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All Lies?

Famines in Sukarnos Indonesia, 1950s-1960s

Pierre van der Eng Indonesia Project, Crawford School of Public Policy ANU College of Asia and the Pacific Australian National University Canberra ACT 0200 Australia Email:

Abstract Food shortages and famines occurred in Indonesia during the 1950s and 1960s, but little is known about why and to what extent. Political turmoil absorbed most public attention, and since 1957 the Sukarno government bridled the national press and limited access by the international media to the countrys interior, while the disintegration of the public service prevented centralised systematic data collection. This paper draws on newspaper reports and contemporary secondary literature to analyse the issue. While deteriorating general economic circumstances and crop failures are relevant, the paper concludes that operations of the state-owned food logistics agency in markets for key food crops immobilised food stocks and exacerbated regional food shortages, in some cases contributing to regional famines. Keywords: famine, hunger, malnutrition, Indonesia, rice, food supply JEL codes: N55, N75, P48, Q18 This version: 16 September 2012

All Lies? Famines in Sukarnos Indonesia, 1950s-1960s 1. Introduction Much is known about the big 20th century famines in Asia, such as in Vietnam during 1944-45 (Gunn 2011), the 1959-61 China famine (e.g. Johnson 1998; Chen and Zhou, 2007), the famines in Bengal in 1942-44 and Bangladesh in 1973-74. But little is known about 20th century famines in another large Asian country: Indonesia. For example, Grda (2007 and 2009) does not mention them at all, even though Indonesia experienced a massive famine in the densely populated core island of Java during 1944-45 (Van der Eng 1998a, 2008), and the fact that several studies analysed occasional regional famines during the Dutch colonial era (Brennan et al. 1984; Van der Eng 2004; Fernando 2010). Indonesias independence from colonial rule in the 1940s did not relegate famines in the country to the dustbin of history. Arguably, only the spread of the Green Revolution in rice agriculture since the late-1960s achieved that. Indonesian newspapers reported occasional famines throughout the 1950s and 1960s, but faced government restrictions on its reporting to the extent that in December 1963, President Sukarno openly denied reports of famines in foreign media, calling them lies, all lies.1 Consequently, with the exception of the famine in Lombok in 1966 (Brennan et al. 1984), these famines have hitherto not been studied. The purpose of this paper is to establish the frequency and magnitude of these famines in Indonesia during the 1950s and 1960s and explain why they occurred. Section 2 will garner some of the evidence that exists on the famine situation during these decades. Section 3 will discuss the systemic reasons that may help to understand the reasons for these famines: population growth, natural disasters, food production shortfalls, a break-down of the supply chain, and hoarding caused by inflation. While combinations of these factors are relevant to a degree to particular famine-struck regions in the country, Section 4 will argue that the most serious problems were caused by the increasing control that government agencies sought to exercise over markets for rice and other food crops, which took away incentives for surplus production and made it impossible for the free market to alleviate supply shortfalls in deficit areas. Section 5 concludes. 2. Famines in Indonesia, 1950s-1960s There are two likely reasons why the famines that plagued Indonesia during the 1950s and 1960s are not well-known in the countrys economic historiography. One is that famine (kelaparan in Indonesian or hongersnood in Dutch) is an emotive term that

The Straits Times (5 December 1963) p.1.

was used frequently but without a concise and uniform meaning in Indonesias context. Following Grda (2007: 5) and others, famine can be defined as entailing a widespread lack of food leading directly to excess mortality from starvation or hunger-induced illnesses. Except for the 1944-45 famine in Java, there is no strong evidence of a widespread lack of food during the 1950s and 1960s. As will be explained below, the famines in Indonesia during those decades were localised and that the general situation was more one of endemic malnutrition and hunger oedema outbreaks aggravated by occasional regional food shortages. Such shortages affected some regions heavily during times of shortages, without developing into an acute famine affecting a large area. In addition, lack of population data makes it very difficult to establish the degree of excess mortality during these decades. This is generally a problem in assessing the impact of famine on mortality ( Grda 2007: 18-19). There was no central agency tasked with tracking and resolving regional famines. Generally local authorities had to deal with the consequences of famines. The local representatives of the central food logistics agency were expected to spring into action when rice supplies were short in regions under famine threat. And the decentralised medical service monitored and took measures to combat the hunger-induced illnesses that were the result of endemic malnutrition aggravated by acute famine in particular regions (Soekirman 1974). A second reason is that only snippets of information about the regional famines reached the public domain during these decades. During 1950-1956, Indonesia had a largely free press and both Indonesian and Dutch language contained frequently reports on famines. Independent local press agency Antara was often the main source. But following President Sukarnos declaration of martial law in March 1957 and the imposition of guided democracy in 1959, the country witnessed a decline of press freedom in the form of an accumulation of restrictions on the operations of the media in Indonesia (Smith 1969: 220-289; Oey 1971: 61-65, 110197). Starting in October 1957, several newspapers were banned, such as antiCommunist Indonesia Raya and 16 other mainly Dutch-language papers.2 That left only nationalist, communist and military newspapers, which themselves were placed under increasing government restrictions that required them to toe the official line. Increasingly they publish government media releases and news items from Antara that passed the censor at the Ministry of Information. Consequently, the degree of frank reporting in the national press decreased. As the operations of foreign reporters were increasingly even more closely scrutinised, even less of the reports in the local press reached the international media.

The Straits Times (23 October 1957) p.6.

