Strategy for Transforming Indonesian Agriculture

Abstract

Traditionally, a major role of agriculture in Asia was to produce enough staple foods for food security through intensification of farming system. Today, however, agriculture is expected to contribute to multiple development goals. First, since wage rate has been increasing in high-performing Asian countries, including Indonesia, farm size expansion to introduce labor-saving mechanization must be promoted to reduce production cost, particularly in rice farming. Second, considering increasing demand for palm oil and global concern with decreasing forest environment, achieving intensification of oil palm production without extensification is an urgent issue. Third, responding to increasing demand for high-value agricultural products (HVPs), such as fresh fruits and vegetables, for better nutrition and health, agricultural resources must be shifted to the production of these products. Fourth, considering that urban areas are excessively congested, rural areas must provide increased employment opportunities by promoting rural industrialization. Based on the literature review, this article proposes strategies (1) to 1 I am heavily indebted to S. Suyanto of the World Agroforestry Center in Bogor for assistance and useful comments. maintain comparative advantage in rice farming, (2) to intensify oil palm production in a sustainable fashion, (3) to increase production of HVPs, and (4) to promote rural industrialization simultaneously in the context of Indonesia.

Determinant of Capital Efficiency and Its Impact on Economic Growth: Empirical Evidence in East Java

“…In other words, agro-industry that is efficient in capital utilization, on the one hand, increases economic growth and can also increase the added value of the agricultural sector. This study's results align with research conducted by Otsuka (2021) in the case of Indonesia and Santoso (2015) in the case of East Java, particularly in forest plant commodities. Agro-industry is most likely to be developed as a basis for economic development in developing countries because the agro-industry does not require complex technology compared to other industrial sub-sectors.…”

“…First, providing incentives to industries that are efficient in the use of capital. Referring to the research results of Otsuka (2021) and Santoso (2015), the agro-industry is an industry that can use capital efficiently. Thus, developing agro-industry in East Java is strategic for strengthening postpandemic economic resilience.…”