Smallholders’ significant role in Indonesia’s rubber industryThere 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 industryIndonesia 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 were expected to decrease 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. Thus, supporting smallholders by providing better technical knowledge and financial support will not only secure Indonesia’s economy but also reduce the livelihood threats to Indonesia’s smallholder farmers.