Agricultural Policy Monitoring and Evaluation 2026

15. Indonesia

Main findings

Support to agriculture

Support to farmers as a share of gross farm receipts in Indonesia declined to 7.4% in 2023-25 after peaking at 26.5% in 2015, compared with 5.5% in 2000-02. Most support is in the form of transfers to farmers from consumers generated by prices above world reference levels (8% higher on average in 2025), due to border measures and interventions in domestic markets. Staple products targeted by programmes aimed at self-sufficiency (e.g. sugar, maize, poultry, rice, and eggs) had the highest single-commodity transfers relative to their gross receipts.

The share of potentially most-distorting transfers to farmers was 93% in 2023-25, reflecting the prominence of MPS (including large negative price support due to increasing export taxes on palm oil) and payments based on unconstrained variable input use (particularly fertilisers) in the Indonesian policy mix.

Consumers are supported in Indonesia mainly through the Free Nutritious Meals (MBG) programme. Export taxes on palm oil products keep prices of these products low and generate tax revenue in addition to benefitting consumers. However, in 2023-25 these transfers are smaller than the support transferred from consumers to farmers due to higher domestic prices for staple commodities. Overall, consumers are penalised by agricultural policies, as measured by a Consumer Support Estimate (CSE), in an amount equal to -11% of consumer expenditures valued at farm-gate prices.

Expenditures on general services to the sector (General Service Support Estimate, GSSE) focus on irrigation infrastructure and public stockholding, and are small compared to producer support, at 15% of the Total Support Estimate (TSE) in 2023-25. Relative to the value of agricultural production, the GSSE was 1.6%, down from 2.6% in 2000-02.

Key policy changes in 2025-26

Domestic stockholding targets for rice and maize were increased, from 2 million to 3 million tonnes for rice and to 1 million tonnes for maize. This is a strengthened and quantified commitment for maize; previously maize intervention purchases were focussed on price stabilisation and did not have an explicit target on the volume of reserves.

Imports of rice were banned in calendar year 2025 after domestic production was forecast to meet domestic consumption needs. This import ban was extended for calendar year 2026 to include not only rice, but also table sugar and maize.

A new regulation on rice land strengthens past protections and centralises responsibility for paddy land conversion authorisations. The government targets 87% of land registered as rice paddy to come under permanent protection from conversion to other uses on a more accelerated schedule than previous plans. This protected land will be classified as “eternal rice field”. This, and the changes in stockholding and import bans reflect a strategic pivot toward national food self-sufficiency.

The Free Nutritious Meals (MBG) programme increased greatly in operation. The programme provided meals to about 56 million people in 2025 and is expected to feed 83 million in 2026.

Assessment and recommendations

• Rebalance the focus on self-sufficiency for staple crops with more attention to access to an affordable, diverse and nutrient-rich diet by Indonesian consumers. The import ban on rice and maize reflects a narrow definition of food security as self-sufficiency. Maintaining good trade relations with a broad set of trusted partners can be a buffer against unforeseen supply shocks and enable a more diverse diet for consumers.

• Apply means-testing to beneficiaries of the Free Nutritious Meals programme to ensure it helps only those who need it. Concerns about stigma to beneficiaries can be addressed by providing the same meals to all students but charging a cost-recovery fee to higher income families for this service. A more cost-effective programme will enable it to have the strongest impact on improving diets while freeing up fiscal space for other priorities.

• Scale up existing approaches to boosting food productivity, including promoting adoption of technologies, intensifying existing production areas and increasing the scale and efficiency of farm operations. This will help reach food security objectives more efficiently and with less impact on local communities and risk to biodiversity than by expanding production area.

• Shift the Food Estates programme toward a market-driven model, focusing government efforts on enabling conditions rather than top-down implementation. While scaling up agricultural operations can support technology adoption, strengthen value chains, and improve farm profitability, these outcomes are more likely if driven by market forces. Key elements for success are well defined and enforced land property rights (including for traditional and Indigenous communities), effective zoning to distinguish protected and development areas, and easier access to credit to support private investment within a framework of secure and widely accepted land rights.

