Development of Agro-Industry in Rural of North Sumatra

Development of Agro-Industry in Rural of North Sumatra 
By: Prof. Drs. M. Dawam Rahardjo *); Ir. Asrul Masir Harahap **) 

As the area's relative forward with the fourth largest population in Indonesia, North Sumatra can not and should not ignore the potential of the countryside as the backbone of regional development especially in the era of regional autonomy.Statistics (CBS, 1999) shows the population of North Sumatra working in the agricultural sector is the largest amount that is 53.73%, and still more who live in rural areas than in urban areas ie 6.46 million (54.03%). 

Laying the North Sumatra regional development priorities in the economic field with the pressure point on the agro-industrial sector in particular must be followed by concrete steps. The development of agro-industries in rural of North Sumatra first needs to be understood as part of an industrialization strategy that contains elements of a particular strategy.First, industrialization was planned in conjunction with the development of the agricultural sector. Second, the implementation of agro-industries in rural areas should be implemented. Agricultural activities generally take place in the countryside, but in the city there are also agricultural activities, even some certain types of agricultural activities take place in urban areas. 

Why industrialization needs to be associated with the development of agriculture?. Because, according to some observations, industrialization had been still less to do with the development of agriculture. In fact, the development strategy in the past has been in focused on agriculture and agricultural processing industries (agro). Only industrialization carried on as if it stands alone, and do not process agricultural products should be also considered as outcomes and enhance agricultural development. Established industry generally foot-loose more processing of raw materials and auxiliary materials are imported. Even industry built in the countryside often work materials from agricultural products, especially local materials.Why agro-industry development is to take place in the countryside?, Because during the industrialization generally lasts around big cities. In fact, agriculture is generally produced in rural areas. Therefore, based on the principle of approaching materials or raw materials, agro logical that took place in the countryside.Agro-industries in rural areas is also related to the issue of surplus labor and the relatively high unemployment rates in rural areas. Unemployment itself arises due to various reasons, such as population growth and further narrowing the field or because of the use of technology (eg tractors or rolling machines), and changes in the social system has transform the use of human labor. The construction of rural agro-industry is expected to absorb labor. So in addition to approaching raw materials or raw materials, agro-rural areas also intends to approach the source of labor. 

Furthermore, rural agro-industry related business ideas to create jobs in rural areas. Rural areas is static, meaning not a lot of changes in the economic field. Should the city more vibrant. More new jobs were created in cities. As a result, there was a migration of villagers to cities. Agro-industry is creating new jobs. Placement means the rise of rural agro-industrialization with all its impact on the countryside. Agro-industry is intended as a commercial venture or a new arena for the rural population.Of course there is the further intent of the development of agro-industries in rural areas. Agroindustry function creates value added for agricultural products. If agro-industries were developed in the towns, the value added of agricultural products that would result from the townsfolk. Though the rural population requires more income. With the agro-industry, the new revenue created can remain in the hold in the countryside.

Income generation in rural areas have a wider impact, which allows rural residents save. Of the savings capital will be formed. The potential savings that would cause banks as financial intermediation institutions. With the banks, open wider opportunities for the rural population to invest in utilizing credit facilities. 

Development of Agro-Industry 

If it was meant as agro-industry processing agricultural materials, agro verily has long been known in North Sumatra. Even agro-industry is an early form of North Sumatra, because Sumatra is an agricultural area with a belle plantation sub-sector.The development of the agricultural industry is the logical consequence of an agrarian society. Agro-industries related to agriculture and the early growing cottage industry that is generally done in the pattern of household crafts. Besides industry processing agricultural materials, the industry first developed in North Sumatra is the industry's work materials such as petroleum mining in Pangkalan Brandan. The mining industry is generally a large-scale foreign capital should be treated or SOEs. 

In colonial times there were two kinds of agriculture and mining industries. The first is that its products are sold in the world market. Second, the products for the domestic market or for export. As it is known that the majority of the petroleum industry in exports. While the agricultural industry is also export oriented products of rubber, oil palm and tobacco deli.Some type of agricultural industry is more oriented towards the domestic market rather than export industries such as sugar and rice mills. While the agricultural industry such as coffee partly for export and partly to the domestic market. 

