Analysis: Improving crop production for sustainable agriculture
This article has been translated by PwC Indonesia as part of our Plantation News Highlights service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
The Jakarta Post
2 November 2022
By: Muhammad Osribillal
Indonesia's agriculture industry represents almost 14 percent of the country's GDP with almost 33 percent of the labor force working in the industry. It is no surprise then that Indonesia's economy is heavily reliant on agriculture.
Furthermore, the well-being of the Indonesian people is also directly affected by crop production such as rice, maize and soybean, which are the main sources of nutrition for domestic demand.
Thus, managing sustainable production should be a priority for the government to promote the overall well-being of the people. But there are problems that need to be addressed to be able to sustainably manage crop production for a better overall Indonesian economy.
The first problem is the fact that land use for rice crops has significantly decreased over the years.
According to Statistics Indonesia (BPS), Indonesia's rice fields have declined by up to 23 percent since 2015, from an area of over 13.8 million hectares to only 10.6 million ha by 2022.
Meanwhile, production has also significantly declined since 2015 by almost 26 percent from a production of 75 million tonnes to now only 55 million tonnes in 2022.
Although Indonesia has not had any major issues regarding availability, shown by the low import of rice, we still need to anticipate increasing demand caused by population growth and normalization from the pandemic.
Secondly, Indonesia still relies heavily on the import of other commodities. Domestic consumption of primarily imported commodities such as soybean, maize, wheat and groundnuts remains high.
To be more secure in the face of global turbulence, the government should aim to either improve the production of these commodities or find substitutes for them. Commodities that Indonesia are still heavily reliant on consist of crops such as soybean, with imports worth US$1.5 billion in 2021, maize worth $297 million in 2021, groundnuts worth $357 million in 2021 and wheat worth $3.5 billion in 2021.
With ever-declining land use for rice crops and production, the government needs to be more creative to be able to increase production in Indonesia, either through intensification, extensification or diversification.
As a matter of fact, rice production is highly concentrated in Java, as shown in the statistics that rice productivity in Java could reach up to 56.4 quintals (5,640 kilograms) per ha while productivity on other islands only managed to reach 48.2 quintals per ha on average in 2022, showing a lot of potential on other islands.
So, what is the right approach toward increasing sustainable production?
The government has shown its efforts to increase production through intensification; but if we look closely at the data, productivity from 2018 to 2022 shows that the development of crop yield is stagnant.
According to data from BPS, productivity in Java reached 56.9 quintals per ha in 2018, and in 2022 it has only reached 56.4 quintals per ha. Instead of improving, productivity is basically declining.
From this information, we can see that in the first approach there is still a lot of room for improvement in Java to increase production.
Improving productivity through intensification can be done by heavily investing in modern technologies, providing high-quality seeds, developing irrigation systems, superior quality fertilizer and higher skilled labor.
Also from experience, intensification is an approach that has a higher chance of success than other approaches because the fundamentals of crop production, land and labor, are already established. Thus, it is an approach that should be highly considered in increasing sustainable production.
Another approach is extensification, meaning opening new land for crop production.
This approach could work with a program we call the food estate, which the government is already trying to develop.
Successful food estates in theory will help increase Indonesia's overall food production. However, history has shown that developing a food estate or extensification is not easy work.
Instead of being sustainable, it can lead to bigger problems such as high cost-low production, deforestation, labor dissatisfaction, socioeconomic problems and many more issues.
With that in mind, a successful food estate could only be achieved through developing projects that are integrated with one another just like creating a new city.
Basic infrastructure such as schools, housing, roads, marketplaces and hospitals should be established for workers to create better living conditions.
Lastly, food estates should aim for profitability to reach sustainability in the long run. If workers do not experience any benefits or profit from a food estate, then the project will be completely abandoned just like what happened with other food estates in the past.
The last approach is the diversification of crops, which would further strengthen Indonesia's production.
The government could create policies that are concentrated on increasing the production of currently import-reliant maize, soybean and groundnut. Many farmers have stopped producing these commodities simply because other crops are more profitable.
To diversify crops, the government could start by giving incentives to farmers to increase the benefits of producing these commodities. These incentives could be in the form of subsidized seeds and fertilizer, or they could be in the form of easier access to the market. Either way, the key objective is profitability, if the product creates a profit, then farmers would grow it.
Overall, we do not believe that there is one perfect approach to increasing production, the perfect approach is made from several policies that are molded into one main idea.
Thus, with the right mix of intensification, extensification and diversification, Indonesia could benefit a lot from the increase in food production as it will increase the well-being of the Indonesian people while also increasing the nation's overall economy.
