Strategy for Transforming Indonesian Agriculture

Abstract

Today agriculture is expected to help countries such as Indonesia to achieve multiple development goals. These goals include not only food security but also higher employment, environmental sustainability, and reduced poverty and malnutrition. Drawing on the literature on agricultural development in Asia, this article proposes four agricultural strategies that could help Indonesia to achieve these goals. First, to efficiently ensure food security, Indonesia should use labour-saving mechanisation and increase the average size of rice farms, in order to reduce wage-related production costs. Second, to ensure environmental sustainability, Indonesia should intensify oil palm production that helps the country meet global demand but also minimise forest loss. Third, to improve health and nutrition, Indonesian agriculture should produce more high-value products such as livestock products and fresh fruit and vegetables. Fourth, to generate more employment opportunities and to reduce poverty, Indonesia should promote rural industrialisation. In proposing these strategies, this article focuses on the agro-industrialisation of the private sector, on public-sector extension for smallholders, and on land rights security for stimulating the production of oil palm. The article finds that major policy change will be needed to achieve efficient, equitable and sustainable growth of agriculture in Indonesia.