• Reform the Eternal Rice Field strategy by decentralising land-use decision-making within a national framework, allowing regional governments to manage zoning while ensuring alignment with national targets and limits. The strategy is designed to prevent the conversion of important rice production area to alternative uses in order to preserve production capacity, but this can lead to trade-offs with other development opportunities. Enabling regions to negotiate and adjust land use within agreed national constraints, including the possibility to trade allocations would preserve the central government’s role in setting national goals, while giving regional authorities retain responsibility and flexibility for local implementation.

Key indicators on agricultural support

Table 15.1. Indonesia: Estimates of support to agriculture

Million USD

	2000-02	2023-25	2023	2024	2025p
Total value of production (at farm gate)	23 791	151 420	140 939	150 566	162 753
of which: share of MPS commodities (%)	71.96	73.80	75.07	73.32	73.00
Total value of consumption (at farm gate)	22 661	112 803	100 351	116 276	121 783
Producer Support Estimate (PSE)	1 328	11 469	11 726	8 918	13 762
Support based on commodity output	1 235	7 229	7 981	3 801	9 906
Market price support¹	1 235	7 229	7 981	3 801	9 906
Positive market price support	1 832	15 050	14 625	10 478	20 046
Negative market price support	-597	-7 820	-6 645	-6 677	-10 139
Payments based on output	0	0	0	0	0
Payments based on input use	82	4 221	3 732	5 090	3 840
Based on variable input use	19	3 307	3 053	3 792	3 078
with input constraints	0	0	0	0	0
Based on fixed capital formation	59	682	623	849	574
with input constraints	1	1	1	0	0
Based on on-farm services	4	232	56	450	188
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I, production required	11	18	13	26	16
Based on Receipts / Income	11	18	13	26	16
Based on Area planted / Animal numbers	0	0	0	0	0
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0
With variable payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
With fixed payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0
Percentage PSE (%)	5.47	7.37	8.10	5.73	8.26
Producer NPC (coeff.)	1.05	1.06	1.07	1.03	1.08
Producer NAC (coeff.)	1.06	1.08	1.09	1.06	1.09
General Services Support Estimate (GSSE)	623	2 525	2 796	3 440	1 340
Agricultural knowledge and innovation system	45	25	28	27	20
Inspection and control	14	24	25	30	18
Development and maintenance of infrastructure	323	998	1 094	1 660	239
Marketing and promotion	0	3	1	5	2
Cost of public stockholding	240	1 475	1 647	1 718	1 060
Miscellaneous	0	-0	0	0	0
Percentage GSSE (% of TSE)	28.27	15.19	16.01	23.83	7.62
Consumer Support Estimate (CSE)	-1 447	-12 427	-13 473	-7 598	-16 210
Transfers to producers from consumers	-1 506	-13 146	-14 925	-7 806	-16 706
Other transfers from consumers	-291	-3 064	-3 124	-2 585	-3 481
Transfers to consumers from taxpayers	328	2 501	2 937	2 081	2 485
Excess feed cost	22	1 281	1 640	712	1 492
Percentage CSE (%)	-6.43	-11.27	-13.83	-6.65	-13.59
Consumer NPC (coeff.)	1.09	1.17	1.22	1.10	1.20
Consumer NAC (coeff.)	1.07	1.13	1.16	1.07	1.16
Total Support Estimate (TSE)	2 279	16 495	17 458	14 439	17 587
Transfers from consumers	1 797	16 209	18 049	10 391	20 188
Transfers from taxpayers	773	3 349	2 533	6 634	881
Budget revenues	-291	-3 064	-3 124	-2 585	-3 481
Percentage TSE (% of GDP)	1.20	1.17	1.27	1.03	1.22
Total Budgetary Support Estimate (TBSE)	1 043	9 265	9 477	10 638	7 681
Percentage TBSE (% of GDP)	0.56	0.66	0.69	0.76	0.53
GDP deflator (2000-02 = 100)	100	417	411	415	424
Exchange rate (national currency per USD)	9 331.27	15 856.73	15 236.89	15 855.45	16 477.87

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient.

A/An/R/I: Area planted/Animal numbers/Receipts/Income.

1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Indonesia are: maize, rice, soybean, sugar, milk, beef and veal, pig meat, poultry, eggs, bananas, cassava, cocoa beans, coffee, palm oil and rubber.

