Improving Institutional Capacity:
Strengthening Farmer Organizations in the OIC Member Countries
56
markets unlock will be attractive to village youths, who currently choose to labor for low
wages in cities or foreign countries, rather than pursue agriculture.80 The KPA further believes
that small-scale farmers are only able to work 2-3 hours a day productively, due to a lack of
inputs and training. They also believe that crop processing can be developed further in rural
areas. To counter this, the KPA calls for the creation of more village-level cooperatives that can
take on agri-business tasks such as processing.81
3.4.3. Policy environment for both organizations
Indonesia’s history of farmer organizations, and in particular cooperatives, is one marked by
extensive state involvement. This has formed an integral part of the nation’s development
program, as one expert notes:
“The development of farm co-operatives was always in line with the country’s food
sufficiency program. Specially designed laws and government regulations were introduced
to develop and establish the functions of the farm co-operative. Indonesia’s farm co-
operatives with little exception, were in fact government programme agents which
contributed to the success of self-sufficiency in rice.” 82
At the dawn of independence, the Basic Agrarian Law of 1960 was passed. This law
championed the notion of agrarian reform and equitable access to, control, and management of
agrarian resources in Indonesia. In the period following this law, agriculture extension policy
was centralized, requiring co-ordination between government agencies and local extension
officers. In 1967, the Ministry of Agriculture began recruiting village-level agricultural
extension workers using the ‘train and visit’ approach – a process allowed Indonesia to achieve
self-sufficiency in rice by 1984.
Farmer organizations existed at this point but were largely government-controlled and used,
just like in many other areas, as an avenue for extension delivery. Suradisastra describes FO’s
role during these years: “The village unit co-operative was given responsibilities in farm credit
scheme, agricultural input and incentives distribution, marketing of farm commodities and
other economic activities.”83 The government guaranteed the marketing and market price to
encourage the growth of farm co-operatives. For instance, the Board of Logistics (Badan
Urusan Logistik, or BULOG), was mandated to stabilize the price of the nation’s staple food
supply, i.e. rice, corn, soybean, poultry and meat, and other staples. The role of the BULOG was
prominent particularly during the harvest period when it bought and stored farmers’ produce
through the village-unit co-operatives across the country.
This continued until the late 1990s, when trade liberalisation and adjustments to government
spending patterns occurred. Local governments were given more responsibilities for
agricultural development but had fewer resources to conduct traditional extension. As the
market liberalised, there was a perception that Indonesia’s rural economy became more
concentrated. In the discussion with the SPI, Saragih explained that there is a feeling that land
80 Interview with Iwan Nurdin, KPA Offices, Jakarta. Monday 20 October 2014
81 Rural Transformation through, ‘Advanced Villages for Agrarian Reform (Damara)’.
82 Suradisastra, K (2006) Agricultural cooperative in Indonesia. Indonesian Centre for Agriculture Socioeconomics and Policy
Studies
83 Ibid p.1