In a widely cited open letter in December 1957, ex-Vice President Mohammad Hatta was still able to openly blame the government for growing regional rice shortages. He singled out the disorder in distribution, shipping and communications as the main cause, due to the poor planning of the takeover of KPM ships by the West Irian Action Committee that coordinated anti-Dutch agitation for the reunification of Dutch-controlled West Irian with Indonesia.3 But that was about the last time the government was openly criticised domestically. Certainly since 1959, when the concept of a guided press was imposed, the Ministers of Information increasingly regarded the remaining news outlets as government agencies whose task it was to spout propaganda. On occasion, they issued instructions to Indonesian journalists not to report any famines, and urged the remaining foreign media reporters who were banned from freely travelling in rural areas, ostensibly for security reasons to write uplifting stories about Indonesia.4 Associated Press correspondent Peter Arnett was expelled in May 1962 for reporting on a famine.5 Arnett mentioned a visit by Minister for Health Satrio to Indramayu (West Java) in mid-April. Satrio had discovered that local authorities had failed to report famine for fear of being blamed for poor administration. Arnett noted that the core reasons for this famine and others were poor transportation, racketeering, diversion of food and ships to West New Guinea front, natural calamities that keep food from moving, as well as rebellions and mismanagement of nationalised estates and industry. A Ministry of Foreign Affairs spokesman explained that Arnett was expelled for his record of consistently ignoring repeated warnings to exercise more care not to file tendentious reports which present a distorted picture and his reports were detrimental to the countrys interests.6 In a press conference in December 1963, President Sukarno openly denied reports of famines, calling them lies, all lies.7 Even press agency Antara was bridled before it was nationalised in 1962. Apart from Antara, another key source for the foreign media was Suluh Indonesia, the newspaper of the Nationalist Party of Indonesia.8 This paper largely toed the government line but nevertheless pleaded in February 1964 for government action to relieve the famine, when it published a statement from the Deputy Governor of Central Java, Soejono Atmo, that famine in Central Java threatened one million

Nashua Telegraph (28 December 1957) p.1; Nieuwsblad van het Noorden (28 December 1957) p.1; The Singapore Free Press (28 December 1957) p.1. 4 Reference? Most likely Information Minister Ruslan Abdulgani (1963-64) or Achmadi (1964-65). 5 Utrechts Nieuwsblad (24 April 1962) p.1; Milwaukee Journal (21 April 1962) p.56; Toledo Blade (8 May 1962) p.2. 6 Lewiston Morning Tribune (10 May 1962) p.2; The Sunday Sun (Vancouver) (12 May 1962) p.13. 7 The Straits Times (5 December 1963) p.1. 8 Indonesia still had 60 to 115 daily newspapers during the 1950s and 1960s, most of which were regional papers (Oey 1971: 150-151). Further research on regional famines may focus on these papers.

people.9 A Ministry of Foreign Affairs spokesman responded by stating that certain foreign correspondents had exaggerated the number, denying that one million people were under threat. He mentioned that there was no food shortage, but that supplies remained in ports because of a shortage of transport facilities.10 Nevertheless, the Communist Party of Indonesia openly blamed President Sukarno for the famines.11 And a month later Sukarno called a high level conference in Jakarta with 300 participants to discuss what was labelled the food problem.12 Openness about famines decreased further when in March 1964, the Indonesian Journalists Association of Jakarta asked the Indonesian government to take action against foreign news agencies and American Peace Corps volunteers in Jakarta for filing stories of famine in Central Java. The volunteers had apparently acted as substitutes for journalists. The appeal to the government also mentioned that Indonesian journalists had pledged not to publish reports that might disturb the Indonesian revolution.13 In February 1965 Sukarno openly declared that Indonesia could not afford press freedom, when he ordered the banning of anti-Communist newspapers.14 Clearly, the conditions under which both Indonesian and international journalists had to work made independent reporting on the extent and causes of the famines difficult. This is unlikely to have changed in the wake of the September 1965 military coup, which sustained restrictions on newspaper publishing and reporting. Table 1 summarises the available information on the most serious famines in Indonesia from press reports, listed by main cropping season. Generally the famines were reported during the lean months of December-April before the start of the main rice harvest during April-June. Particularly at times and in regions where the harvest was delayed due to late onset of the previous rainy season, food shortages could occur. The newspaper reports are inconsistent in their details. Some give numbers of deaths, but not estimates of excess mortality. Such estimates would have been very difficult, because the colonial system of village-based population registration had generally broken down (Van der Eng 2002). In some regions such data were still collected, or deaths of people at hospitals were reported, but for most cases only estimates of the number of people at risk were given. Table 1 is not complete, because newspapers reported only intermittently, possibly due to self-censorship at the newspaper and/or censorship at the Ministry of Information. Another reason is that the table is based on reporting in a selected number of newspapers, not all newspapers published in Indonesia at the time. It seems
9 The Straits Times (15 February 1964) p.2; Leeuwarder Courant (17 February 1964) p.4; The Straits Times (18 February 1964) p.10; The Times (17 February 1964) p.8. 10 Leeuwarder Courant (21 February 1964) p.3. 11 The Straits Times (21 February 1964) p.9. 12 Leeuwarder Courant (10 March 1964) p.1. 13 The Straits Times (28 March 1964) p.1. 14 The Straits Times (25 February 1965) p.2.

likely that further searches, especially in local newspapers will uncover other reported famines. Nevertheless, of the reported regional famines listed in Table 1, those during the cropping years 1954-55, 1956-57, 1957-58, and particularly 1963-64 and 1966-67 appear to have been the most severe in terms of people under threat. Of these, the famines in Central Java during December 1957 April 1958 and October 1963 May 1964, and in Lombok during 1963-64, 1965-66, 1966-67 and 1967-68 were arguably the most serious ones. Despite the uncertainty about excess mortality, it seems unlikely that the famines in Indonesia reached proportions comparable to China or Bengal/Bangladesh mentioned above. This confirms the observations of Swedish journalist Tord G. Wickbom who reported in May 1964: Even official quarters in Jakarta will admit that people are badly fed in large areas of Central and East Java. But people who have travelled there recently seem to agree that although there are signs of widespread malnutrition, beggars, pot-bellied children and so on, there is nothing like a famine in the Indian sense of the word.15 The reasons for each of the famines, as well as the official responses to these disasters are likely to have differed significantly, as they were generally addressed by the regional authorities. Without closer scrutiny of the local newspapers in Indonesia, it is difficult to say more about this. The only famine studied to some degree was the Lombok famine of 1966, which Brennan et al. (1981) place it in a long series of famines in Lombok due to population growth exceeding rice production, exacerbated by drought reducing rice production, and significant inequality in landownership that increased the vulnerability of poor sharecroppers. 3. What systemic factors may explain the famines? A reason why famines occurred during the 1950s and 1960s in Indonesia was that population growth and the growth of food production were precariously balanced, as per capita food supply in Figure 1 reveals. It shows that the main staple crop, rice, on average made up 46% of calorie supply. Other major staple crops were cassava, maize and sweet potatoes, which were generally regarded as inferior foods, and certainly cassava was considered to be a famine crop (Van der Eng 1998b). The average for the whole period is just 1,761 Kcal per capita per day, which was 10% below the average level of food supply in Java in the 1930s (Van der Eng 2000), but still higher than the average level of 1,567 Kcal per capita per day during the famine period 19441946 (Van der Eng 2008: 26). The difference between average Kcal supply in the 1930s and 1950s-1960s is partly explained by the acceleration of population growth after independence, from an