Source: OECD (2026), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Legal framework

The Coordinating Ministry for Food covers four core ministries including Agriculture, Forestry, Fisheries and Environment. The Coordinating Ministry for Food also covers the National Food Agency (Bapenas) and the newly created National Nutrition Agency (Badan Gizi Nasional, BGN). The National Food Agency is responsible for co-ordinating, formulating, setting, and implementing government policies on food availability, supply and price stabilisation, food and nutrition security, diversification of food consumption, and food safety. The National Nutrition Agency is responsible for maintaining national nutrition primarily through management and delivery of a national meals programme.

The Food Law of 2012 establishes that food is the most essential human need and part of human rights. The law emphasises food self-reliance (kemandirian pangan) and food sovereignty (kedaulatan pangan). More recently, a strong policy focus has emerged on nutrition assistance, in addition to the longstanding goals for self-sufficiency in food (MoA, 2024[1]).

Policies aimed at domestic food supply

Subsidies are provided for fertilisers and credit. The percentage of subsidy varies across fertiliser types. Subsidies are paid to fertiliser manufacturers who are mandated to sell fertilisers to farmers at a reduced price. Before the beginning of the planting season, the Ministry of Agriculture (MoA) issues a decree on the estimated demand for different types of fertilisers by province, along with the maximum retail price (Harga Eceran Tertinggi, HET) of fertilisers. Based on this information, governors of the corresponding provinces break down the demand for fertiliser by district. The decree also serves as a reference for fertiliser companies to distribute fertilisers in the corresponding regions. In addition to the subsidy, the MoA also directly distributes fertilisers to food crop farmers in selected regions.

The HET for fertilisers was reduced by 20% in 2025, with the price of urea fertiliser declining from IDR 2 250/kg (USD 0.14/kg) to IDR 1 800/kg (USD 0.11/kg). The distribution target for 2026 is 9.62 million tonnes of subsidised fertiliser, equivalent to IDR 46.88 trillion (USD 2.85 billion). This is a 6% increase compared to the 2025 fertiliser subsidy budget. The subsidy can reduce the cost of fertiliser by up to 80%.

Indonesia’s Food Estate (FE) programme supports land clearing of publicly owned forest, smallholder's land and other land types for conversion into large‑scale farming of rice, maize, chili, sugarcane and other staples. Current programme objectives call for bringing up to 3 million hectares of new land into production by around 2028. The FE programme also encompasses the development of regional food production centres, bringing together upstream and downstream activities in the food production chain.

Oplah (Optimasi Lahan) is a national land‑intensification programme aimed at improving productivity on existing agricultural land, especially sub‑optimal, degraded, or under‑utilised land, including lahan rawa (swampy land). The goal is to enable two to three rice crops per year instead of a single annual harvest. Main elements of Oplah are rehabilitating irrigation and drainage infrastructure, improving land levelling and field boundaries, and supporting farmers’ organisations to manage land and water systems sustainably. The programme also provides inputs such as high-yield rice seed varieties, soil amendments and machinery.

A rice field development programme (Cetak Sawah Rakyat, CSR) aims to create new rice paddies by converting non-productive or swampy land into irrigated rice fields. It provides funding for land preparation and construction works as well as irrigation and water infrastructure. Unlike the large-scale and centralised FE programme, CSR focusses on smallholders and involves local governments and communities.

The Food Brigade (Brigade Pangan, BP) is a corporate-style farming institution that participates in land optimisation (Oplah) and rice-field expansion areas (CSR) programmes and is designed to bring about modern, mechanised, large‑scale rice production. Each BP consists of 15 millennial farmers (aged 19‑39) who collectively manage roughly 200 hectares under a 70:30 profit‑sharing partnership with landowners. Each BP is provided with IDR 3-3.9 billion (USD 182-236 000) in machinery plus working capital, training, and credit access. BP integrates production, machinery management, and downstream processing within a single business entity. The BP programme is designed to increase the number of crops per year, improve rice productivity, expand modern agribusiness capacity, and increase incomes for members and landowners.

Public investments in infrastructure are combined with exemptions for water delivery costs. Farmers are not charged for the cost of delivering water from the source to the tertiary system via primary and secondary canals. Funded in part by savings from reduced fuel subsidies since 2015 the government has pushed to improve irrigation infrastructure, mainly for rice production. This includes water pumps and other irrigation infrastructure, and support for seeds in in new planted areas.