In addition to the industries of agriculture and mining in North Sumatra is also developing a variety of industrial and non-agricultural and non-mining known as industrial manufacturing industries such as home furnishings, meubeler, iron tools (contrived the smiths), metal casting etc. other. Various industry began booming mid-decade of the '30 's. The government started to develop the industry for various reasons. First, to overcome depression caused by unemployment and falling agricultural sector. Secondly, in order to reduce dependence on manufactured goods abroad especially in time of war, although according to the industrial policy of 1937, the colonial government did not provide support and contribution to the industrial branches that compete with imported goods. And third, in order to reduce the bad influence of the world economic conjuncture. 

In the development of various types of industries, principle of comparative advantage would be the consideration. Among others, the availability of agricultural materials are relatively abundant or available. Even one of the principal reasons the Dutch colonization is to be able to build farms that produce industrial materials. From there was born the rubber processing industry, tea, coffee, tobacco, sugar cane, oil palm and other plantation-based industry short term (such as sugar cane and tobacco) or perennial (such as rubber, tea, coffee and palm oil). 

Agricultural industries is the type of industries that have a connection to the back (backward linkage), namely the agricultural business. Plantations of tea, coffee or cocoa in the wake to produce materials like beverage in European society. The world community is in much need of a sugar, rubber, clothing, paint, footwear and other goods, whose raw materials can only be produced in certain amounts and types outside Europe.At the time of independence, such as the agricultural industry is thriving and encouraged its development by the government. But the agriculture industry is a growing urgency manufacturing of import substitution industrialization policy. In the decade of the '50 's, when Indonesia began to build, and at the same time the newly independent states could also just started building, a common trend is the implementation of the policy of industrialization as the main form of development. 

Some features of the industrialization policy was first priority and neglected agriculture sector. Second, the building industry to make the goods which had been imported. In other words, the industry is an industry built replacement for imported goods. And third, raw materials and auxiliary materials industry must be imported. 

Many reasons why the raw materials and auxiliary materials must be imported. First, the goods to be made is that the original goods are imported, so the ingredients are still to be imported. Second, the technologies used are made overseas.And third, the raw materials can not be made in the country. Because it's the one feature of the import substitution industry is its dependence on raw materials, auxiliary materials and technology abroad. Import substitution industry assembly industry generally, such as the assembly of chemicals, liquid goods assembly, assembly tools, assembly of textile materials and even assembling ingredients. 

Such type of industry developed in the New Order era, especially in the early days. That used to be the epitome of import substitution industries are motor vehicles or Coca-cola. Coca-cola Beverages models and soft drinks (soft-drink) others may only use water from Indonesia, the rest imported materials. Until now, this kind of type of industry is still growing. Such industry is the expansion and globalization of industry marketing only in developed countries, which is grown in Indonesia as a joint venture or franchise branch of the parent company. 

Such type of industry can not be contained by our nation embracing open economic systems. Because it's the attitude that should be taken is a positive attitude, looking at aspects of direct or indirect benefits. At any rate the industry has been able to provide new jobs and income. Production of Coca-Cola has created new jobs. Distribution is at least also encourages the growth of restaurants, cafes and street vendors. Many people profit from sales and field work this kind of industry. 

But the most valuable benefits is an inspiration to young entrepreneurs to make similar commodities. One of the positive reaction to the inclusion of this kind of industry is the birth of bottled tea industry and tea boxes. Initially a lot of people worry about Coca-Cola will be a 'culture' in Indonesia considering new motto: 'anytime and anywhere (drinking Coca-cola)'. 

But now it's motto seems to have been forgotten. Indonesian and Asian people in general, will still drink coca cola stomach ache in the morning. Similarly, the parties or seminar organizers would rather serve tea bottles. Precisely bottled tea or tea box that is 'anytime and anywhere (suitable for drinking)' Coca-Cola only good at drinking if already cooled. But not so bottled tea and tea boxes. There are people even want to drink tea without refrigeration, to avoid colds. Apparently Coca-Cola bottled tea can still be defeated.
  
