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According to Population Census 2000, some 60 per cent of the country's population earned their living from agriculture. However, statistics says that in 2003 some 56.5 percent of 25.4 million families of peasants or farmers belonged to the economically-weak bracket, cultivating land of less than 0.5 ha on average or were merely tenants.
Agriculture grew at 3.39 percent during the period of 1967-1976, and 5.72 percent in the period of 1976-1986, making these time Indonesia self-sufficient in food. The policy that stressed more on self-sufficiency in rice during the said periods led to rather unfavorable impact towards other types of food crops. Even though this sector still proved viable from the economic crisis the country suffered in the middle of 1997, it grew at only 1.57 percent the lowest rate the country had ever made.
Though almost all regions in the country suffered a rather long drought in 2003, agriculture was still capable of growing in a heartening trend. Cumulatively this sector (agriculture, forestry, and fisheries) up to the third quarter of 2003 noted a growing rate of 2.54 percent. Of the growth rate, foodstuff sub-sector grew on average 2.73 percent per annum, estate sub-sector 1.65 percent, and animal husbandry 1.40 percent. Thank to endeavors the Government, the public and business circle made to maintain such growth rate that the country's stockpile of foodstuffs suffered no shortage.
The country's agricultural performance has been to some extent influenced by the on-going domestic and global dynamism. The world's economy that grows at a lower rate would certainly cause an unfavorable impact to the country's economic growth. So would unfair practices of international trade such as excessive subsidies to agriculture in some developed countries since it would affect the competitive edge of products from the developing countries such as Indonesia.
POLICIES AND STRATEGIES
New paradigm has been currently adopted to develop agriculture, namely by developing a business system from downstream to upstream. Extensive socialization of this system is required to reach all levels of society, including politicians and legislators, that agribusiness should be managed not by the Government but by the society itself, to make it the prime mover of the country's economy.
In empowering peasants or farmers, direct aids for them have been made available. Up to 2003 some two trillion rupiahs had been granted directly to some 25,000 groups of peasants scattering in some 250 districts throughout the country, to finance their undertakings, their collective undertakings or cooperatives, the procurement of their tools and development of their skills and knowledge. The aid proved offering the peasants either positive impacts for the development of agribusiness or a multiplier effect to the development of the real sector of economy, and simultaneously become a stimulus for rural economic development. Other stimuli would be among other things increasing budget allocation either from state budget or regional budget that reflects serious commitment of the Government for the development of agribusiness, along with increasing the trend of domestic investment during the last few years.
Policies and programs having been introduced by the Government to encourage agribusiness include: maintaining sactorial cooperation, including with regional administrations; introducing various deregulations such as on pesticides, fertilizers, and agricultural tools and machines; facilitating the cultivation of seedling; encouraging peasants or farmers at rural areas to have more accesses to financial institutions; helping peasants or farmers to have more accesses to market and market information; producing excellent varieties of plants of food, horticultural, and estate crops; speeding up dissemination of technology; facilitating the formation of synergic undertakings of agribusiness; protecting domestic agribusiness undertakings from unfair trade practices by other countries; improving skills and knowledge of peasants; reinforcing system of quarantine; and maintaining stability of unhusked rice prices.
AGRICULTURAL PRODUCTS
Food Crops
The year 2003 saw in general better performance of agricultural productions than those of 2002, though they were still below the target. Production of rice, for instance, grew 1.14 percent from 51.49 million tons in 2002 to 52.08 million tons in 2003, lower than the target of 53 million tons. Horticulture products, except of sweet potato, also noted an increase: production of corn up by 12.08 percent, from 9.65 million tons in 2002 to 10.82 million tons in 2003; soybean by 0.66 percent, from 673,000 tons to 674,000 tons; peanut by 5.77 percent; green pea by 8.20 percent; and cassava by 4.79 percent. The increase had in fact improved the country's viability of food supplies.
Horticulture
At the end of 2003, the harvested areas of vegetable consisting of spring onions, shallots, potatoes, cabbage, mustard green, and carrot, reached 316.7 thousand ha or a rise of 3.99 percent than that of 2002. Vegetable production at the same time amounted to 3.8 million tons, down by 3.46 percent due to primarily the decline of production of mustard green and shallot by 16.40 percent and 13.79 percent respectively.
Indonesian main fruit crops are avocado, mango, lanzon, durian, orange, salaks, pineapple, rambutan, banana, sapodilla, and guava. Java Island is the country's main fruit producer, except of durian, lanzon, and orange, which the island of Sumatra mainly produces. Within the Java Island, West Java is a major fruit producer, accounting for 33.61 percent of the Island's total production. Of outer Java, East Nusa Tenggara is also the main fruit producer.