The Times (London, 19 May 1964) 13; The Straits Times (29 May 1964) 10.

average of 1.6% during the 1930s to 1.9% in the 1950s and 2.0% in the 1960s, but with significant differences in the growth rates across provinces (Van der Eng 2002). The per capita nutritional requirements of an on average younger population in the 1950s and 1960s were lower than the 1930s. Nevertheless, even with some omitted food products such as fruits and vegetables included, the average it is not likely to have exceeded what was at the time considered to be a minimum, around 1900 Kcal per person per day (Napitupulu and Sunardjo 1962; Van Veen et al. 1971: 40; Van der Eng 2000: 606). But this average reveals little about the geographical and size distribution of the available food supplies. Regional per capita food production varied considerably across Java, and the entire country (Mears et al. 1958: 537 and 561; Reksohadiprodjo and Hadisapoetro 1968). Malnutrition was prevalent in the densely populated parts of the country, such as in Central Java, particularly in upland areas where dependence on secondary food crops such as cassava was greater (Nibbering 1993). But malnutrition also persisted in Bali and in the drought-prone Nusa Tenggara islands such as Lombok, Sumbawa and Sumba. Particularly the poor living in these parts of the country were vulnerable (Napitupulu 1968; Van Veen 1970: 36-39, 46). The opportunities to increase the production of food crops, particularly rice, with existing technologies were limited, but on the whole sufficient. The patterns of that process had been established during the 1920s and 1930s and took the form of public investment in the development and dissemination of new varieties of food crops, an agricultural extension service that introduced farmers to these new crop varieties and to improved cultivation practices, and particularly public investment in irrigation structures that facilitated multiple cropping, as well as in drainage structures that opened up unused land were paramount in keeping population growth and food supply balanced (Van der Eng 1996: chapter 3). Specifically in Java, population growth and food supply had been delicately balanced since the land frontier was reached in the 1920s and extra food production could only be achieved through higher crop yields and multiple cropping, particularly on irrigated fields. There were limits to the degree that irrigation structures were able to adjust regional and temporal variations in rainfall patterns, which therefore impacted on this precarious balance. Figure 2 shows that in five cropping years the majority of 16 rainfall stations in Java, Bali and Nusa Tenggara received at least 25% less rainfall compared to their 1950-1970 average. These data suggest that the first halves of 1952, 1954, 1962, 1964 and 1966 qualified as years of drought due to insufficient rainfall and/or a delay of the cropping season due to an extended dry season the year before. Only for 1952, 1962 and 1964 does this correspond with the newspaper reports in Table 1. The reported famines of early 1956, 1957, 1958, 1959, 1961, 1963, 1965 and 1967 are not reflected in these rainfall data, suggesting that there may have been other causes.

Possible causes of famine were animal pests, such as rodents and grasshoppers, crop diseases and floods that caused crop failures. Figure 3 shows the degree to which rice paddies were deemed to have failed in a sense that for whatever reason the crop yields were so low that the farmer would be exempt from the land tax. Fortunately, failed areas did still produce a crop, but the average yield of the fields would be low. The chart shows that 1961 (the 1960-61 cropping year), and 1963 (or 1962-63) were bad years, in line with the newspaper reports in Table 1. Another argument presented in the newspaper reports was that transport problems impeded the movement of rice from surplus to deficit areas, or the movement of emergency supplies, to alleviate rice shortages. The Dutch-owned shipping company KPM maintained the interisland shipping network in Indonesia during most of the 1950s. The argument centres on the situation immediately after December 1957, when all KPM ships steamed out of Indonesia to avoid nationalisation of the companys main assets (Marks 2010a: 80-83; A Campo 2002: 545-570). Newly established state-owned shipping company PELNI had insufficient capacity to meet the demand for shipping space to take care of the 70% of interisland trade previously handled by KPM. However, the Indonesian government responded quickly by chartering foreign ships to meet shortages.16 It also propped up PELNIs shipping capacity for interisland liner shipping. Capacity was soon back to normal, although the Indonesian military requisitioned some of this for shipping to support military activities in Sumatra, Sulawesi and later Eastern Indonesia. In addition, shipping efficiency decreased for a variety of reasons (Marks 2010a: 83). Nevertheless, Indonesia still had a large interisland shipping fleet of between 7,500 and 10,000 wooden prahu sailing ships that conducted interisland tramp shipping. During the 1950s and 1960s, prahu shipping thrived (Dick 1975: 81-82). These ships were small and wind-dependent, but in principle available for shipments of food products as they had done for centuries. Table 2 shows that the total domestic cargo loaded in Indonesian ports increased somewhat, but certainly did not decrease significantly. In addition, it is likely that they did not accurately record cargo handled by prahu (Hughes 1985: 103) Table 1 showed that several famines occurred in Java, which was also the main granary of Indonesia. Transport in Java took the form of coastal shipping, railways or road transport. The railway system was damaged during the Japanese occupation of the 1940s, repairs were slow to materialise in the 1950s, and infrastructure and rolling stock deteriorated in the 1960s. Table 2 shows a decline in railway freight in Indonesia (mainly Java), which was not only due to deterioration of the railways, but also the growth of road transport as a more competitive means of overland transport, despite the deterioration of roads and bridges (Soemobaskoro

New York Times (24 December 1957) p.3.

