Indonesia's key agricultural subsectorsAs the world’s biggest producer of plantation crops, such as palm oil and natural rubber, Indonesia’s crop production is vital to the national economy. However, the production of food and horticultural crops in Indonesia is relatively low. The last decades have seen an increase in imports of horticultural products, indicating that Indonesians now enjoy a more diversified food supply than before. There is therefore great potential in expanding the domestic market by cultivating more profitable fruits and vegetables.
The demand for fish and meat is also increasing every year. Indonesia is the second-largest producer of poultry birds in the Asia Pacific region and one of the largest seafood producers in the world. However, there is a large gap between the income from the fisheries sector compared to land-based agriculture. The fisheries sector contributed less than three percent to Indonesia’s GDP even though 77% of its geographical area is made up of ocean waters. Realizing the unexplored potential of the marine sector, Indonesia’s current president, Joko Widodo, is focusing the country's attention on this sector as part of his goal to make Indonesia a global maritime axis.
As for the forestry sector, Indonesia is one of the world’s largest exporters of tropical timber products, ranging from plywood, pulp, and paper which are used to produce furniture and handicrafts. This subsector, however, is expected to grow slower in the future as Indonesia attempts to decrease its deforestation rates.
Challenges facing the Indonesian agriculture sectorDespite the significant size of Indonesia’s agriculture industry, some barriers to maximizing its potential still exist, such as poor technological advancement and supply chain challenges. These challenges are further compounded by prolonged spells of bad weather, such as drought, leading to shortages of basic commodities such as rice, wheat, soybean, and sugar.
Indonesian ‘agripreneurs’ and the government have been transforming the agricultural sector by establishing collectives and using modern farming methods in recent years. However, emerging challenges such as increasing demand for food traceability and the impact of climate change are already taking a toll on Indonesia’s agriculture. The country needs to innovate and adopt emerging digital technologies into its agricultural practices faster than before. Improving the agricultural sector through technology could help shorten the long distribution chain from farmers to consumers, reduce its large carbon footprint, and evenly distribute economic growth in Indonesia.