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close this bookIn Place of the Forest: Environmental and Socio-economic Transformation in Borneo and the Eastern Malay Peninsula (UNU, 1990, 310 pages)
close this folderPart 1 : Background and the course of events
close this folderChange since World War II
View the documentThe background of modern economic transformation
View the documentNew Order and New Economic Policy
View the documentEnergy exports and production
View the documentMinerals, industry, and the cities
View the documentAgriculture and land settlement
View the documentDeforestation and timber extraction

Agriculture and land settlement

Agriculture in the context of growth and industrialization

Agriculture was the locus classicus of the misunderstood dual economy of prewar South-East Asia (Boeke, 1953). An impoverished but - contrary to contemporary theory - not unenterprising smallfarmer sector competed poorly for government attention and support with a highly capitalized plantation sector. Most of part II of this book is concerned with what has happened to the land, its people, and its forests in modern times. Here we trace the evolution of policy and its implementation from the 1950s to recent years, as background to that much fuller discussion.

All of Indonesia's agriculture suffered under the dislocations of the Sukarno period, small farmers and plantations alike. For the latter, a gloomy situation in which prospects appeared to be only of further immiseration inspired the "agricultural involution" of Geertz (1963) and the equally dire predictions of many other writers. In Malaysia the plantations thrived, but small farmers obtained relief only in the short period of the rubber price boom between 1950 and 1952. The price boom was of less advantage to Indonesian peasants because of both generally poorer planting stocks and, in many areas, greater disruption from violence than in the Peninsula. Efforts to expand and upgrade their production through replanting and "fringe alienation" schemes in the period through independence left most of them still in poverty.6 As in Indonesia under the later Dutch administration, efforts to improve irrigation for rice were also made by the British, and continued after independence. The social benefits were limited for a long time.

A perceived solution to these problems was to relieve pressure by opening up new land and settling landless and near-landless villagers. "Transmigration" from Java and Bali to the outer islands began under the Dutch (Pelzer, 1945). It was taken up again under Sukarno, with totally unrealistic goals that never even began to be achieved. In a different context, the same idea was adopted in Malaysia shortly before independence with the establishment of FELDA, briefly mentioned above. Here the object of cash-crop expansion was as important as that of poverty relief and, over time, it came to dominate. From 1956 to the end of the 1980s, and with particular vigour between 1970 and 1985, FELDA alone cleared over 6,600 km²of land in the Peninsula and a smaller area in Sabah (Sutton, 1989); it had settled some 700,000 people. Other agencies also participated, the Sabah Land Development Board being particularly vigorous in that Borneo state, so that a total of over 15,000 km²of forest was converted to various forms of agriculture (Government of Malaysia, 1981, 1986, 1991a).

When the Indonesian transmigration programme was seriously resumed in the late 1960s, it continued using the old Dutch model rather than the Malaysian model. Farmers were settled more for subsistence cultivation than for cash-crop production, and holdings were less than half the size of those allocated in Malaysia. At first mainly in Sumatra, and only recently principally in Kalimantan, about 1.7 million people were resettled from Java and Bali by the mid-1980s (Hardjono, 1986). Between 1980 and 1985 nearly 400,000 transmigrants went to Kalimantan, but numbers then declined (Statistik Indonesia, 1990). Over the 1980-1985 period, transmigration accounted for between 41 and 65 per cent of the population increase in three of the Kalimantan provinces, but for only 14 per cent of that in East Kalimantan, which has been more affected by spontaneous movement (World Bank, 1988). There was a substantial new surge of both sponsored and spontaneous transmigration in the early 1990s, especially in Kalimantan.

Only a proportion of these government settlements has been truly successful, and there have been a considerable number of almost total failures, although some schemes written off by the authorities were not entirely deserted by the settlers, and some who left have later returned (Dent Hidayati, pers. comm.). Serious weaknesses in planning are identified by Hardjono (1986, 1994), and we discuss some of these in more detail in part II. Once oil revenues declined, it proved difficult to obtain international funding for a programme that, by the mid-1980s, was already under severe criticism on economic, ecological, and even social grounds. However, in recent years the Malaysian model, with variations, has at last been adopted in Indonesia, with primary emphasis on tree crops grown for sale. Smallholder cash-crop schemes (Perkebunan Inti Rakyat, PIR) have increasingly become the pattern in recent years, based around a central processing facility or existing government estate. Settlers are able to earn a wage as well as income from their own crops. Schemes using rubber have been most common in Kalimantan, but oil-palm, sugar, and even rattan have also been employed as the cash crop.

