18 May 2009
When the world economy goes into recession one of the first things people do is to stop buying new cars. No new cars means no new tyres, which means no need for tyre-makers to buy rubber. And when demand for rubber crashes, so does the income of rubber ‘tappers’ – people who collect raw latex from rubber trees. In Indonesia – the world’s second largest producer of natural rubber – this is happening right now.
Deep in the rainforest
Most of Indonesia’s rubber is produced by small-holders, much of it in Kalimantan, the Indonesian part of the island formerly known as Borneo. Deep in the forested area of Central Kalimantan, many hours by speed boat up the River Rungah from the provincial capital Palangkaraya, is the village of Tumbang Malahoi.
Like most people in the village, the 21 members of the extended Tojo Pandji family rely on rubber trees for their income. Each morning it’s the job of one of the family’s young men to collect latex from the 200 or so rubber trees growing on the outskirts of the village. This involves opening a cut in the bark of the tree to get the sap (latex) flowing into a bamboo collecting-tube. After being transferred to a large container, the latex is then poured into a suitcase-sized wooden box to harden. When full, the solid blocks of raw rubber are taken to the river, tied into rafts and floated downstream for export.
Recently, however, with exports falling and rubber prices following suit, the earnings of the rubber tappers have taken a major hit. Last September they could expect about 11,000 Rupiah (about £0.75) for one kilo of unprocessed rubber, enough to afford about 2.3 kilos of rice. But by January of this year the price had fallen to 3,500 Rupiah (about £0.25p), which only buys around one kilo of rice.
Forced to economise
As prices have fallen, families like the Tojo Pandji have been forced to economise. As well as eating less nutritious food such as meat, fish and fresh vegetables, they are cutting back on necessities like medical advice. And as rubber-dependent families rein in their spending, market stall holders, petty traders, motorbike taxi drivers and café owners are all seeing their incomes decline too.
To make up for the loss of income, some men from Tumbang Malahoi (and many other villages like it) have turned to unlicensed gold mining on the Rungah. As well as being illegal, this is extremely bad for the river’s health. By dredging the river and mining the banks, the miners churn up large amounts of silt, and in the process of extracting the gold, they add polluting chemicals to the water. Such degradation of the river seriously threatens the future livelihoods of local fishermen.
In the Tojo Pandji household one of the elderly women who has lived there all her life and cannot speak any English has recently learned one phrase – ‘global crisis’. She somehow understands that the economies of the US, China, Japan and Europe have ‘sneezed’ and, in their longhouse on the edge of the Indonesian rainforest, her family has ‘caught a cold’.
Local improvements
The Indonesian government has developed a number of programmes to help people, like the Tojo Pandji, who are especially vulnerable to the impact of economic ups and downs. The largest of these is the DFID-supported National Programme for Community Empowerment (PNPM). This supplies grants to local communities which can be used to provide families with small loans, or with employment improving local roads, schools and health facilities.
DFID provided about £6 million towards the development of this scheme. After trials in a number of pilot districts showed its effectiveness in moving people quickly out of poverty, the programme was expanded to cover more of the country's poorest areas. By April 2008 over 72 million workdays had been created, with 40,000 km of road built, 10,500 clean water units installed, 11,000 irrigation schemes renovated, and 3,800 village health posts and 6,700 new schools constructed.
Now, as the government rolls PNPM out across the whole of the country, with funding from DFID and other partners, the scheme should provide vital help to families like the Tojo Pandji – providing them with a decent income and the chance to sustain their way of life, even in the face of global economic downturn.
Facts and stats
- Indonesia is among the 20 largest economies in the world. But 18 million of its people still live on less than $1/day and about half the population – 120 million people - live on less than $2 /day.
- DFID Indonesia provided £6 million between 2005 and 2008 to help design and test the PNPM.
- In December 2008, DFID committed a further £4 million to support the monitoring, evaluation and continued development of PNPM in recognition of its vital role in protecting the poor from the impacts of crisis and in reducing social exclusion.
Note
This article contains data from a DFID-funded multi-country study of the impact of the current economic crisis managed by the Institute of Development Studies. The Indonesia survey was conducted by a team from the SMERU Research Institute.