Most primary agricultural products such as rice, grains, soyabeans, meat, eggs, milk, fruits, vegetables and sugar are exempted from the Value Added Tax (VAT). Certain non-primary agricultural products and sub-products such as palm oil, flowers, medicinal plants or rice husk are subject to reduced VAT rates. Furthermore, small entrepreneurs – a category that cover most farms – are exempted from VAT.

The National Food Agency (Badan Pangan Nasional, Bapanas) manages government food reserves and public interventions in the domestic market and imports through the state-owned enterprise Perum BULOG (BULOG). Bapanas is also responsible for market operations aimed at stabilising domestic prices. BULOG buys rice from farmers at Government Purchase Price (GPP) and is responsible for maintaining and distributing public stocks. BULOG is the only body allowed to import medium-quality rice (rice having a maximum of 25% broken grains). However, private companies can import specialty rice such as jasmine and basmati (USDA FAS, 2018[2]).

The following commodities are regulated by a Reference Price (RP): corn, chicken eggs, chicken meat, soybeans, shallots, garlic, curly red chilies, red cayenne pepper, granulated sugar, and beef/buffalo. The RP is the threshold reference price that allows the government to intervene, purchasing if the market price at the producer level is below the RP, and selling if it is above. The price policy regime for corn changed from RP to GPP in 2025.

Micro Business Credit is provided to small and medium-scale farm businesses through partnerships between the private sector and community investment funds. The programme helps private financial institutions to partner with public funds to extend credit to MSMEs, increasing credit availability by reducing risk to lenders.

Policies directed at consumers

The Free Nutritious Meals Programme (Makan Bergizi Gratis, MBG) is the main support for consumers and currently a government priority. The MBG provides free meals, mainly in schools, aiming to improve the nutritional status of target groups (Presidential Decree No. 115/2025). The target groups in the MBG programme are students and children under five years old, pregnant women and breastfeeding mothers, and certain other groups including educators and education personnel.

Expenditure on the MBG programme in 2025 was IDR 51.5 trillion (USD 3.12 billion), with coverage expanding to 56.13 million people over the course of the year, less than the target of 82.9 million recipients but a substantial increase from 2024. In 2026, the government allocated a budget of IDR 335 trillion (USD 20.30 billion) with the same target number of recipients.

Support for consumers is also provided through the Basic Food (Sembako) programme. This is a revised and renamed version of the Bantuan Pangan Non‑Tunai (BPNT) programme. The Sembako programme is a food social assistance programme provided in cash or non-cash form to beneficiary families registered in the Integrated Social Welfare Database. This database contains data on those needing social welfare services, recipients of assistance and social empowerment, and potential sources of social welfare. Disbursements under the Sembako programme in 2025 were IDR 28.4 trillion (USD 1.72 billion) reaching 18.3 million beneficiary families. Meanwhile, in 2026, the budget for Sembako was IDR 43.86 trillion (USD 2.66 billion) with a target of 18.25 million beneficiaries.

Price ceilings are in place for rice at the retail level, which vary across regions. When the retail price exceeds the ceiling, BULOG releases rice from stocks to the market. The state-owned food holding company ID FOOD also plays a role in food-related policies, e.g. by facilitating the distribution of cooking oil.

The distribution of Government Rice Reserves is primarily for food supply and price stabilisation, food aid and disaster emergency response, but can be used for other purposes, including distribution to State Civil Apparatus, the National Armed Forces, and the National Police, distribution of rice for the MBG program, and provision for Regional Government Food Reserves as well as for international co‑operation and foreign food aid.

Trade policies

The Food Law of 2012 identifies a set of core objectives focused on the principles of food self-reliance (kemandirian pangan) and food sovereignty (kedaulatan pangan). The law stipulates that domestic food demand can only be met by imports if local food sources are insufficient. Indonesia restricts trade of strategic commodities (those associated with self-sufficiency targets: rice, maize, soybeans, sugar and beef). Additionally, food exports are allowed only after the demands of the National Food Reserve and staple food consumption are met. Importing companies must receive Ministry of Trade approval as registered importers for animals as well as a range of processed products manufactured from meat, cereal, sugar and cocoa.

