The Indonesian Potato Problem

Rainer Heufers gave a talk about forest ownership and management in Indonesia at the World Conference on Market Liberalization in Bali, Indonesia, 2015.  Rainer Heufers works with the Center for Indonesian Policy Studies and is a senior fellow at the Atlas Network.

So this is the story about potatoes in Wonosobo.

Indonesians know all about Wonosobo potatoes – it like, goes together.  Belongs together somehow.

Well, there’s actually a problem with this, because if you look at the numbers, and I do a rough comparison only.  Potato prices in Indonesia in comparison to per capita income are extremely high.  You pay in Indonesia about 97 US cents per kilo compared to income levels.  Whereas, and I am from Germany, and we consume a lot of potatoes.  We are only paid in comparison – compared to our salaries and income – we are only paid 30 cents per kilo.

So potatoes are extremerainer 3ly expensive in this country.  Philippines are even worse, and Vietnam, but let’s not look at those countries.

The price is artificially high.  If you go to Alibaba.com, you can buy a metric ton of potatoes for very little money.  Just check now, you see several offers, five metric tons, ten metric tons, for about 200 US dollars per metric ton.  But the consumers here in Indonesia pay about 97 cents US dollars per kilo.  It’s very high.

What’s the logical consequence?  Well, farmers – let’s grow potatoes!

And that’s the problem in Wonosobo with an artificially high price, because there’s no free trade.  The farmers in Wonosobo grow potatoes.  All slopes look like this, and it’s all potatoes.

Now, unfortunately, it’s a bit too bright to see it to clear, but you see all the fields here, this is all potatoes.  And some farmers have even started with vertical farmers, and not any more the horizontal farming.

The natural result of this is terrible landslides.  You can make a case that protectionism leads to the death of people, because the potato farms really cause landslides, flooding . . . it’s a terrible situation for the people there, but they keep growing potatoes.

 

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