1958; Mears 1958: 51; Dick 2000: 195; Marks 2010a: 83-84). Table 2 shows that the number of registered trucks continued to increase. The table does not show that the quantity of imported and domestically produced petrol and diesel increased faster, suggesting an increasing use of road-based transport facilities. In other words, while sea and land transport problems may on occasion have aggravated the regional supply of foods, shipping and overland transport facilities may not have deteriorated to the extent that it would help to explain the occurrence of famines. A further potential obstacle in the supply chain was that the purchase of paddy, the milling of rice and the distribution of rice were largely in the hands of ethnic Chinese entrepreneurs. About 90% of the 575 large rice mills in Java were Chinese-owned (Mears 1958: 48). Their position in Indonesias economy and society was precarious and during the 1950s they were increasingly discriminated against. In 1954 the government stipulated that ownership of all licensed mills had to be taken over by Indonesian citizens (Bank Indonesia 1954/55: 115; Bank Indonesia 1955/56: 132). Many mill owners registered their mills in the names of Indonesian front men. Following the coup in 1957, ethnic Chinese groups became apprehensive, fearing in December 1957 that they may next be singled out by extremists for restrictive controls.17 About 70,000 ethnic Chinese were banned from rural areas in 1959 (IS 1959; Van der Kroef 1960: 58). Over 100,000 ethnic Chinese subsequently opted to migrate to China, but the majority of those banned from the country side retreated to towns and cities (Somers 1964: 26). Nevertheless, these developments severely disrupted the involvement of ethnic Chinese in the rice industry, because with them went the market expertise and the commercial and social capital that made the rice industry work. Cooperatives were expected to take over the role of these rural Chinese, but despite their rapidly growing numbers of cooperatives on paper they were not able to do so. Several newspaper reports dismissed rice traders as racketeers, whose activities aggravated the food supply problems. This matches the stereotypical view of traders as speculating profiteers who hoarded rice by purchasing it just after the main harvest and releasing it during the lean season when rice prices increased. This poor reputation was a consequence of the fact that many small rice farmers had often pledged their crop as collateral for loans to bridge the lean period until the main harvest. Farmers were forced to sell when prices were low, and buy back rice or other staple foods when prices were high. Arguably, this popular view was a caricature that did not take account of the risk in the rice market and the high degree of competition among small traders (Gosling 1983). Nevertheless, the view that traders were speculators who hoarded rice stocks was particularly relevant at times of high inflation in Indonesia during the 1950s and

New York Times (24 December 1957) p.3.

1960s, specifically 1951, 1958 and 1961-1968, as Table 3 shows. Most inflation was the consequence of the central governments unsecured borrowing from the central bank to finance growing budget deficits. Consequently, M1 increased between 1950 and 1970 by a factor of 58 (actually 58,000 due to the debasing of the currency in 1966), while inflation and the rice price of rice increased by a factor of respectively 46 and 41. In contrast, from 1950 to 1970, GDP in constant prices increased by a factor of just 2.2 (Van der Eng 2010b). As money growth outstripped growth in the real economy, Indonesia suffered high inflation, which was a source of increasing uncertainty in domestic commodity markets, such as the rice market. Not only did it discourage farmers from producing a marketable surplus, it also reduced confidence in holding currency and caused people to convert cash earnings into goods and assets as soon as possible to hedge against further inflation. A rice stock was a cumbersome store of value that was subject to policing of regulations against rice hoarding, particularly penalties and confiscation. Nevertheless, rice was one of the few assets that were accessible to many people in rural areas, particularly farmers. Inflation also eroded wage rates. For example, nominal male wages paid at agricultural estates in Java and the rest of the country increased between 1950 and 1970 by a factor of, respectively, 23 and 20 (BPSb, various years). In other words, real wages decreased. This affected small landholders earning wages as byemployment and fulltime wage workers in both rural and urban areas. Rice shortages in urban areas may have been alleviated with rice distributed by the food logistics agency at below-market prices (see below), but distribution in urban areas was only to those who were registered with local authorities. As a lot of migrants from poor rural areas were new arrivals to urban areas in search of work and income, they were not necessarily included in the distribution system. 4. The impact of the food logistics agency on rice markets While different combinations of the factors listed in section 3 are likely to be of some relevance to particular famine-struck regions in Indonesia, they do not appear to add up to a convincing explanation for the occurrence of famines, because on average food supply was low but relatively stable, as Figure 1 showed. If the law of one price held in Indonesias national economy, we would have expected markets for food crops to have taken advantage of price differentials between regions to facilitate a flow of surplus to deficit regions and achieve a more equitable distribution of foods, particularly rice. But this assumes that efficient markets existed in Indonesia during the 1950s and 1960s. Available evidence suggests that at least in Java rice markets were highly integrated in the 1930s, and worked well to minimise temporal and crossregional variations in the price of rice (Van der Eng 2010a; Marks 2010a: 86-88). But

during the 1950s and 1960s temporal and cross-regional price differences increased significantly, suggesting a de-integration of regional rice markets across the country (Marks 2010a: 90; Marks 2010b: 316). To the degree that the factors listed in section 3 do not explain the occurrence of famines in Indonesia, the reasons may be found in the disintegration of rice markets across the country. A major reason for the disintegration of rice markets was the accumulation of restrictions on their operation. After independence, the Indonesian government continued the semi-public food logistics agency Voedingsmiddelenfonds (VMF) that had worked during 1946-1949 to alleviate drastic food shortages in several parts of the country (Van der Eng 2008: 51-66). The agency retained its power to license rice mills, restrict shipments of paddy in Indonesia and impose a maximum on stored quantities of rice. There were some changes in the rationale, structure and operations of the food logistics agencies which succeeded VMF and each other during the 1950s and 1960s.18 Like VMF, the main policy goals of the agency were (1) to maintain low and stable prices for consumers through a buffer stock that (2) could also be used for emergency injections. In the 1950s three other goals were added. (3) Providing adequate supply of rice to the armed forces, police, and employees of governments and vital industries. (4) Maintain real incomes of farmers at high enough levels to protect them from a situation in which they incurred debts to paddy traders during the lean season that they were forced to pay back by selling paddy just after the harvest when seasonal prices were at their lowest. And in 1957 the aim (5) of creating a balanced middle class was added, which was a euphemism for a transfer of ownership/control over the rice mills from ethnic Chinese to native Indonesians (Mears et al. 1958: 532). And to that end the agency exercised increasingly extensive controls on transport, storage, processing and distribution of paddy and rice. Without going into the details of year-to-year changes in how the successor agencies operated, the consequences of its operations were increasingly that markets for paddy and rice were no longer steered by the agencies as in the case of VMF but that effectively two markets were created. One market was orchestrated by the logistics agency on the basis of bureaucratic instructions that were implemented with variable degrees of effectiveness. In the other market operators sought to circumvent the consequences of increasing controls on its operations. The two markets intersected in several ways. For instance, the large rice mills were obliged to work only for the agency. They could not mill and trade rice on their own account. Any unauthorised trade of large quantities of rice was forbidden. On the one hand this implied a considerable constraint on the rice trade, as the mills were not
Respectively, Yayasan Bahan Makanan (1951), Yayasan Urusan Bahan Makanan (1952) which cooperated with regional Badan Pembelian Padi (1957) and Badan Pelaksana Urusan Pangan (1964), Komando Logistik Nasional (1966) and Badan Urusan Logistik (Bulog, 1967). For an elaborate but often confusing discussion of the increasingly complicated structure and operation of the agencies during 1958-1970, see Moeljono (1971: 56-105).