The trade weighted average of applied Most Favoured Nation (MFN) import tariffs on agro-food products was 8.6% in 2024, with rice and sugar having the highest specific tariffs. Quantitative import restrictions and licensing are in place, notably for rice, sugar and beef. Certain import requirements are imposed for food safety and religious reasons. The MFN tariff schedule (Buku Tarif dan Kepabeanan) is updated every five years by the Ministry of Finance.

A variable export duty on crude palm oil is based on a reference price. It is zero for prices below USD 750 per tonne but the tax applies according to a sliding scale when prices exceed that reference. Since 2015, the government collects an additional export levy for crude palm oil on top of the variable export duty to finance subsidies to biodiesel, infrastructure, research and development projects on palm oil, replanting in small farms, market promotion and human resource development. Variable export taxes are also in place for cocoa.

A biofuel mandate requires a blend rate oil-based biodiesel for all uses (Halimatussadiah et al., 2021[3]) fixed at 40% since January 2025. A subsidy to biofuel producers is provided via the Indonesia Oil Palm Estate Fund (Badan Pengelola Dana Perkebunan, BPDP). The BPDP collects an export levy and redistributes it to producers of biofuels who sell their products domestically.

Indonesia is a member of the Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), and World Trade Organization (WTO). It participates in trade liberalisation between ASEAN members and their major trading partners in the region, including the People’s Republic of China (hereafter “China”), Japan, India, Korea, Australia, and New Zealand. The ASEAN economies committed in 2015 to complete the formation of the ASEAN Economic Community by 2025. This is intended to develop a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy (ASEAN Secretariat, 2017[4]). Indonesia belongs to the group of BRICS countries since January 2025.

Recent policy developments

Domestic policy developments in 2025-26

Administrative changes

As of January 2026, the employment status of agricultural extension workers has been changed from regional (provincial and district) governments employees to employees of the central government. Within the Ministry of Agriculture, the Agency for Agricultural Extension and Human Resources Development (BPPSDMP) is responsible for these workers, including administration, training, and data support.

The status of the Centre for the Application of Agricultural Modernisation (Pusat Penerapan Modernisasi Pertanian) has been upgraded from echelon 3a to echelon 2b as part of organisational reforms formalised in 2025. This elevates the unit from a mid‑level operational entity to a higher‑level strategic and coordinating unit. This gives the centre broader policymaking and supervisory authority for programmes related to agricultural modernisation and implies a higher profile and budget prioritisation for modernisation as a policy area. The purpose and operational scope of the Centre is related to the deployment of advanced technologies, modernisation of agricultural practices, engineering and field testing, digital agriculture systems, and strengthening innovation for improved productivity and resilience.

The governance of subsidised fertiliser distribution was made solely the responsibility of the Ministry of Agriculture in January 2025. Previously this had been carried out jointly by the Ministry of Agriculture, the Ministry of Trade, and the Ministry of Industry. This change aims to simplify bureaucracy and increase the efficiency of direct subsidised fertiliser distribution to farmers. It does not affect the design of the fertiliser subsidy policy.

The regulation on rice quality and grades (Permentan 22/2025) was updated in October 2025. It (i) tightens and clarifies the technical thresholds for Premium and Medium grades; (ii) makes those grades legally binding and the reference for national standards; and (iii) improves enforcement through sanctions for mis-labeling and formalises HET compliance for subsidised rice and rice products within the regulation. These changes are designed to enable more consistent grading, labeling, and price oversight.

A new legal framework was established in February 2026 to cover the conversion of rice land to other uses (Presidential Regulation Number 4/2026). This regulation transfers authority for oversight and land use change permits from regional governments to the central government. It tightens conditions for land conversion, strengthening rules for conversion of protected rice fields (Lahan Sawah yang Dilindungi, LSD) and increasing the amount of paddy land with protected designations. The new regulation allows the central government to override prior regional zoning decisions to establish LSDs. The new regulation sets a target of 87% of existing rice fields to be converted to “eternal rice field” status (Lahan Pertanian Pangan Berkelanjutan, LP2B), a status even stricter than LSD (which is intended as a transitional designation only). Land designated LP2B cannot be converted to other uses under any circumstances. The LP2B status existed previously, but the reform ramps up the speed at which land will be so designated.