Fruit production in 2003 declined due to chiefly the decrease of lanzon production from 208 thousand tons in 2002 to 116 thousand tons in 2003, down by some 44.2 percent, and that of avocado which decreased by 33.9 percent.
Plantation Estates
Smallholders cabbage plantation in Lembang, West Java |
Plantation estates consist of large estates and smallholdings. Large-scale companies engaged in rubber plantation in 2003 numbered 453 establishments, cultivating a total planted area of 543.4 thousand ha; in coconut plantation, there were 230 establishments cultivating some 78.9 thousand ha; in oil palm, there were 882 establishments with total plantation area of 2,875.3 thousand ha; in coffee plantation 155 establishments tilling 60.7 thousand ha; in cacao plantation 222 establishments with 155.4 thousand ha; in tea plantation 144 establishments with 84.7 thousand ha; in kapok 25 establishments with 4.7 thousand ha, in quinine 16 establishments with 1.1 thousand ha; in jute, five establishments with 1.3 thousand ha. In addition there were 88 companies engaged in sugarcane plantation, 19 companies of tobacco estates, and 16 companies of quinine estates.
Large scale palm oil estate in North Sumatra province |
Major products of large scale estate companies were palm oil (5,456.7 thousand tons), palm kernels (1,231.8 thousand tons), rubber (3,325 thousand tons), tea (122.6 thousand tons) and sugar (1,876.6 thousand tons).
Leading smallholding estates in term of the size of cultivated area in 2003 were respectively rubber (3,796.9 thousand ha), coconut (3, 803.6 thousand ha), oil palm (1,810.0 thousand ha), coffee (1,360.8 thousand ha), cacao (817.0 thousand ha), and cashew nut (604.1 thousand ha). In term of production, they were rubber (1,788.8 thousand tons), coconut (3,141.7 thousand tons), palm oil (3,648.8 thousand tons), coffee (669.4 thousand tons), and cacao (572.9 thousand tons).
Animal Husbandry
The year of 2003 saw a rise of large livestock population: dairy cow grew at 2.90 percent, to 368.7 thousand heads; slaughtered cow went up by 0.87 percent to reach 11.4 million heads, buffalo by 2.18 percent to 2.5 million heads, and horse by 8.06 percent to 452.9 thousand heads.
So did the population of small livestock such as goat that amounted to 13.3 million heads or a rise of 5.79 percent compared to that of 2002, sheep eight million heads or a rise of 5.04 percent, and pig 6.3 million heads or a rise of 7.05 percent.
Also noting an increase was the population of poultry: native breed chickens in 2003 amounted to 85 million heads or a rise of 8.98 percent, broiler chickens 917.7 million heads or a rise of 6.08 percent, and ducks 48.1 million heads or a rise of 4.16 percent.
Exports and Imports
The exports of agricultural commodities (excluding those of fisheries and forestry) went up substantially by 26 percent in 2003 to a total of US$5.7 billion from US$4.5 billion in 2002.
The year 2003 also saw the net exports of agricultural commodities arising significantly from mere US$0.8 billion in 2002 to US$1.35 billion, an increase of 225 percent. Of the amount, the commodities of plantation accounted for US$2.91 billion, horticultures for US15.3 million, but animal husbandry suffered a decrease to US$139.4 million.
At the same time total imports of agricultural commodities recorded a rise of 4.94 percent to reach US$4.37 billion in 2003 from US$4.16 billion in 2002.
Exchange Values and Commodities
In general, the exchange values of agricultural commodities in 2003 were better than in 2002. In Java, the value increased between 2.59 percent and 31.11 percent. Of West Java, a province in Java Island, it grew by 4.84 percent, in Central Java 9.84 percent, in Yogyakarta 2.57 percent, and in East Java 31.11 percent. Of outer Java except of North Sulawesi, South Kalimantan and Bali, there was an increase of the agricultural commodities' exchange value. In West Nusa Tenggara it recorded a rise of 5.77 percent, in South Sumatra 4.23 percent, in West Sumatra 3.40 percent, and in South Sulawesi 2.27 percent.
Six out of 14 provinces which their agricultural commodities' exchange value was less than 100 percent were Lampung (74%), South Sumatra (74%), West Sumatra (91%), and North Sumatra (99%). If this exchange value was a reference of peasants' welfare, it could be reasonable to say that the peasants' welfare was improving.