active participants in rice markets, but had to wait for instructions and permits at the risk of having their license to conduct business withdrawn. Most commercially traded rice was therefore hand-pounded, transported by bicycle and other small-scale transport facilities, and marketed by petty traders in small quantities (Mears 1961: 68).19 Hence, the impact of such control measures on rice milling and trade therefore was a loss of allocative efficiency of the rice market. Despite measures and penalties to prevent unauthorised trade of paddy and rice between regions, smuggling and blackmarketing, as well as unauthorised hoarding occurred, which contributed to regional shortages in rice supply (Van der Kroef 1963: 389). Despite increased smuggling across regional borders (Mears et al. 1958: 543), these impediments to interregional distribution were a major reason for the increasing price discrepancies across Indonesia. Moreover, throughout 1950-1970 the agency never met its purchase targets, as Table 4 shows (Affif et al. 1958: 542; Mears 1961: 286-8). A major reason was that it sought to purchase rice at below-market prices (Bank Indonesia 1956/57: 151) One of the consequences of below-target purchases was that the use of the available milling capacity decreased, reaching a low 42% in Java during 1955-57, and decreasing further to just 25% in 1967 (Mears et al. 1958: 542; Prawirodihardjo 1968: 149). Underutilisation of capacity increased average processing costs. The shortfall in rice available for distribution purposes was met with imported rice, for which the agency had a monopoly. During the 1950s and early-1960s rice imports increased to unprecedented quantities, before decreasing during 1965-1967 when Indonesia simply ran out of foreign exchange for essential imports. Imports that did happen during those years and after were increasingly financed as foreign aid from the USA and Australia, following the September 1965 coup, the end of konfrontasi with Malaysia and the normalisation of international relations (Van der Eng 2009: 60-62). Given the agencys problems of purchasing rice domestically, it found it increasingly easier to distribute imported rice in urban areas than to improve the domestic purchase of rice and the shipment of rice from rural to urban areas. Moreover, the cost in Rupiah of rice imports was calculated with a low exchange rate compared to imported consumer goods or the black market exchange rate (Moeljono 1971: 45-46). Hence, the domestic cost of imported rice was sometimes lower than that of domestically procured rice, including all overheads. The mounting difficulties with meeting purchase targets led to several changes to the operations of the agency. One major change was an increasing decentralisation of its operations, starting in 1958, to the extent that by the early 1960s its operations
Mears (1958: 47) estimated the marketed surplus of rice to be 20% of production. Penny (1969: 258) mentions that 30% of rice production entered the rice market during the early-1960s. Either way, given that the logistics agency purchased at most 10% of rice production during those years, 10 to 20% of rice must have been traded informally by petty traders as home-pounded rice.


had actually become spread over several regional logistics agencies. During the 1950s the agency purchased almost all its rice in Java, but the regionalisation implied that regional branches of the agency since 1962 were required to purchase and stockpile rice locally, presumably because they could no longer rely on shipments from stockpiles in Java (Moeljono 1971: appendices 23-24 and 30-31). Hence, regionalisation impeded coordination of policies across the country, obstructed the interregional trade of rice even more, and enhanced the degree of arbitrariness in the agencys operations. In addition, there was a growing involvement of the different administrative layers, as well as the local police and regional army in supporting the work of the regional food logistics agencies. Not only did this development lower the degree of transparency in the operations of the agency, it also created regional inequities in how policies were executed. The agencys purchase targets changed from targets to obligatory quota, that were imposed down the administrative echelons to the village level, similar to the system used during the Japanese occupation of 1942-1945 (Van der Eng 2009).20 Depending on the region, the local officials of the agency, the rice mills, as well as the local administrators, police and army cooperated in order for a region to meet the purchase quota. Hence, the minimum target price at which rice would be purchased gradually became the price at which farmers were obliged to surrender rice to fulfil pre-determined quota. Figure 4 shows that the purchase price fell from 70% to 60% of the average rural rice price during the 1950s, and to less than 40% in the early 1960s, mainly because inflation caught up with the fixed minimum prices. In the face of disappointing rice purchases, the regional agencies started to purchase and stockpile maize and dried cassava as well in 1965-66. It is very likely that falling purchase prices enhanced the reluctance of farmers to increase surplus production, thus reinforcing the shortfall in purchase targets and the increasing reliance on imported rice. The obligatory sales of paddy became a heavy burden for farmers during periods of bad harvests. Where targets were not met, officials used force to persuade farmers to cooperate, thus enhancing farmers resentment against the operations of the food logistics agency and its often corrupt representatives in the early-1960s.21 Worse, to prevent rice from leaving surplus areas and reduce the chance of regions meeting purchase quota, some regions introduced controls on intraregional shipments of paddy (Mears 1961: 157). A major reason why this situation unfolded was the agencys task to use a buffer stock for emergency injection purposes, as well as securing the supply of rice
Tirtosudarmo (1963) describes the top-down system in Central Java in 1961-62, as well as the deliberative pressure (musyawarah) that village officials used to persuade farmers to deliver paddy. 21 Mears et al. 1958: 548-549; Sadli (1961); Tirtosudarmo (1963); Ismael (1963); Fletcher and Mubyarto 1966: 14.


