing them with fertilizer and seeds.

Hermanto, however, alerted that the move to regulate imports through specific entry gateways and to prohibit imports when local supplies are deemed to be adequate might back fire against the government'€™s will to shield its farmers from heavy competition.

'€œBeware of retaliation [from other countries]. If Indonesia wants its commodities to be accepted by other countries, it has to open its market access to competition,'€ he said.

'€œIf the government wants to protect the country from imported products, they have to resort to ways that are widely accepted by international organizations, like, imposing tariffs.'€

Indonesia received strong resistance from the US earlier this year over its horticulture import policy that regulates and prohibits imports of several horticultural products to protect farmers.

The US filed a consultation request with the World Trade Organization (WTO) for allegedly breaching the organization'€™s anti-protectionism rules.