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Essays on the impact of agricultural mechanization, esp. Use of tractors on small farms, on agricultural production, labour productivity, rural employment and agricultural income, based on surveys in West Java and South Sulawesi, Indonesia - discusses labour shortages (lack of skilled operators and mechanics,) shift from agricultural employment to nonfarm employment due to wage differentials, and migrant workers; examines agricultural credit, agricultural equipment, irrigation and crop diversification; includes recommendations. References.
With both achievements and persistent challenges over the last few decades, ensuring food security remains a priority for policymakers and development efforts in Indonesia. Setting aside some backsliding resulting from the Covid-19 pandemic, Indonesia’s poverty reduction journey has come a long way since the Asian financial crisis to less than 10% by 2019. Likewise, meaningful progress has been seen in daily calorie consumption and a declining stunting rate. But despite these gains, many challenges are evident. On the production side, agriculture struggles to promote productivity, community livelihood, and sustainability—a challenge made more pronounced by increased extreme weather events, climate change, and emissions . Meanwhile, on the consumption side, not everyone enjoys access to food and nutrition security equally. Modernizing agriculture is seen as a potential response to challenges in agriculture. Increased investment in agricultural mechanization and digital technologies provides a critical avenue to transform the sector into a more inclusive, efficient, and sustainable system. With the expected increase in productivity and income—including for smallholder farmers—agricultural modernization will help Indonesia’s economy structurally transform and finally shift off-farm toward higher-paying, higher-productivity sectors outside of agriculture. The challenges facing Indonesia's food security and modernization efforts in agriculture set the broad context for this book. While solutions to food insecurity are complicated and involve many stakeholders, this book focuses on optimizing the private sector’s role in improving food security. The Center for Indonesian Policy Studies (CIPS) has gathered expertise on a range of topics related to improving Indonesian agriculture and food security and the private sector’s contribution. CIPS is an independent, non-profit, non-partisan think tank advocating for practical policy reforms informed by evidence-based policy research and analysis. CIPS presents this book as part of its commitment to empowering Indonesians to lead prosperous and peaceful lives by supporting open food trade and agriculture markets to ensure food security and sustainable livelihoods. This publication was made possible through the support of a grant from the John Templeton Foundation. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the John Templeton Foundation. Aditya Alta is the Head of Agriculture and Food Security Research at the Center for Indonesian Policy Studies, Jakarta, Indonesia. Dr. Risti Permani is a senior lecturer in agribusiness at the School of Agriculture and Food Sciences at the University of Queensland, Brisbane, Australia, and a member of the board of directors at the Center for Indonesian Policy Studies, Jakarta, Indonesia. Dr. Maria Monica Wihardja is a visiting fellow at the ISEAS-Yusof Ishak Institute in Singapore and a member of the board of directors at the Center for Indonesian Policy Studies, Jakarta, Indonesia.
This research was undertaken to better assess the role of mechanization in the future of smallholder farmers in Nepal. It addresses the knowledge gap about whether promoting mechanization that is often complementary to land can effectively support smallholders, particularly in the face of a growing nonfarm sector. Rising rural wages in Nepal have increasingly put pressures on smallholder farmers, who tend to operate labor-intensive farming. Agricultural mechanization through custom hiring of tractor services has recently been considered as an option to mitigate the impact of rising labor costs for smallholders. However, the benefit of agricultural mechanization may still be better captured by exploiting the economies of scale of medium to large farmers rather than smallholders. In the meantime, the Nepal agricultural sector still employs a disproportionate share of workers given its share in the economy, potentially depressing agricultural labor productivity. It is therefore an important policy question whether to (1) continue supporting smallholders through custom-hired tractor services or (2) encourage smallholders to rent their farms out to medium-size or larger farmers, while helping smallholders specialize in the nonfarm sector, where their labor productivity may be higher. Using samples from the Terai zone—one of the agroecological belts in Nepal, largely consisting of lowland plains— from the Nepal Living Standards Survey, we assess whether the benefits of hiring in tractor services are greater among medium to large farmers than among smallholders, and how these benefits may depend on smallholders’ decision to remain in or leave farming. This study also contributes to the impact evaluation literature by showing that jointly assessing the effects of two treatments (whether to adopt custom-hired tractor services and continue farming, or to search for better options and specialize in off-farm activities) can lead to different implications than assessing them separately. Our analyses suggest that the government should continue to promote custom-hired tractor services not only for medium to large farmers but also for smallholders. If, over time, barriers to specializing in nonfarm activities are lowered and more smallholders start leaving farming, mechanization may no longer benefit the remaining smallholders. Support for mechanization can then be focused more on medium to large farmers, while types of support other than mechanization can be devised for the remaining smallholders.