to the burgeoning public service, armed forces and police, and to the economically vital plantations and industries. Rice was supplied at below-market prices to the first three groups in order to compensate them for their declining real wages. The distribution of rice to plantations and industries was meant to help them to secure labour and continue production for export. Table 4 shows that the share of purchased rice used for distribution to these groups increased from an average of 41% during 1953-1954 to 53% in 1955-1959 and 70% in 1960-1964, and the share of rice used for distribution in deficit areas and for price control decreased accordingly. This development made it increasingly difficult for the agency to respond effectively to regional famines. To solve this multitude of problems, the new government that came into power following the September 1965 military coup established a new centralised agency in 1967; Bulog. In contrast to its predecessors, it was directly responsible to the President and was more autonomous in its operations. Although it failed to stem increases in the rice price during the late 1960s, Bulog gradually succeeded in establishing an effective grip on the rice economy. A major difference between the operations of Bulog and its predecessors was that it actually defended a market-based floor price of paddy, rather than use fixed purchase prices at which paddy had to be sold to the agencies. And Bulog defended a ceiling price of rice to prevent hoarding and speculation. Figure 4 shows that the purchase price was close to the average rural retail price in Java. The defence of a floor price implied a more active market involvement. The strict controls on rice milling and the trade of paddy and rice were removed and Bulog defended the floor price by purchasing rice from the mills, but now on a non-exclusive basis. The argument of this paper is that the activities of the food logistics agencies not only worked to obstruct markets and immobilise rice supplies that would otherwise have been produced and traded impeded markets, but also that they were a disincentive for surplus production by rice farmers. The argument to this end is summarised in graphic form in Figure 5. This chart depicts total supply (S1) and total demand (D) in the rice market in Indonesia and the main economic changes in rice supply. The assumption is that Indonesias rice market was still largely integrated in the early 1950s. The accumulating restrictions imposed on trade and transport of rice perhaps suggest the contrary, but the existence of a free market in principle indicates that rice continued to be traded from surplus to deficit areas. The equilibrium situation (E1) that would have emerged if the situation had not changed compared to previous years can be approximated with the situation during normal years before the impact of the food logistics agency was stepped up. Assuming that 30% of farm production of paddy entered domestic trade, and assuming that all rice was purchased in Java, the equilibrium quantity (qe) shifted from 1.2 million tons of rice in 1950, rising to 2.1 million tons in 1970. This is the total amount produced minus subsistence usage by


farm households. To analyse changes in the market as a consequence of the operations of the food logistics agency, it is relevant to account for two effects. The first effect to be taken into account is the purchase of rice by the food logistics agency. As Figure 4 indicated, the purchase price (pp) of paddy (in terms of rice) was long below the clearing price on the free market (pb). Due to the fact that the agency offered a low purchase price, the quantity of rice it managed to purchase (qp) domestically was indeed far less than the total amount of rice marketed. On average just 26% of marketed paddy in the whole of Indonesia during 1950-1970. The difference (qe - qp) could have been sold on the free market. However, given the accounts of food shortages, the quantity of rice traded on the free market was presumably smaller than (qe - qp). A key factor was the impact of a range of physical impediments on production and supply. This effectively increased the unit cost of supplying rice. One likely reason for the increased cost may have been the greater cost of transporting rice. If the transport of rice was restricted by shortages of railway carriages, road trucks and steamships, these would in principle have been replaced by other means of transport, such as ox-carts or even bicycles, and prahu. Such means of transport may not have been able to handle the entire volume of freight formerly carried by rail, road and steam ships. Not because such alternative means of transport were difficult to organise, but because they would have been much more expensive and therefore would have increased the cost of supplying rice. So, physical impediments to the production and marketing of rice, such as transport difficulties, would have increased the unit cost rather than the marginal cost of supplying rice. This effect is indicated in the graph by the shift in the supply curve from S1 to S2. The S2 curve is truncated at the left side because rice supply at quantities up to qp was determined by the purchase and transport policies of the logistics agency, which set below-market transport costs. Rice supply in that segment of the market was therefore determined by S1. As a consequence of, for instance, higher transport costs, the market reached a new equilibrium (E2), in which the price (pt) exceeded the purchase price (pp), and the total quantity demanded and supplied fell from qe to qt. The second effect that explains why the quantity of rice traded in the free market was smaller than might have been the case under normal circumstances was the ban on the trade and transport of paddy and rice without permission by the logistics agency. In general the supply of produce in food markets is highly elastic, which means that a small change in the market price triggers a substantial change in the quantity supplied. Indonesias rice market cannot have been an exception to this rule, particularly at regional levels, given that there were several millions of rice farmers. However, the operation of a free market and the increasingly restrictive measures taken to control it drastically increased the marginal cost of supplying rice. Anti-hoarding restrictions on the ability of traders to hold rice stocks increased the


risk involved in trading rice on the free market. The risk to producers and traders not only involved the possible confiscation of rice stocks, but also stiff penalties and/or payment of bribes. Hence, suppliers in the free market faced a higher and rapidly rising marginal cost of supplying produce. This effect is indicated in the graph by the shift in the supply curve from S2 to S3. As a consequence, the market reached an equilibrium (E3), in which the market price (pb) exceeded the purchase price (pp) by far and in which the total quantity demanded and supplied fell to qp+b i.e. the quantity purchased by the food logistics agency plus the quantity traded in the free market. The argument in this paper is that the second effect outweighed the first effect, and that therefore the activities of the food logistics agency not only caused a disintegration of rice markets across Indonesia, but were also a disincentive for farmers to produce and for traders to handle a higher quantity of marketable rice than they did. This lower supply of rice, than would otherwise have been the case, is likely to have exacerbated regional food shortages, to which the food logistics agency was increasingly ill-equipped to respond from 1950, until Bulogs operations became effective in 1968. 5. Conclusion It is difficult to argue that the reports of famines were all lies, as President Sukarno maintained in 1963. The Indonesian and international press reported consistently on famines. Given the limits on press freedom in Indonesia at the time, these reports may have been the tip of an iceberg. Nevertheless, it is highly unlikely that the famines in Indonesia during the 1950s and 1960s were of the same magnitude as those in China and Bengal/Bangladesh, and also in Java during 1944-45. Nevertheless, the famines are likely to have been the pinnacle of a situation of widespread hunger and malnutrition in Indonesia, particularly in parts of Java, Bali and Nusa Tenggara, which only the spread of the Green Revolution in rice agriculture since the late-1960s would alleviate. The paper probed several of the systemic reasons that may in principle help to explain the occurrence of famines: the fragile balance between population growth and the growth of food production; drought; pests, diseases and floods; transport problems; the changing position of the ethnic Chinese; and high inflation. It argued that combinations of these factors may have been of relevance to understanding the occurrence of famines at certain times in some regions, but that they in themselves may not be sufficient explanations. It is more likely that the perverse impacts of the activities of Indonesias food logistics agency impacted on rice markets in ways that were unintended but nevertheless of significant consequence. The mandate of the food logistics agency rested on practical and ideological factors. The practical reasons were the need to operate a buffer stock for the purpose


