Rubber industry in Indonesia - statistics & facts

Indonesia is the second-largest rubber producer worldwide. It is no wonder that rubber is also the second-most important agricultural commodity in the archipelago after palm oil. However, its domestic consumption is significantly lower than its exports. There has been a slow decrease in the share of manufactures of rubber and plastic products to Indonesia’s GDP in the past few years, following the decreasing rubber production in Indonesia.  

Smallholders’ significant role in Indonesia’s rubber industry

There are more than 50 incorporated rubber tree cultivation companies in North Sumatra, West Java, and East Java. Together with Kalimantan Island, these areas are Indonesia’s primary production areas of natural rubber, with Sumatra and Kalimantan as the largest employers of rubber farmers and farmworkers in the nation. 

More than 80 percent of Indonesia’s rubber production comes from smallholder farmers. Thus, Indonesian smallholder farmers still earn the least average net wage in comparison to other industries. These farmers’ roles are becoming more important as the smallholder estates have been increasing their production, while the large estates’ rubber production has been significantly decreasing, replacing their rubber areas mostly with more profitable commodities, especially palm oil. The production of palm oil from Indonesia’s largest rubber companies such as Kirana Megatara Group, PT. Perkebunan Nusantara, and Bakrie Sumatera plantations have been increasing while their rubber production keeps declining.

Challenges facing the Indonesian rubber industry

Indonesia has the largest rubber plantation in the world. But despite the significant size of Indonesia’s rubber plantation area, barriers to maximizing its potential still exist. Downstream activities, such as post-harvest handling, manufacturing, and processing are still not as significant due to the lack of infrastructure and product diversification. Without a new approach, Indonesia’s rubber industry would remain heavily dependent on the export markets in the next decades while its domestic rubber consumption stays low.

Besides the infrastructure issues, fungal attacks are also taking a toll on Indonesia’s rubber plantations. At the end of 2019, the outbreaks decreased Indonesia’s rubber production by more than ten percent. The use of low-cost fertilizers that were bought by farmers and plantation owners during times of low prices was one of the major contributors to this outbreak. It took about two years until the rubber production in Indonesia started to rise again. These issues highlight the importances of supporting smallholder rubber farmers in Indonesia. By providing better technical knowledge and financial support, it will not only reduce the livelihood threats to Indonesia’s smallholder farmers, but also secure Indonesia’s economy.

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