SUNS  4300 Tuesday 13 October 1998


ASIA: CRISIS HITS POOR FARMERS HARDEST

Geneva, Oct 9 (IPS/Gustavo Capdevila) -- Analysis of the financial crisis in Asia has concentrated on how its effects big bankers overlooking the privations of the poorest people of the rural zones,
complained international officials.

Germany's Klemens van de Sand, vice-chair of the International Fund for Agricultural Development (IFAD), said debate on the crisis to date had dwelt on macroeconomic aspects, effects on industry and consequences in the banking and financial sectors.

Conversely, little information is available on changes in the poor rural sectors since the crisis erupted in July last year.

A conference of non-governmental organisations, academic institutions, rural worker groups and international agencies held in Indonesia stated there is no real overview of the effect of the crisis in the least developed areas of Asian agriculture.

IFAD - an agency established in Rome under the United Nations system - has the mission of alleviating rural poverty, said van de Sand, on his return from a tour of Asia.

Those countries most affected by the crisis merit in-depth study of their situation, more international aid should be made available and political instruments should be created and coordinated to stem the expansion of a rural impoverishment crisis parallel to a similar urban process, he said.

In countries affected by the crisis, initial response action taken by governments consists of drastic cut-backs in investments and current expenditure, especially in infrastructure and social services like education and health.

In Thailand, the authorities reduced the infrastructure section of the budget by 20 percent in the last two fiscal periods.

Hefty increases in education fees in Indonesia upped school desertion by at least 20 percent.

At the end of this year, poverty here will have increased six times in relation to 1996, said van de Sand.

In Thailand, before the crisis, income in the rural sector was equal to 60 percent of the total value of national exports. At present it oscillates between 40 and 50 percent.

Mass unemployment in the urban areas led to marked reductions in the amount of remittances sent home to families in the rural zones.

Many of the salary-earning urban Asians, particularly those working in the construction industry, come from the poorest sectors of the rural areas.

With the advent of the crisis there were complex movements of impoverished rural workers toward the cities and of unemployed urban workers returning to their rural home towns and villages.

Another expected outcome in the crisis-hit Asian countries has been the sharp drop in buying power amongst the middle classes, which has in turn led to drastic reductions in the demand for products from small rural businesses.

Plummeting tourism figures has struck small scale concerns, like craftspeople and weavers. In Indonesia, the income of traditional weavers has fallen 76 percent, forcing them to go out to work as rural day labourers.

The increase in price of agricultural supplies, especially imports, has led to a drastic reduction in the amount and range of crops planted by small producers.

Meanwhile, climbing prices for palm oil on the international markets has prompted the expansion of extensive plantations of this shrub, and the consequent felling of more forest in crisis- ridden nations.

As well as Indonesia and Thailand, the worst struck, other Asian countries run the risk of similar crisis if prompt measures are not taken, warned IFAD.

Threatened regions include areas of the eastern Himalayas, including Nepal, northeastern India, the Chittagong hill tract in Bangladesh and Bhutan.

The IFAD-organised seminar recommended abandoning development policies with a predominantly capitalist and urban bias, especially in Indonesia, said van de Sand in a press conference in Geneva Friday.

Instead, it recommended encouragement of projects aimed toward intensive work and rural decentralisation.

Up to now, only three percent of foreign investment and 10 percent of its national counterpart have gone to rural ends, even though this sector employs 50 percent of the nation's work force.

The seminar concluded development policies in the countries affected by the crisis should be founded on two concepts; family food security and the promotion of income-generating activities for poor rural workers.

Phrang Roy, director of the IFAD Asia-Pacific Division, attributed problems with rice supplies in Indonesia to the consequences of the El Nino climatic disturbances.

During a certain period of time, said Phrang, the Indonesian government refused to recognise that production and the needs of the population were out of step.

Nonetheless, following talks with various donors, Jakarta accepted rice donations from the World Food Programme (WFP) and Japans offer of some consignments of this foodstuff.

IFAD officials managed to warn the Indonesian government of the importance of rice for the nation's agriculture, trying to persuade the administration to encourage the population to plant paddy fields during periods of economic hardship, said Phrang.