of stabilising rice prices for consumers and also to dispatch emergency supplies in regions suffering from supply shortfalls. An added practical reason was the need to top up public service and armed forces salaries with subsidised rice allocations as inkind payment. And a major ideological reason was to cut the monopsonistic Chinese middlemen out of the supply chain. However, the agency was not able to build a sufficient buffer stock during the harvest seasons, as it paid below-market prices. Its activities largely morphed into a scheme to distribute rice to public servants, police and armed forces as an in-kind wage. To achieve that, the agency had to increase controls over the transport, storage and processing of paddy and rice created significant distortions that had negative consequences for the free market where possibly 50 to 75% of the marketed rice was traded, to the extent that it distorted the incentives for the production and supply of rice and resulted in rice supplies that were lower than may otherwise have been the case. This also reduced the ability of the food logistics agency to respond adequately to emergency situations. Arguably, the operations of the food logistics agency aggravated regional rice shortages in Indonesia during the 1950s and 1960s. In combination with regional crop failures and run-away inflation, it was at the heart of the famines that the Indonesian population suffered during these years and that resulted in excess mortality and presumably long-term negative health consequences.

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Figure 1: Net Food Supply per Capita, Whole of Indonesia, 1950-1970 (Kcal per capita per day)
2,000 1,750 1,500 1,250 1,000 750 500 250 0 1950 1955 1960 1965 1970
Imported rice Other (meat, poultry, sugar, fish, edible oil, imported wheat) 5 other main food crops Domestic rice

Note: These estimates include imports of food crops, are net of losses during processing, and do not account for carry-over of stocks from one year to the next. Source: Van der Eng (2000).


Figure 2: Drought Years in Indonesia, 1950-51-1970-71

Note: Calculated from monthly rainfall data. The chart shows the percentage of 16 rainfall stations that received at least 25% less than their 1950/51-1969/70 annual average rainfall. The rainfall stations were located in Java, Bali and Nusa Tenggara. Source: Calculated from data provided by Dr Dewi Kirono; Kirono et al. (1999). Figure 3: Share of failed irrigated paddy area in total planted paddy area in Java 1950-1970 (percentages) SS
14 12 10 8 6 4 2 0 1950





Note: Failed paddy area refers to land producing below-average paddy yields due to pests, rodents or floods, and that was exempted from land tax. Sources: BPSa and BPSc (various years).


Figure 4: Ratio of Paddy Procurement Price and Rural Retail Price of Paddy in Java, 1952-1970

1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970

Note: No purchase prices available for 1964-1967. Sources: Purchase prices, Bank Indonesia (various years) and Moeljono (1971: 66); rural retail prices: BPSa (various years).


Figure 5: Schematic impression of the main changes in supply and demand in the rice market in Indonesia during the late-1950s and 1960s


Table 1: Main Famines in Indonesia Reported in Local and Foreign Newspapers, 1951-1970 Cropping season Famine locations Causes 1951-52 November-May n.a. West Java (Krawang, Subang) Poor harvest, malnutrition Central Java (Klaten, Surakarta, Kebumen) High rice prices East Java (Banyuwangi) Nusa Tenggara (Flores, Timor, Sumba, Drought, malnutrition, high rice prices Lombok) 1952-53 October-December East Java (Banyuwangi) Rice shortage Malnutrition Bali (Nusa Penida) 1954-55 January-April n.a. West Java (Indramayu) Rodent pest, malnutrition Central Java (Banjarnegara, Pekalongan, Pemalang, Wonigiri) Malnutrition East Java (Jember) Drought, rice shortage Nusa Tengara (West Timor, Sumba) Floods Central Sumatra (Jambi) Unsafety, unplanted fields South Sulawesi (Luwu) 1956-57 December-April Malnutrition Central Java (Banyumas) Malnutrition Nusa Tenggara (Lombok) n.a. East Kalimantan (Mahakam) Shipping connection South Sulawesi (Masalima) 1957-58 September-April Floods West Java (Majalengka) Malnutrition, floods, transport problems Central Java (Banyumas, Kebumen, Kutuarjo, 30 subdistricts) Drought Nusa Tenggara (Sumba, Sumbawa) Rice shortages Central Kalimantan Secessionist uprising, refugees, Sulawesi (S/E, Kendari; North and unplanted fields, rice shortages South)

At risk 7,400 53,000 n.a. 10,000 n.a. 35,000 n.a. 17,000 504 n.a. 6,000 thousands 60,000 1,500 50,000 n.a. 50,000 550,000 n.a. n.a. n.a.

