Agricultural production and policy in Indonesia in the last two decades – tasks and challenges

Abstract

With its geographical and climate features Indonesia belongs to the greatest agricultural producers in the world; there are more than 50 million hectares under agricultural cultivation. The tropical climate excludes the possibility of growing ordinary cereals such as wheat or barley, but provides favourable circumstances for rice, palm oil, natural rubber, cocoa and other tropical plantations. The sector is the biggest employer, in 2008 nearly 45% of the Indonesian employees worked in agriculture. The sector’s GDP share – although it decreased after the industrialization – is still considerable (14% in 2006). The Asian crisis in 1997 affected the Indonesian agriculture, just like the other sectors in the economy in spite of having been the only sector which was able to achieve growth even in the middle of the economic crisis. The external trade (including both export and import) fell back partly because of the crisis and also due to the drought that had never been seen for 50 years. Nowadays Indonesian agriculture faces several challenges. People living in poverty stricken regions strongly depend on the sector that is why the government strives for improving the quality and the quantity of the production. Development is not always sustainable, though. Extension of arable lands often means deforestation decreasing the area of the unique tropical rainforests that provide biotope for several living creatures and contribute to the maintenance of biodiversity, which is the most important criterion of sustainability. Consecutively, achieving sustainable development is the first priority of the Indonesian agriculture.