Market policies

The rice reserve policy for 2025 raises the domestic procurement target from a 2024 baseline of roughly 2.0–2.5 million tonnes to a mandatory 3 million tonnes in 2025, with plans to revise this upward to 4 million tonnes in the future. The Government Purchase Price (Harga Pembelian Pemerintah, HPP) for unmilled paddy rice (Gabah Kering Panen) was increased from about IDR 5 500 (USD 0.33) per kg in 2024 to IDR 6 500 (USD 0.39) per kg to boost farmer incomes and enable large‑scale procurement by BULOG. The 2025 rice reserve policy includes new provisions requiring enhanced actions to rotate and preserve rice stocks and expands the scope of authorised uses of government stocks to include the new national free and nutritious meals programme (MBG) and international food assistance and co‑operation. The new policy strengthens and formalises the role of BULOG in procurement, under the authority of the National Food Agency (Bapanas).

An official target of 1 million tonnes was set for Government Maize Reserves (Cadangan Jagung Pemerintah, CJP). This is a strengthened and quantified commitment compared to prior practice. Previously maize intervention purchases were focussed on price stabilisation and did not have an explicit target on the volume of reserves. To help meet this target, BULOG may now purchase maize at the maximum retail prices to meet the CJP target, and not only at the lower minimum purchase reference price. The HPP for maize was set at IDR 5 500 (USD 0.33) per kg with a moisture content of 18% to 20%.

Trade policy developments in 2025-26

As part of its new rice reserve policy imports of rice were banned in calendar year 2025 after domestic production was forecast to meet domestic consumption needs (though some imports did take place). This import ban was extended for calendar year 2026 to include not only rice, but also table sugar, and corn. These changes reflect a significant rise in domestic production and a strategic pivot toward national food self-sufficiency.

In 2025, Cassava and its derivative products were added to the list of agricultural commodities that must meet certain import requirements. Such commodities have stricter import procedures, require special permits, and are closely monitored by the relevant authorities. Previously, the list had already included animals and animal products, rice, maize, garlic, sugar, and horticultural products.

In February 2025, Indonesia and the United States signed the Agreement on Reciprocal Trade (ART). Under this agreement, the United States limits its reciprocal tariffs on Indonesian goods to 19%, down from the originally announced 32%. Indonesia agreed to support and facilitate commercial agreements for imports annually for five years of the following amounts:

• a minimum of 3.5 million tonnes of US soybeans

• a minimum of 2 million tonnes of wheat

• 3.8 million tonnes of soybean meal

• 50 000 tonnes of beef

• 163 000 tonnes of cotton.

The agreement also establishes annual quotas for apples (26 000 tonnes), citrus fruit (3 000 tonnes), fresh grapes (5 000 tonnes), corn (100 000 tonnes), beef and beef products (50 000 tonnes), ethanol (1 000 tonnes), and rice (1 000 tonnes) and includes wording on the import of chicken parts (leg quarters, breasts, legs or thighs). The agreement also contains provisions requiring Indonesia to modify certain regulations and controls such as for animal diseases.

Export levies for crude palm oil (CPO) in 2025 increased from 7.5% to 10% of the reference price set by the government. In March 2026, the export levy of CPO was further increased to 12.5%. Export tariffs for related products were also adjusted. These are generally higher than the CPO tariff for raw products and lower for more highly processed products. Export tariffs for cocoa beans were also adjusted in 2025 and vary between 2.5% and 7.5% depending on the reference price (quality grade) of the exported product. Cocoa with higher reference prices face higher tariff rates.

Policy context

Key economic and agricultural statistics

Indonesia is the fourth most populous country in the world with 283 million inhabitants, with rapid population growth and high population density. Indonesia is also one of the world’s largest agricultural producers. Despite a reduction of the share of the sector in the economy in the last two decades, it still accounts for 12.6% of GDP. The reduction in the share of the work force employed in the agricultural sector has been proportionally much larger, declining from 45% in 2000 to 28% in 2024, with an increase in the average production per employed person in the sector.

Indonesia is a net agro-food exporter and the share of its total exports that come from the sector have almost tripled in the last two decades to 19% in 2024. The country is also a large importer of agro-food products. Total agricultural area in Indonesia has increased by one-fourth in the last two decades and currently represents 1.9% of the agricultural land in all countries covered in this report. While food crop production is predominantly based on small family farms, there are large commercial farms producing perennial crops, particularly palm oil.

