Agricultural Sector of Indonesia

With its vast and abundant fertile soils Indonesia is a major global key producer of a wide
variety of agricultural tropical products, and although agriculture's share of the country's gross
domestic product (GDP) has declined markedly during the last five decades, it still provides
income for the majority of Indonesian households today. In 2012 this sector employed around 49
million Indonesian individuals, which represents 41 percent of the total Indonesian labour force.
But although in absolute numbers the agricultural workforce keeps growing, its relative share of
the total Indonesian workforce has declined significantly from 55 percent in the 1980s to 45
percent in the 1990s and currently to 41 percent. Only during the Asian Financial Crisis in the late
1990s this share grew significantly because unemployment in both the industry and services
sectors was absorbed by the agriculture sector (mostly informally).

Between the mid-1960s and mid-1980s the percentage of Indonesian land area that was
used for agriculture stayed constant at around 21 percent of Indonesia's total land area. However,
in the mid-1980s this number rose to almost 25 percent until the late 1990s. Starting from 1998
another upsurge (due to the establishment of large scale plantations - in particular palm oil) made
this number reach the current level of 30 percent.

Indonesia's agriculture sector is forecast to continue growing, albeit at a lower pace

compared to the industry and services sectors.

2010 2011 2012 2013 2014

Agricultural growth
2.9 3.0 4.0 3.4 2.4
(annual percent change)

Source: World Bank

The agricultural sector of Indonesia comprises large plantations (both state-owned and
private) and smallholder production modes. The large plantations tend to focus on commodities
which are important export products (palm oil and rubber), while the smallhold farmers focus on
rice, soybeans, corn, fruits and vegetables.

The Indonesian government has placed self sufficiency in certain agricultural products high
on the agenda. In particular this applies to rice which by far is the main staple food for the majority
of the population; Indonesia has the highest per capita rice consumption in the world
(approximately 139 kilo per capita per year). However, the country is still dependent on imports
from Vietnam and Thailand to secure the domestic rice supply. Other food crops that have become
target of self sufficiency programs are soy beans, corn and sugar. Government sponsored programs
are currently being executed and 2014-2015 have been mentioned as the years in which self
sufficiency in these food items should be reached. However, it remains doubtful whether these
programs can really make significant progress. Since 2007 the government has also started
revitalization programs for smallholding farmers in order to raise production.

Source: www.indonesia-investments.com