At the national level in the two countries, the reorganization and modernization of agriculture have been of greater significance than resettlement. Both in rice and in cash crops there have been major research inputs, introduction and dissemination of new varieties, subsidization, and fundamental changes in marketing and management. Again, however, there are significant differences between Indonesia and Malaysia. High-yielding rice was first planted in Java in the late 1960s, and at the same time major programmes of extension, fertilizer subsidy, irrigation improvement, and rural credit were either initiated or strengthened. These were accelerated in the 1970s, leading to attainment of Indonesian self-sufficiency in rice in the mid 1980s.7 Similar, though smaller, efforts were made in the Peninsula, but the programme lagged, primarily because rice farming remained a low-income activity in a country where the rewards of other activities were rising; since the early 1980s Malaysian rice production has been in decline. Reasons for the failure of subsidization and related schemes in Malaysia are analysed by Fatimah (1990); the benefits of subsidization have been more to profits than to production and, under Malaysian conditions, only farms larger than the average can profitably grow rice. This analysis further illuminates an outstanding examination (Scott, 1985) of social inequality in a Malaysian rice community undergoing change.

With cash crops, on the other hand, Malaysia has taken the lead, particularly by creating systems of collection, marketing, and processing that, in the Peninsula, have created strong vertically integrated structures at the core of which has been FELDA - by the late 1970s already an agro-business corporation of world scale (Bahrin and Perera, 1977). Other structures have been set up to process and market smallholder rubber, and in recent years these have extended to the encouragement of downstream manufacture. Nothing of this nature has evolved in Indonesia, where, Hill (1994: 75) writes, "the history of the cash crop sector therefore appears to be one of lost opportunities. "

These efforts in food-crop and cash-crop innovation were initially heavily concentrated in the core areas of the two countries. The eastern Peninsula became a major oil-palm and rubber region, but since 1980 the same new production system has been extended into eastern Sabah with rapid growth in acreage of plantation oil-palm and cocoa (Bach), Liew, and Abdullah Sibil, 1992). This shift, which has replaced rubber as the leading cash crop, has occurred despite severe problems of labour shortage. Almost all the plantation labour force has been drawn from foreign workers (Indonesian and Filipino), many of them illegal (Kong, 1992). Such developments are leading to a gradual redistribution of population in Sabah, with a drop in the proportion of the total in the old-established, west coast districts (except Kota Kinabalu) and a rapid increase in the formerly underpopulated east coast, especially around booming Lahad Datu, which trebled in size between 1980 and 1991 (Malaysian Census, 1991), and where it is unofficially estimated that half the population consists of illegal immigrants, for the most part living in houses built on stilts over mangrove swamps and tidal flats (I. Douglas, pers. comm.).

The emphasis on plantation agriculture in Sabah has tended to bypass local small farmers, whose yields have stagnated, and the overall growth in population has led to a decline in rice self-sufficiency, from 43 per cent in 1980 to 32 per cent in 1990 (Bach), Liew, and Abdullah Sibil, 1992: 8). Special efforts are now being made to target such farmers (Gunting and Khoo, 1991; Lau and Ooi, 1992). Little has even been tried in Sarawak. Although high-yielding rice has been adopted in the major producing areas of both South and West Kalimantan, both physical and social conditions have militated against the maximization of annual yields. In the old Banjarese "rice bowl" of the Hulu Sungai in the south-east, high-yielding varieties are largely grown and South Kalimantan is an exporter of rice, but water control has been unsatisfactory. Where irrigation is available from dams in the mountain foothills, it is not always utilized to produce a second rice crop. Low levels of land ownership and rice prices that are held down by government both discourage more intensive production. In the tidal swamp areas of South and Central Kalimantan, traditional rice varieties remain characteristic and yields are low.

With the principal exception of parts of the eastern Peninsula, therefore, induced agricultural change in our region has taken the form mainly of extensification rather than intensification. It has thus been closely linked with deforestation and with the timber industry. We therefore conclude this essay with a brief review of the background of these linked forces of transformation.