Improving Agricultural Market Performance:
Creation and Development of Market Institutions
130
Though down from 45% in 2000,338 Indonesia’s agricultural sector continues to generate 35%
of domestic employment,339 equaling more than 40 million jobs.340 Most of Indonesia’s 25
million farm households341 (according to the census in 2003) are concentrated on Java though
many of them are farm laborers and do not own farm land. A farm household is defined as a
maximum of 2.5 hectares wetland with 7.5 hectares dryland. Average intensive farm
household landownership varies from 0.2 to 0.5 hectares wetland and 0.5 to 1.5 hectares
dryland, while this equals 1.5 to 2.5 hectares of wetland and 5.5 to 7.5 hectares of dryland for
extensive farming practices.342 Average plots of approximately 0.8 to 1.0 hectares are used for
traditional farming (e.g. food and export crops). 343 The Government of Indonesia encourage
the formation of co-operatives to increase economies of scale and production capacity.344
The average agricultural productivity per hectare equals US$2,108, which is considerably
above the OIC average of US$1,312 in 2013.345 The overall agricultural productivity of small-
scale farmers lags behind due to their geographical isolation in combination with inadequate
access to agricultural extension services, markets, and credit. 346
Table 6 – Indonesian (IDN)/World agricultural production and exports, selected
commodities
2016 Production (‘000 MT) 2016 Exports (‘000 MT) Imports (‘000 MT)
IDN World IDN % IDN World IDN %
Palm oil 36,000 66,855 54% 25,500 47,058 54% /
Rice* 37,000 483,662 8% / /
Coffee** 10,900 159,312 7% 8,200 130,326 6%
Sugar 2,200 179,636 1% / 59,240 0 4,150
Maize 11,350 1,036,898 1% / 150,785 0 850
Cassava 23.436 268 9% / / /
Natural Rubber 3.153 13.245 24% 2.58 9.26 28%
Poultry 1,660 89,470 2% / 11,163 /
Cacao* 0.728 4.45 16% 0.33 8.17 4%
Tea 0.154 5.56 3% 0.051 1.84 3% 0.022
Coconut oil 970 3,440 28% 610 1,720 35% /
Tobacco 0.1963 7.176650 3% 0.028 2.275 1% 0.009
* Milled production
** in’000 60-kilogramm bags
Source: USDA Foreign Agricultural Service (2017), FAO (2017); International Trade Center (2017)
338 FAO (2003), “WTO Agreement on Agriculture: The Implementation Experience - Developing Country Case Studies,”
available a Accessed June 2017].
339 FAO (2015), FAOSTAT Indonesia, available a Accessed June
2017].
340 WTO (2013), Indonesia Trade Policy Review Report by the Secretariat, Geneva: World Trade Organization.
341 Global Forum for Rural Advisory Services (2013), Indonesia, available a
[Accessed June 2017].
342 FAO (2006), Country Pasture/Forage Resource Profiles,
available a [Accessed June 2017].
343 Global Forum for Rural Advisory Services (2013), Indonesia, available a
[Accessed June 2017].
344 Interview conducted with Ministry of Agriculture in Jakarta, July 13, 2017
345 COMCEC (2016), COMEC Agricultural Outlook 2016, pp. 55-90, Ankara: COMCEC.
346 IFAD (2015), Investing in rural people in Indonesia, pp. 20-25, IFAD: Rome.