Table 15.2. Indonesia: Contextual indicators

	Indonesia		International comparison
	2000*	2024*	2000*	2024*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	1 097	4 663	2.69%	2.76%
Population (million)	205	283	4.68%	5.18%
Land area (thousand km2)	1 878	1 893	2.24%	2.23%
Agricultural area (AA) (thousand ha)	44 618	55 122	1.48%	1.86%
			All countries1
Population density (inhabitants/km2)	113	148	52	64
GDP per capita (USD in PPPs)	5 347	16 448	9 508	31 740
Trade as % of GDP	26.4	18.0	12.3	15.0
Agriculture in the economy			All countries1
Agriculture in GDP (%)	15.6	12.6	3.0	3.6
Agriculture share in employment (%)	45.3	28.0	-	-
Agro-food exports (% of total exports)	6.8	18.7	6.4	8.3
Agro-food imports (% of total imports)	12.7	12.5	6.1	7.5
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	83.6	82.9	62.1	60.4
Livestock in total agricultural production (%)	16.4	17.1	37.9	39.6
Share of arable land in AA (%)	40.2	32.3	33.0	34.0

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organisation (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Indonesia’s economy has grown at around 5% per year between 2000 and 2019, almost tripling the real income per capita. In 2020, GDP decreased as a consequence of the COVID-19 pandemic and related restrictions, but economic growth was back to 5% 2022 to 2025. The inflation rate has been steadily decreasing from almost 10% in the 2000s to 1.6% in 2021, rebounding in 2022 and 2023, but down to 1.9% in 2025. The rate of unemployment has remained stable around 4% in the last decade, down to 3.2% in 2025.

The value of agro-food exports has oscillated around USD 30 billion in the last decade but strongly increased in the last three years up to around USD 50 billion (USD 49.7 billion in 2024) driven by a large increase in palm oil export value. Imports reached USD 29.4 billion in the same year. Three‑quarters of agro-food exports are processed products to be further transformed by industries in other countries such as rubber and palm oil. A significant share of agro-food imports (65%) is destined for further processing by Indonesian industry.

Indonesia’s agricultural production increased at an annual rate of 2.7% in 2014-23, well above the global average. Most of this growth is productivity driven: Total Factor Productivity (TFP) has increased by 1.7% per year, also above the world’s average and representing technological improvements and improved efficiency to combine different production factors. Additional primary factors, including land, and intermediate inputs have contributed an additional 0.9 and 0.1 points to the production growth, respectively. Unlike in the 1990s, Indonesia’s growth in TFP has significantly outperformed the global averages during the last 10 years.

The sector’s shares of energy used has fallen since 2000 to 0.6% in 2024, while the share of GHG emissions has remained relatively stable at 12.7% in 2024, while the whole of agriculture, forest and other land use – in particular deforestation and forest degradation – represented more than half of Indonesian emissions in 2000-18. The country’s nitrogen balance is significantly above the OECD average, as is the 2023 phosphorous balance.

Table 15.3. Indonesia: Productivity and environmental indicators

	Indonesia		International comparison
	1991-2000	2014-23	1991-2000	2014-23
			World
TFP annual growth rate (%)	0.1%	1.7%	1.8%	0.8%
			OECD average
Environmental indicators	2000*	2024*	2000*	2024*
Nitrogen balance, kg/ha	44.9	78.7	32.3	29.0
Phosphorus balance, kg/ha	4.9	19.0	3.3	2.3
Agriculture share of total energy use (%)	3.2	0.6	1.7	2.0
Agriculture share of GHG emissions (%)	21.0	12.7	8.7	10.3
Share of irrigated land in AA (%)	12.3	12.2	-	-
Share of agriculture in water abstractions (%)¹	..	..	46.1	47.7
Water stress indicator	..	..	..	..

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Indonesia’s economy was relatively closed to trade for almost three decades from the 1960s to the 1980s. Trade liberalisation started only in the 1990s with the signature of agreements that created the WTO and the ASEAN Free Trade Area (AFTA).

