FOOD & AGRICULTURE
Being the largest, archipelagic nation in the world, Indonesia is blessed with rich and fertile soil. With a land area of 1.9 million square kilometers, around 12% contains arable land – around 230,000 square kilometers. Moreover, Indonesia's water resources, accounts for almost 6% of the world's total resource, and 21% of the Asia Pacific region.
Due to its tropical climate and fertile land, Indonesia has historically been the perfect place to grow high priced plants and spices such as cloves, vanilla and nutmeg, which are rare and high in demand.
Nowadays, Indonesia has been able to place itself as the global leader in the production of palm oil and the second largest producer of rubber in 2010. The production and export of crude palm oil has been the biggest contributor to the plantation subsector in Indonesia's GDP.
Nowadays, Indonesia has been able to place itself as the global leader in the production of palm oil and the second largest producer of rubber in 2010. The production and export of crude palm oil has been the biggest contributor to the plantation subsector in Indonesia's GDP.
Table 1. Estate Production by Crop, 2004-2008 (tons)
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Source: Central Bureau of Statistics Indonesia
PALM OIL
There has been continuous expansion of the palm oil plantation area, with the last five years seeing an increase of approximately 40% for areas of cultivation. The figure rose from 5.4 million hectares in 2005, to 7.8 million hectares in 2010. Given this expansion was recent, further growth in production is anticipated as plantations reach maturity and yields grow. There is strong government commitment to utilizing concessions that are already used for agricultural purposes, in order to increase productivity of land already earmarked for agricultural purposes, as well as prevent any degradation of forest land. This will mean there will be a decrease in the rate at which areas of cultivation will grow for this sector; however, we view this as a positive step towards sustainability. Expansion of production areas will continue in the provinces of Jambi, West Sumatra and West Kalimantan. Responding to the growing global concern of deforestation caused by the opening of new palm plantation area, Indonesia's government is going to launch the Indonesia Sustainable Palm Oil (ISPO) certification. This certification will be awarded to the palm oil producers that are able to achieve all the environmental and sustainable standards in all of the production and processing stages.
Click here for more information on Indonesia's Palm Oil industry
Click here for more information on Indonesia's Palm Oil industry
RUBBER
Currently Indonesia also has the largest area of rubber plantations in the world, with 3.4 million hectares producing 2.4 million tons of rubber per year, this means Indonesia is the 2nd largest producer globally, second only to Thailand. By early 2011, new rootstock will be planted on approximately 400,000 hectares of land in order to improve yields and lessen impact of ageing trees, as well as boost production of high quality of crumb rubber, a semi-processed raw material used in the production of rubber products such as tires and rubber gloves.
Click here for more information on Indonesia's Palm Oil industry
Click here for more information on Indonesia's Palm Oil industry
COCOA
Cocoa is one of Indonesia's pre-eminent commodities that has a great potential for the plantation area and its production tends to increase every year. In 2010, Indonesia has shifted Ghana as world's 2nd cocoa producer after Ivory Coast. With a total area of 1.7 million ha, the production of Indonesia's cocoa currently reaches over 800 tons, while 80% of which are exported in the form of cocoa beans. The government through the Ministry of Agriculture since 2009 to 2011 has been revitalizing the old cocoa plantations with a budget of Rp13.7 trillion. The government has also enacted the Movement of National Cocoa Production and Quality Improvement (Gernas), in order to accelerate the improvement of cocoa crop productivity and quality, which consists of rejuvenation, rehabilitation, and intensification of people's cocoa crop with the latest technology.
Click here for more information on Indonesia's Cocoa industry
Click here for more information on Indonesia's Cocoa industry
Indonesia's Food & Agriculture industry offers you?
1. Low Labour Cost
For centuries Indonesia has been developing many experienced laborers in this sector. In 2010, more than 40% of Indonesia's total workforce of 107,405,572, are employed in the agricultural sector. Additionally, compared to other countries, even China and India, Indonesia still has a comparative advantage over labor cost.
Graphic 1. Labor Cost (2009)
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2. Large Domestic Market
With a population of approximately 240 million, Indonesians spend up to 50.6% of their household income on food. A growing demand, both locally and globally for food, feed, fuel and fiber, places agricultural production and food security high on the national agenda.
The importance of technology supply and utilization becomes more critical in improving the efficiency and productivity of farming and food processing machines. This could be seen as an opportunity for the investors to invest and participate in research and development (R&D) programs for better food and agriculture practices in Indonesia.
3. Supporting Government Program
The Government of Indonesia is committed to overcoming challenges for food security by establishing food estates across the country, designed to stimulate large-scale investment in the agriculture sector and beef up food security. The developers will have some allocation towards domestic supply until the nation's food needs have been met, before they are able to export.
One pilot project under development is located in the Eastern most province of Indonesia of Papua ? where 1.6 million hectares of land in Merauke is being transformed into an integrated farming, plantation and livestock zone, where companies will grow, process and package their products in one place. Rice and corn will be the key staple commodities of the estate, with around 600,000 ha of the estate's total being allocated for food crops.
Production is aimed at 2 million tons of rice and corn, 167,000 tons of soybeans and 2.5 million tons of sugar. Should this program be a success, Papua itself still has 2.49m ha worth of land that is suitable for future agricultural use.
Another government program aimed at diversifying food staple products is the Food Diversification and National Food Defense Enhancement Program 2010-2014 ("Program Peningkatan Diversifikasi dan Ketahanan Pangan Masyarakat"), by the Food Security Agency. The program's aim is to promote the diversification of the production of food starch-based staples other than rice. This program gives the opportunity for investors to develop and market alternatives of new food products as a part of the food diversification.
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Regional Investment Coordinating Board of Aceh Province
Anwar Muhammad Jl. Jend. Ahmad Yani No. 39, Banda Aceh 23122 P : (62-0651) 23170, 22697 F : (62-0651) 23171 E : bainprom_aceh@hotmail.com W : http://www.acehinvestment.com Add to custom report kit
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