Improving Agricultural Market Performance:
Developing Agricultural Market Information Systems
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6. INDONESIA CASE STUDY
6.1 INTRODUCTION AND BACKGROUND Indonesia was selected for this study due to the fact that it has an up and running agricultural
MIS, and the existence of a donor-supported MIS has been in place since the 1980s and 1990s
(Shepherd, 1997; Shepherd and Schalke, 1995). Indonesia is the largest economy in South-East
Asia and has progressed rapidly over the past decade into a dynamic, highly competitive and
decentralized electoral democracy with a rapidly growingmiddle class. Steady economic growth
has led to a gradual reduction in overall poverty in the country, which fell from 17 percent in
2004 to 11 percent in 2014. At the same time, nearly 40% of Indonesians still live just above the
national poverty line, and these households are vulnerable to shocks including a rapid increase
in food prices. While the agricultural sector’s share of the country’s GDP is reported to have
declined markedly during the last five decades, it still provides income for a major proportion
of Indonesian households, contributing 17% of GDP (IFAD 2015). However, according to the
World Bank (2010), the sector has since the 1990s been characterized by stagnation and low
productivity due to years of declining private- and public-sector investment. The main crops
produced in Indonesia are listed in Table 8.
Table 8: Indonesian/World Agricultural Production, Selected Commodities
2016 Production (‘000 MT)
Indonesia World Indonesia %
Palm oil 36,000 66,855 54%
Rice* 37,000 483,662 8%
Coffee** 10,900 159,312 7%
Sugar 2,200 179,636 1%
Maize 11,350 1,036,898 1%
Cassava 23,436 268,000 9%
Natural rubber 3,153 13,245 24%
Poultry 1,660 89,470 2%
Cocoa* 728 4,450 16%
Tea 154 5,560 3%
Coconut oil 970 3,440 28%
Tobacco 196.3 7,176 3%
* Milled production
** in ‘000 60-kilogram bags
Source: adapted from COMCEC (August 2017), which is based on USDA Foreign
Agricultural Service (2017), FAO (2017), International Trade Center (2017).According to IFAD (2015), Indonesia’s National Long-Term Development Plan 2005-2025 sets
out the country’s key aims in terms of poverty reduction and development as follows:•Achieving equitable development that gives greater attention to those who are
disadvantaged, including poor communities in remote or disaster-prone areas;
•Increasing national food security and self-reliance based on local diversified food resources;
and