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Manufacturing a Crisis: The Politics of Food Aid in Indonesia

IFDP Development Report No. 13

July 27, 1999
Contact: Anuradha Mittal
Tel: (510) 654-4400

Oakland, CA -- News of food shortages and hunger in Indonesia, reported to be caused by drought, alarmed the world in 1998 and 1999. According to the Minister of Food Affairs and Horticulture, Indonesia was the world's biggest recipient of food aid in 1998. But in recent months news has filtered out that many agricultural communities are prospering in the midst of the crisis. In view of these conflicting reports, South East Asia Food Security and Fair Trade Council organized a fact-finding mission to Indonesia in January 1999.

"Indonesia is not suffering a critical food shortage in the traditional sense. We found a surreal juxtaposition of bounty and misery, caused by the well-publicized economic collapse of the world's fourth most populous nation," said Anuradha Mittal, who led one of four teams of a fact-finding mission to Indonesia.

Over 100 million Indonesians, "half the country's population," are now living below the poverty line, up from thirty million in 1997. In 1998 average Indonesians saw ten years of family savings wiped out by six months of currency devaluation. By July the value of the rupiah had fallen fifty percent against the U.S. dollar, pushing up prices and squeezing earnings, hitting those who could least afford it the hardest. "This crisis was caused by massive outflows of speculative capital," said Mittal, "brought on by more than a decade of pressure from the U.S., World Bank, and International Monetary Fund to open Indonesia's financial markets to foreign investors."

Today many Indonesian banks and companies are on the brink of bankruptcy, with more than a third of Indonesia's key electronics, machinery, chemical, and metal-based industries forced to close. Every day in Jakarta an estimated 15,000 workers lose their jobs. People have begun migrating from cities back to the countryside. A bleak report from the International Labor Organization states, "Without any improvements in household income, further price increases in 1999 will push some 140 million people, or 66 percent of the population, below the poverty line." But is there a food shortage?

"Abundant food is available for those who can afford it, but few can due to the economic collapse," said Mittal. "Yet the image of a food shortage that can only be remedied with food aid continues to dominate. Western donors have been rushing in wheat products, undercutting rice-based food self-sufficiency and creating a long term market for exports. The Indonesian government has used this aid to pacify the new urban poor and consolidate support for the June 1999 elections. This has been done with the total approval of foreign governments and multilateral organizations." As a World Food Program official put it, "Hungry people are angry people."

In 1984 Indonesia was awarded the FAO medal in food self sufficiency, while today the food aid pouring in threatens to turn it into a permanent international beggar by bankrupting local agriculture. "Economic conditions in Indonesia do not call for food aid. What is needed are economic policies to provide jobs and income so people can have an adequate diet, and buy goods and services to meet other needs. Agriculture is in trouble in Indonesia, but it is a crisis that is strictly man-made," said Mittal. "A huge dependence on fertilizers and other chemical inputs characteristic of Green Revolution technology resulted in a fragile rural economy that can easily be unraveled by policy decisions for example, the recent ending of the fertilizer subsidy. Indonesia is not experiencing a classic drought-driven famine. It is experiencing economic collapse."

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