It was so beverage in bottles are durable and practical coming from outside the country has succeeded in stimulating the growth of new products. Among the famous Passion fruit drink from Sumatra and Sulawesi. The success of this drink because it is a typical product of a region. Until now other areas practically not developed this passion fruit products. 

The concept of agribusiness 

In the early decades of the '80 's, has become a popular concept of agribusiness. This concept in Indonesia initially popularized scholars expert in the marketing of agricultural produce graduates Germany, Prof. Dr. Ir AM Saefuddin (former Food Minister of Habibie cabinet, founder of Agribusiness Development Center), through IPB seminars initiated by himself in 1989. But the popularity of the concept of development is very slow. The late '80 's new concept began to busy talking.
  
Agro-industry is actually an integral part of the concept of agribusiness which means 'business in agriculture'. Therefore, agribusiness is a marketing concept. Background, first, the realization that agricultural yields can be easily damaged, so the price quickly fell. Second, agricultural products, the marketing also depends on the season. If now is not the season, consumers are hard to get these crops, but when the time of harvest, there is often over-production so that prices fall and hurt producers. Third, agriculture is not easily controlled. It is difficult for farmers to determine the size, volume, and taste the fruit, roots or leaves that are sold. This complicates the marketing. 

The background is important is the emergence of the concept of development strategy in the '50 's and '60' s who think that the shortest way to build is to achieve high growth can only be achieved through the development of the industry.Agricultural development is considered the colonial legacy. Besides that, a lot of limitations. First, agricultural development is inhibited by what is known as the law of the ever rising yield decreases (law of diminishing return). Second, income elasticity the results of a small farm. Rising incomes did not cause major changes to the demand of agricultural products, but instead the result of high industry. Third, in terms of consumption, according to Engels law, the higher the income, the smaller part of their food consumption. In addition, the exchange rate against the smaller agricultural industrial products.Therefore, the purchasing power of the farmers group, the smaller. 

Agribusiness is the concept of the marketing of agricultural products keeping in mind the properties of agricultural products, the marketing efforts to overcome difficulties: First, by means of biological engineering and biotechnology in crop cultivation. The process of farming is carried out by using advanced technology, good machined (using tools or machines), biology (developing seeds and how to plant maintenance) or chemical (fertilizers and pesticides). Second, the post-harvest handling and further processing of agricultural products that. And third, develop modern business organization and management, both in the production and distribution or marketing. 

Although agricultural part of agribusiness, but agro-industry can implement and integrate the entire agribusiness system.Because it could be identical to the agro-agribusiness, at least the application of the agribusiness system. In this case agribusiness is an attempt to overcome the marketing of agricultural products by vertically integrating the production, marketing, and even the consumption of agricultural products. 

Development Strategy 

Agro-industry is a form of integration can the whole process from planting, post harvest handling, processing and marketing of agricultural products. With that effort, the results can be produced in agriculture on a large scale, long lasting, so it is quite time when marketed nationally and internationally. For example, potato crisps (potato chips) U.S. production is marketed all over the world in large numbers. This range of products has been developed in Indonesia, although it is still small in scale, low quality, and the price is much cheaper. Even so, we can replicate by using the U.S. product popularity. 

Another example, banana chips is a popular traditional food. Even so, traditional banana chips may be too loud, too rough shape, and the packaging is not attractive. Now Lampung chips are manufactured with new packaging and is made in such a way, as if a typical product Lampung. Almost every outsider who visited Lampung definitely bring presents banana chips as people bring drinks Passion of Sumatra. 

With fresh banana biotechnology makes it more durable, such as Del Monte plantation in Latin American countries and the Philippines, bananas marketed in the U.S., Western Europe and the Middle East. Though it was not as good as bananas Barangan and Ambon example. Biotechnology The course can also make bananas Barangan and Ambon fresh feel to be more durable and more comfortable, so that it can be marketed more widely. 

Besides fresh bananas, one of the products that can be developed through banana agro example is the banana flour. This idea comes from a traditional Indonesian food. Until now, many mothers who give their babies eating bananas, besides giving milk. Perhaps, mothers need to flour banana baby food. Baby food from banana flour has not been popular, because women are able to overcome the problem by getting a fresh bananas at the market or supermarket. Besides feeding bananas to a baby with a banana is increasingly popular. Faced with this problem agribusiness can design a baby food product with the image of a modern and more practical, durable and secure. 