Deaths n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 300 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Table 1 (continued) 1958-59 January 1960-61 September 1961-62 April Maluku (Ambon) Central Java (Wonosobo) Nusa Tenggara (Lombok) West Java (Jakarta, Indramayu) Central Java Kalimantan (Banjar) Bali West Java (Indramayu) Central Java (throughout) Secessionist uprising, shipping problems n.a. Drought Drought, economic chaos, transport problems, racketeering Drought n.a. Rodents, volcanic eruption Drought Drought, rodents, failure rice harvest Drought, rodents n.a. n.a. n.a. 5,000 thousands 9,000 n.a. 110 200,000 304 340,000 1 million 100,000 5,000 n.a. n.a. n.a. 5 n.a. n.a. n.a. 1,500 n.a. 12,000

1962-63 April-June 1963-64 October-February

n.a. 100 30,000 40,000 1965-66 November-April n.a. n.a. 10,000 Nusa Tenggara (Lombok) 1966-67 December n.a. n.a. 1,700 Central Java (Yogyakarta) Drought 5,000 100 Nusa Tenggara (Sumbawa) Drought, malnutrition, smallpox, malaria 80,000 50,000 Nusa Tenggara (Lombok) 1967-68 Rodents, grasshoppers n.a. 20,000 Nusa Tenggara (Lombok) 1968-69 July n.a. 60,000 n.a. Nusa Tenggara (Sumba) 1969-70 December-April n.a. 15,000 n.a. West Java (Indramayu) Volcanic eruption 20,000 n.a. Nusa Tenggara (Flores) Notes: Several other famines were reported, but reports were not always specific about the area, the number of people under threat, the number of deaths, and/or the specific causes of the reported famine. The foreign media generally reproduced reports by international news agencies such as Reuters, AP, UPI and AAP, which in turn tended to quote Antara or Indonesian newspapers such as Suluh Indonesia if they did not have their own reporters in Indonesia. Sources: An incomplete selection of domestic and international newspapers.

Bali Nusa Tenggara (Sumbawa) Nusa Tenggara (Lombok)

Table 2: Transport Situation in Indonesia, 1950-1970 Registered Motor Vehicles Domestic Railway cargo Commercial Passen freight Motor Bicycles loaded in ger Buses Trucks traffic cycles harbours cars (x 1,000) (1,000 tons) 1950 31 8 22 8 950 5,328 3,417 1955 64 10 45 77 1,774 6,823 5,365 1960 103 18 75 133 1,551 6,565 6,771 1965 166 18 85 234 1,454 4,397 6,384 1970 239 24 102 440 2,879 3,958 9,694 Note: Stock of bicycles estimated on basis of imports of bicycles since 1930, assuming a 20-year asset life. Sources: BPSa (various years); Indonesias foreign trade statistics.

Table 3: Inflation and Money Volume Growth, 1950-1970

Rural rice price (bulu, no.1, pounded, Rp/100 kg) 93 205 238 210 210 263 313 340 524 551 696 1,190 3,371 7,436 17,183 58,263 541 1,549 3,986 3,649 4,243 Jakarta retail price index* (1953= 100) 54 89 94 100 105 138 149 151 203 271 328 398 1,006 2,447 4,677 23,118 268 794 1,991 1,940 2,225 Inflation Jakarta retail price index 20% 65% 6% 6% 5% 31% 8% 1% 34% 33% 21% 21% 153% 143% 91% 394% 1,059% 197% 151% -3% 15% Money volume Currency and demand Curdeposits rency (M1) (billion Rupiah) 2.6 4.3 3.3 5.0 4.4 6.6 5.2 7.5 7.5 11.1 8.7 12.2 9.4 13.4 14.1 18.9 19.9 29.4 26.4 34.9 34.1 47.8 48.8 67.9 102.2 135.3 177.4 265.3 500.0 722.4 1,810.0 2,557.1 14.4 22.2 34.1 51.5 77.0 116.2 116.0 181.7 155.0 251.0 Money volume growth

1950 51 52 53 54 1955 56 57 58 59 1960 61 62 63 64 1965 66# 67 68 69 1970

Rice price 4% 120% 16% -12% 0% 25% 19% 9% 54% 5% 26% 71% 183% 121% 131% 239% 829% 186% 157% -8% 16%

Currency 48% 29% 31% 20% 43% 16% 8% 50% 41% 33% 29% 43% 110% 74% 182% 262% 696% 137% 126% 51% 34%

M1 30% 17% 31% 13% 48% 10% 9% 41% 55% 19% 37% 42% 99% 96% 172% 254% 770% 131% 126% 56% 38%

* This is an index comprising the prices of 19 food products. # The Rupiah was debased in 1966, with 1 new Rupiah = 1,000 old Rupiah. Sources: BPSa (various years); Bank Indonesia (various years).

Table 4: Operations of Indonesias Food Logistics Agencies, 1950-1970.

Food logistics agencies rice balance sheet (x 1,000 ton) Opening Domestic stock purchase Distribution and Sales Net foreign Military, Estates, Injection purchase civil state and service Enterprise others 334 34 117 220 529 54 188 354 766 61 212 399 293 57 197 371 257 53 184 347 125 139 213 466 825 269 245 505 554 269 194 468 921 399 179 450 891 588 181 406 894 657 200 391 1,064 704 204 389 1,025 752 202 614 1,043 801 162 403 1,010 873 190 284 203 448 74 102 354 659 123 71 354 681 36 176 628 697 28 155 604 688 104 214 956 711 151 266 End year Total stocks 370 597 673 625 584 818 1,019 931 1,028 1,175 1,249 1,297 1,567 1,366 1,347 623 852 893 881 1,005 1,127 69 72 354 395 482 86 148 90 145 130 53 82 59 178 182 80 222 203 548 351 672 Domestic Target purchase as % domestic of Stock rice Prochange purchase Target duction in Java 130 80.8 2.7 3 200 70.0 3.6 282 426 61.1 6.3 41 447 83.4 8.4 87 548 75.7 8.6 -396 655 45.3 6.5 62 432 59.6 5.4 -58 416 76.8 6.7 55 468 34.7 3.3 -15 468 57.3 5.3 -77 295 94.3 5.5 28 300 87.2 5.4 -22 964 53.9 10.1 119 593 74.6 10.0 4 400 85.4 7.8 -102 525 60.6 6.4 142 780 82.1 12.3 -19 597 87.1 10.5 345 600 99.6 10.8 -197 587 34.7 3.5 322 528 93.4 7.2

1950 51 52 53 54 1955 56 57 58 59 1960 61 62 63 64 1965 66 67 68 69 1970

0 69 72 354 395 482 86 148 90 145 130 53 82 59 178 182 80 222 203 548 351

105 140 261 373 414 297 257 319 162 268 278 262 520 443 342 318 640 520 598 204 493

Note: Negative stock change indicates net sales. Sources: Food logistics agencies operations from Bank Indonesia (various years); Moeljono (1971) Attachments 12-14; Bulog (1988). Rice production in Java from BPSc (various years).