Almost all programmes were implemented by providing poor societies, including rural societies (mostly farmers) with soft credit or revolving funds to enable them to run their individual or group businesses. Unfortunately, none of these efforts have been sustainable. The small-scale businesses were not well developed and consequently there was no capital accumulation for them to expand. Even the seed money (the start-up capital) was used for daily family consumption leaving the borrowers unable to repay their soft loans. Another supporting system that GOI should develop is a rural soft credit system incorporating a simple procedure. This facility is much better than a revolving fund or other programme which tend to create a moral hazard among rural societies and executing agents.

However, supported by long-lasting high economic growth, the long history of government effort to alleviate poverty significantly reduced the poverty figure from 54.2 million people or 40.1 per cent in 1976 to only 22.5 million or 11.3 per cent in 1996 (BPS 2004). However, a massive economic crisis in Indonesia in 1997-1999, simultaneously with a long drought (El Nino) pushed the number of poor Indonesians to 48 million or 23.4 per cent of the Indonesian population in 1999. The gradual recovery of the economy reduced the incidence of poverty to 37.3 million people in 2003 (BPS, 2003).

There were two good examples of projects that did not provide farmers with soft loans or revolving funds for economic business, but provided them with the construction of infrastructure facilities, such as village roads, farm roads, bridges, and irrigation facilities. The IDT project in 1993-1996 was designed to provide farmers with village roads, bridges, drinking water, and sanitary facilities (bathroom with toilet). However, the coverage area was relatively small.

Currently, there is an ongoing poor farmers project (called Poor Farmers Income Improvement through Innovation Project = PFI3P), funded by soft loans from the Asian Development Bank (ADB). The objective of PFI3P is to increase farmers' innovation in solving their own problems. PFI3P is aiming at empowering farming communities in rural areas, especially those on marginal lands.

Through PFI3P, some innovations related to and supporting agricultural development have been introduced to farmers at the project sites. These innovations are based on identified problems at the specific locations. The project hands responsibility to rural societies to manage their budget for the development of infrastructure and agricultural innovations under the supervision of district administrators and local NGOs. It is expected that eventually rural communities will be capable of implementing development in accordance with their needs, limiting the government's function to facilitator.

The project started in 2003 and will continue until 2008. The project was implemented in five districts, namely, Blora and Temanggung in Central Java, East Lombok in West Nusa Tenggara, Ende in East Nusa Tenggara and Donggala in Central Sulawesi. In each district there will be about 200 villages included in the project to develop infrastructure. The main examples of infrastructure that influence farming systems are, among others: village roads, farm roads, irrigation channels, markets, credit schemes, and information systems. Due to budget limitations, the infrastructure being developed by rural societies is in the form of farm roads, check-dams, irrigation channels, wells, drying floors and information systems. These facilities are aimed at overcoming the problems associated with the transportation of agricultural products, water shortages during the dry season, and flooding during the wet season.

These two projects are thought to be more appropriate to help farmers improve their agribusinesses. Integrated poor farmer empowerment such as PFI3P can be considered as a model of the future of rural development. Improvement in agricultural technology to increase production is meaningless without the development of supporting infrastructure. Nevertheless, its implementation requires adequate control in order to achieve effectively and efficiently the goal of farmer empowerment.

Written by Dewa K.S. Swastika, Senior Researcher, ICASERD, Bogor, Indonesia.

(References available upon request)