Prospect of Agribusiness
Bullfrog farming for export commodity, at Pacitan, East Java |
Indonesia's economy for the year 2004 is envisaged to grow at 4.8 percent, and during the first quarter of 2004 it recorded a growth rate of 3.54 percent (based on constant prices). Recording the highest rate was among other things the agricultural sector (agriculture, forestry, and fisheries) that grew at 17.07 percent. Attributable to such growth rate in the sector were the sub-sector of food crops that went up by 54.99 percent and of animal husbandry by 6.69 percent. On the contrary, other sub-sectors such as plantation grew minus 22.29 percent, forestry minus 29.83 percent, and fisheries minus 8.92 percent.
The World Bank predicted that estate commodities such as coffee, tea and crude palm oil would increase. So would the price of rice to return to the level achieved in 2002. According to the prediction, meanwhile, economies of the developed countries would be growing at 1.5 percent, and of the developing countries at between 4 percent and 4.9 percent. At the same time the world's trade would go up by an estimated 4 percent.
The said trends would certainly affect economic development in Indonesia. Another factor that would also influence economy in Indonesia is the recovery of Iraq, for this country is one of the countries importing Indonesia's commodities. What is more, the exports of Indonesian coffee, cocoa, and pepper to the US would probably be affected by the imposition of the Bio Terrorism Act and stricter export procedures by the US. Market segment of Indonesian traditional export commodities would also probably dwindle by the admission of 16 East European countries to the European Economic Community.
In general, the exports of Indonesian agricultural products still have promising prospects in some regions such as the Middle East, South Asia and East Asia, but they will largely depends on creativities and shrewdness of Indonesian exporters to seek out and manage the opportunities.
In promoting the agribusiness, the Government has taken measures to among other things continue augmenting productivity and improving seedling system; to keep on schemes of direct financial assistance to peasants; to continue modernizing the agribusiness system and its production marketing as well as agricultural tools particularly in rural areas; and to continue struggling for fairer trade policy through the World Trade Organization.
Poutry and Bird Influenza Epidemic
The country's large number of population should certainly be a potential market for the production of chicken eggs and meat. These days the country's per capita egg consumption is 50-60 eggs annually, and per capita consumption of chicken meat is ranging from 3.5-4.0 kg per annum.
After being hit by the impact of the monetary crisis in the middle of 1997, the poultry industry in 2001 started indicating its recovery, and become a substantial economic mover. The poultry industry involved businesses worth estimated at Rp 50 trillion as it was reflected in the production of poultry feed of six million tons per annum, with price assumption of Rp 2000 per kg. In 2002 Indonesia was known as one of eggs-producing countries with cheapest cost of production and selling prices.
During the period of 1974-1986, in which the country's economic growth rate recorded as high as seven percent per annum, the sub-sector of animal husbandry's GDP once accounted for some 25 percent of total contribution of agriculture to the country's GDP.
Modernization of animal husbandry in Indonesia began in late 1970s when the breeding of egg-laying chickens, broilers, and native-breed chickens had been developing rapidly. The chicken feed industry usually related to foreign investment also flourished.
Of the total 854 million chickens in 2004, broilers accounted for 524 million heads, native chickens for 263 million heads, and egg-laying chickens for 67 million heads. They were susceptible to viruses of the so-called "bird influenza" recently attacking several countries in East Asia. The Government officially admitted that this dangerous chicken disease attacked some provinces in Indonesia in January 2004. In protecting chickens and minimizing victims of the disease, the Government helped farmers in tackling the endemic by providing vaccine (Avian Influenza Vaccine), imposing bio-security, socializing and disseminating information related to bird influenza, and other preventive actions.
The number of chickens victimized by either bird influenza or Newcastle Disease (ND) etc., was 4.7 million heads or 0.05 percent of total population, relatively low indeed. However, the plague had caused Japan to temporarily stopping of importing chickens from Indonesia, and domestic consumption declined to the lowest ever of 20 percent of total supplies, and the prices of chicken meat dropped substantially. The price of feeds on the contrary soared because some 70 percent of materials were imported. The country's exports of poultry in 2002 amounted to US$4.8 million.
In tackling and eradicating bird influenza endemic, Indonesia along with other countries such as Thailand, Vietnam, Laos and Cambodia received emergency financial aid from the Food and Agricultural Organization (FAO).
Prospect for poultry industry of post-bird flu plague is still promising and its domestic market is still significant. Technological innovation in poultry industry is indeed required to improve output qualitatively and quantitatively. Also required is to improve the production of corn as one of prime raw materials for feed industry.
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