Government and private initiatives are set to broaden agriculture’s contribution to economic growth and boost smallholder operations by encouraging the use of more advanced technology in the farming sector.
Although economic diversification and urban migration have impacted the agricultural sector in recent years, the sector still provides a livelihood for the majority of Indonesian households.
Indonesia is now turning to e-commerce and the greater use of digital tools to boost growth opportunities in a variety of sectors, including agriculture. Current government forecasts estimate a surge in e-commerce spending from $25bn this year to $130bn by 2020.
Public and private agro-tech initiatives
As part of efforts to broaden the digital economy, Indonesia has introduced an e-commerce pilot project in Brebes, Central Java to support farmers as part of the “Synergised-Actions for the People Economy” programme launched by President Joko Widodo in April.
The online system, which charts food prices and prevents price speculation, is set to benefit both producers and end consumers with a 15% increase in profit margins for farmers and a 15% decrease in the prices of agricultural products, Thomas Lembong, the minister of trade, told local media.
This project complements local start-ups in agro-tech including platforms such as Petani, LimaKilo, Pantau Harga and TaniHub, which provide farmers with information on farming techniques and equipment, commodity prices and online marketplaces. Improved access to information should go some way to improving farmers’ efficiency as well as increasing bargaining power with middlemen and wholesalers.
One successful start-up – Cybreed – focuses on innovation in the aquaculture segment with its application eFishery, which integrates software and hardware components in a smart feeding system. The system releases food based on sensors detecting fish movements, thereby preventing farmers from overfeeding and acting as a cost saver. The application also transmits real-time data to farmers’ phones, enabling them to control the feeding system remotely.
Toward greater sustainability
In tandem with the various digital initiatives under way, the government is also looking to encourage the use of more advanced methods and inputs among smallholder farmers.
In a bid to increase income for 1m commodity farmers by 2020, the Indonesian Economist Association and the Indonesia Chamber of Commerce are developing the Partnership for Indonesia’s Sustainable Agriculture (PISAgro).
The scheme aims to better link institutions and smallholder farmers to optimise production techniques and solve issues such as inadequate access to hiqh-quality seeds and fertiliser.
One PISAgro working group, for example, focuses on encouraging the spread of innovative agricultural techniques such as early flowering technology, which can lead to longer harvest months and higher quality tropical fruit.
This year PISAgro aims to reach more than 445,000 farmers overseeing more than 350,000 ha of land, which will be a sizeable increase on the 83,000 farmers with an area of 67,000 ha that participated in the programme up until the end of 2015.
Another key initiative targeted at independent smallholders is the KUR-Plus programme, a microcredit scheme that allows farmers to receive funds for infrastructure, premium seeds and fertiliser, as well as a living stipend during the harvest waiting period, Rosan Roeslani, chairman of the Indonesia Chamber of Commerce and Industry, told local media.
Moreover, the KUR-Plus programme also facilitates better access to funds, financial education and knowledge of best practices through mentoring and cooperatives.
Since 2011, when the pilot programme was first implemented for commodity farmers, productivity and income among participants increased approximately 25% on average, according to local media.
Given the large role that agriculture plays in the Indonesian economy, the expansion of these initiatives could have a significant impact.
The agriculture sector employs 35% of the total labour force and contributes 13.6% to the country’s GDP, according to Muliaman Hadad, chairman of the Indonesia Economists Association.
However, Hadad estimates that Indonesia’s agriculture sector contributes to more than half of the country’s GDP if the entire value chain from upstream to downstream is considered.
“If we develop technology and a modern logistics system, not only will Indonesia's GDP increase, but also the farmers’ welfare,” he told local media last month.
Renewable energy generation
Greater technology use also has the potential to boost renewable energy generation by integrating production facilities with agricultural operations.
Biogas in particular holds significant potential, as biogas feedstock – including food waste, farm manure, agro-industrial wastewater and crop residue – can be used to generate electricity, heat, cooking fuel and petrol.
An agricultural technology project in the village of Kalisari is already making headway by converting wastewater from small tofu-producing businesses into clean-burning biogas. The biogas is then pumped directly into villagers’ households at a third of the cost of traditional gas tanks.
The new technology is also cutting down on pollution in the village, as the wastewater was previously dumped into nearby waterways where it contaminated crops and affected yields.
The innovative scheme has been so successful that officials from neighbouring regions look to emulate the project in their own areas while the government forecasts that more than 56,000 tonnes of fossil fuels could be substituted each year for biogas produced from tofu wastewater, according to press reports.
Other renewable energy schemes in Indonesia have used sorghum production and pig waste for energy generation.
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