Indonesia continues to promote self-sufficiency in rice production

 

Providing around 50% of Indonesians’ daily caloric needs, rice remains by far the most important staple crop across the country. The average Indonesian consumed 114.6 kg of rice in 2017, with total consumption reaching 33.5m tonnes that year. With the adoption of modern techniques on the rise, as well as new regulations and improved infrastructure, officials continue to promote rice self-sufficiency as a key policy goal. In addition to increasing national production, the rice self-sufficiency programme has several overarching aims, such as minimising imports and stabilising domestic prices and reserve stocks. To this end, the administration of President Joko Widodo has pushed major investments in irrigation infrastructure, including 781 km of irrigation channels in 2018. The government has pledged to continue building irrigation structures, noting in early 2019 that only 11% of rice fields, or 780,000 ha, is watered by dams, a figure expected to rise to 20% after the construction of 58 more.

Self-sufficiency Goals

Indonesia’s current status in rice self-sufficiency is a matter of some debate. Governments have typically defined the term to mean producing at least 90% of a country’s demand, allowing the Indonesian Bureau of Logistics (BULOG), which has a monopoly on rice imports and exports, to purchase about 10% from abroad. While Indonesia was able to meet local rice demand under the regime of former President Suharto in 1984 at great expense to the state, as of 2018 it was still importing between 1% and 4% of its total stock. To compare, this figure is 10% in the Philippines and up to one-third in Malaysia.

Different government agencies also provide varying figures regarding rice consumption. According to BULOG, Indonesia will not need to import rice until the middle of 2019 to meet domestic demand. Meanwhile, Bank Indonesia predicts that the country will achieve total rice self-sufficiency by 2020 if the government continues to increase the size of rice fields, construct irrigation infrastructure and encourage rice farming.

Challenges

The government has implemented a number of regulations with the hope of boosting stability and profitability in the sector; however, these policies are not without their challenges. In 2015 the Ministry of Agriculture (MoA) launched the Indonesian Agriculture Shop (TTI) scheme, whereby rice produced by farming cooperatives could be sold directly to consumers, thus shortening the supply chain. Thousands of TTI outlets have been opened since then, with some 1000 slated to launch across Indonesia in 2019, according to the MoA. However, the programme has been criticised by the All-Indonesian Market Traders Association and some agricultural researchers on the basis that government-subsidised TTI stores have failed to attract sufficient customers to date.

Meanwhile, under the 2013 Farmer Protection and Empowerment Act, both central and local governments have an obligation to insure losses caused by natural disaster, largely motivated by securing a stable supply of affordable rice. In practice, however, convincing farmers to purchase coverage often poses a challenge, thereby limiting the act’s effectiveness.

The government’s competing aims of self-sufficiency and lower food prices have similarly been questioned by foreign and local economists, who advocate for the removal of BULOG’s monopoly on agricultural trade and the liberalisation of local food import/export policies. Rice in Indonesia is frequently the most expensive in South-east Asia, costing around $800 per tonne, compared with $300 in Vietnam. Some critics argue that bringing cheaper imports into the country would reduce the price of rice for the greater population; however, senior politicians remain reluctant to diverge from popular government policies.

Finding labour will be another notable challenge in achieving rice self-sufficiency, with younger workers increasingly seeking higher-paid employment in cities. Some studies have reported that between 60% and 80% of Indonesia’s rice farmers are above the age of 45.

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The Report: Indonesia 2019

Agriculture chapter from The Report: Indonesia 2019

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