Today we enter a new stage in agribusiness. Key feature of this new phase is the presence of high consumer awareness of the original products, especially in terms of hygiene and nutritional value. Every food product for example, felt the need to include the contents of the womb (ingredient), nutrition and hygiene level it. Food and beverage ingredients, and not just appearance and taste, can be made in promotional materials.Now this water was sold at the sale price even higher than gasoline or milk. Origins include the notion of healthy water that can be drunk (safe drinking water). In this case, the industry has managed to create a certain image in the water. Westerners are very careful to drink water, they are "safe to drink Coca-Cola". This aspect should certainly think about if we want to export agro commodities.
  
Today in industrialized countries there is a strong tendency to consume fruit juice (100% pure) without sugar (unsweetened). Products of this kind exist in the type of citrus fruit, tomatoes, pineapple, coconut or even rambutan, bark, banana, watermelon, durian and mangosteen are many in North Sumatra. The pattern of demand this of course needs to be answered manufacturer. It can be a way out for some of the problems of agricultural marketing in North Sumatra. 

The thing to note is the fruit products in North Sumatra are less able to compete with imported products, such as grapes, apples, oranges and pears. Tropical fruit products we also can not compete with the same products from Asian countries, eg, China, Thailand, Philippines, Taiwan or even from the Middle East and Latin America for the U.S. and European markets. Agro-industry could be an effort to resolve the issue.North Sumatra should also be made of pineapple, passion fruit, rambutan and canned bark, liquids (beverages) or concentrate for export. Important note on agro fruit is that often the raw material processing industries from their own gardens can favorable less than traditional crops farmers yard, so it needs to develop a partnership that is one of the prerequisites agribusiness. In addition to raw materials guarantee a continuous, uniform and fruits should also be considered. The case of the failure of the factory in Jambi and West Java pineapple can be a lesson. When the machine has been in bring, it turns out to be pineapple if too small, though very sweet. Though apparently told farmers can not plant their pineapple change just like that. They prefer to plant traditional sweet pineapple for local market, the factory can not produce a result. By doing so, pineapple processing plant could lead to the pattern of planting pineapple or otherwise. Similarly, if we want to set up processing factories of rambutan, bark, passion fruit, and canned beverages or other materials, the industry should be in the form of vertical integration between processing and cultivation. 
A more practical to develop agro-industry is to invite a well-established marketing industry, such as the restaurant industry.The restaurant could have known to consume agricultural products. If the kind of restaurant Garuda and Wong Solo with Chicken Roast and Chicken Pop and it can be developed across North Sumatra, especially in medium cities, with franchise system, the needs and chicken production will increase. The small breeder will be a supplier in bulk. 

Actually traditional products can give inspiration to the development of agro-industries in North Sumatra. For example, satay, chicken satay and satay especially goat so famous through tourism. If promoted overseas, it could attract consumers who have known her. Demand satay is now grown in Singapore, Hongkong, and even in Japan. But no one in those countries that produces satay, so they prefer to import sate. North Sumatra People, of course, produces can sate. The problem, could they satay produces substantial amounts, steady and fast so that it can be sent late afternoon or early morning schedule aircraft?. Hygiene course requirements, must be met. This technique involves the production, packaging and the use of container as well as working with transport companies.
  
Epilog 

The development of agro-industries in rural North Sumatra should be done by an integrated project. But this pattern requires substantial capital and advanced technology. A more practical way is to establish farming industry from the people who are ready, like a banana processing plant, rambutan, bark, coconut, or fish meal in the countryside. Of course, in need of organizing efforts at the level of production / cultivation of the people. But the awakening of an agro-industry in the market of agricultural products, especially in rural areas people had been able to secure. 

It was so, it's time we developed an agro-industries in rural North Sumatra that are integrated with the use of advanced technologies, such as biotechnology. In this case, agro-industry is way out of the problems of marketing agricultural products in North Sumatra today. 

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 *) Commissioner, Agribusiness Development Center (PPA Consultants), Jakarta-Indonesia
 **) Director of PPA Consultants, Jakarta-Indonesia