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Policy analysis of linkages between Indonesia's agricultural production, trade and environment

Project ID

ADP/1994/049

Project Country

Commissioned Organisation

University of Adelaide, Centre for International Economic Studies, Australia

Project Leader

Professor Kym Anderson

Email

kym.anderson@adelaide.edu.au

Phone: 

08 8303-4712

Fax: 

08 8223-1460

Collaborating Institutions

Ministry of Agriculture, Indonesia
Australian National University, Australia
Centre for Strategic and International Studies, Indonesia

Project Budget

$1,003,472.00

Start Date

01/01/1996

Finish Date

30/06/1999

Extension Start Date

01/07/1999

Extension Finish Date

31/12/2002

ACIAR Research Program Manager

Dr Ray Trewin

Overview Objectives

This study examined the impacts of specific pricing policies, investments or subsidies on the goal of food self-sufficiency and on other social, environmental and agricultural targets of this rapidly growing economy. It investigated the options open to Indonesian policy-makers as they implement their commitments made to GATT in Uruguay and considered what might be required in the next round of international agreements. It tested ways of integrating Indonesian needs with those of trade groups in the region.

Project Background and Objectives

At the start of this project Indonesia was experiencing rapid growth in its economy and industry. The Government had introduced environmental policies to deal with its highly complex natural environment. The policies were intended to encourage wise use of resources, control of pollution, deforestation and other activities that potentially degrade biological diversity. Funds were available for research to find less damaging technologies.
The Indonesian Government intended that the nation should grow to the point of self-sufficiency in food, at least for rice, and it subsidised farmers for seed, fertilizer, pesticides and water, gave output price incentives, and set tariff barriers where necessary. Agriculture employed about half the workforce, and Indonesian consumers spend most of their money on its products. It contributed about 15% of export earnings.
Indonesian policy, pricing and subsidies must combine with pollution control and property rights as well as with welfare needs. This project arose from the realization that interactions are intricate and policy-makers need a system-wide perspective from which to make decisions.
The project commenced before the Indonesian financial crisis of 1997. Modifications to the project schedule were introduced so that project members could assist the Indonesian Government during the crisis.

Project Outcomes

The course of the project was interrupted by the Indonesian financial crisis that began in 1997. This led to a significant redirection of research effort, and the researchers were in a position to provide input into the important policy debate surrounding this event. For example, the team produced a volume of works addressing the crisis, entitled 'Indonesian Economic Crisis: Effects on Agriculture and Policy Responses'.
The reviewers considered that the project was very successful in spite of the extremely unfavorable political and social environment in which it had operated. The review report focused largely on the CGE model, whose quality was considered to be excellent, and the large volume of output (over 80 papers) was noted. The significant capacity building effort was acknowledged and the review recommendations focused on how to continue the life and usefulness of the model and modelling capacity arising from the project.
The reviewers commended the management of the project researchers from Adelaide University, who made several important decisions during the project that led to an improved output. The first was the change in model design when new software for efficiently solving large CGE models became available. This meant significantly more work for them but produced a better product. As well, the decision to refocus some of the modelling effort onto the effects of the crisis was commended by the reviewers.

Location

There are no project locations defined for this project.