Over the past 30 years, the main priorities of Indonesia’s agricultural policy have been food self-sufficiency, food diversification, value added, competitiveness, and farmers’ welfare. Agricultural producers benefit from a wide range of input subsidies for fertilisers, seeds, and credits, among others. The number and cost of these programmes grew rapidly starting in the mid-2000s. Since 1998, the government has increased the minimum producer price of rice, while targeted food assistance for the poor (via subsidised rice under the programme Raskin) was introduced, increasing expenditure on food assistance programmes.

Raskin went through a number of changes in the last decade and was eventually renamed as Rastra. These programmes allowed the Food Logistics Agency BULOG to distribute about 10 kg of rice per poor family per month. By 2019, this was replaced by the current BPNT programme that has grown to become a large-scale programme to provide an electronic food voucher, replacing physical rice distribution. Indonesia launched an additional in-kind rice distribution programme to low-income households in 2023 and 2024, reversing the trend towards cash transfers programmes for food assistance.

Tariffs fell significantly, with the average for agriculture (excluding alcoholic beverages) dropping from 20% in 1990 to 5% in 2010. Import monopolies, licensing requirements and export restrictions on agricultural products were removed in 1997-98. However, quantitative import restrictions were introduced, notably for rice, sugar and beef. Import requirements imposed for sanitary, phytosanitary and religious or cultural reasons (i.e. halal certification) are significant and potentially stringent. Export taxes were introduced in 1994 on crude palm oil (CPO) and its derivatives, and on cocoa in 2010. These and other export restrictions to CPO persist with adjustments over the years.

Indonesia’s current agricultural policies are framed in the 2012 Food Law, which establishes the objectives of “food self-reliance and food sovereignty” (kemandirian pangan dan kedaulatan pangan). In practice, the goal is achieving self-sufficiency on staple and strategic commodities (rice, maize, soybean, sugar, and beef). The country provides subsidies for input use, particularly fertiliser and credit. Since 2024, the Government of Indonesia prioritise nutrition policies through a new National Nutrition Agency that leads the ambitious Free Nutritious Meals (MNG) programme.

Table 15.4. Indonesia: Agricultural policy trends

Period	Framework	Changes in agricultural policies
1960s to 1980s	Closed economy Production expansion to avoid social unrest, rise in oil prices and green revolution	Food Logistics Agency (BULOG) established in 1967 and its marketing role expanded Subsidised inputs such as fertilisers, pesticides and credit Significant spending on infrastructure Increased import tariff rates Quantitative control of exports and imports Export taxes on palm oil and its derivatives
1980s–1996	Trade liberalisation	Abolishment of tariffs, general tariffs reduction programme Trade agreements (URAA, AFTA, APEC) New legislation on export tax on palm oil and its derivatives in 1994 Phase out of input subsidies
1997-1999	Market reform Asian financial crisis	Reduction of BULOG’s monopoly powers, particularly in rice markets Reduction of fertiliser subsidy Introduction of targeted rice distribution programme (OPK/Raskin) Tariffs replace import licensing arrangements for sugar Abolishment of local content requirements for dairy and soybeans Temporary removal of export taxes on palm oil and its derivatives
2000-2012	Measures to revitalise the agricultural sector in response to poor productivity	Reinstated fertiliser subsidy Increased expenditures in extension services R&D and irrigation Increased tariffs on rice and sugar Quantitative controls on trade in rice, sugar and beef More stringent non-tariff measures Variable export tax on palm oil and its derivatives, and on cocoa
2012-2023	2012 Food Law, policy focus on self-sufficiency of staple food (rice, maize, soybeans, sugar and beef)	Increased role of BULOG in rice imports and domestic market Distribution of rice at low prices, first through Raskin programme, then Rastra and finally BPNT electronic vouchers organising rice distribution More input subsidies for fertilisers, seeds and credit. Grant for machineries to targeted farmers’ groups New initiative on food estates to increase production area
2024-present	New focus on nutrition and boosting domestic production	A new National Nutrition Agency and an ambitious Free Nutritious Meals (MBG) programme Oplah and CSR programmes to increase production intensity Implementation of Food Brigades to promote scale and technology adoption Increased protections for rice land Broader role for government food stocks Stronger role of central government in extension, implementation, and decision-making

Indonesia’s producer support estimate has been mostly positive over the past 30 years, mainly due to market price interventions (tariffs and minimum prices). The only exception occurred during the financial crisis in 1998 and the food crisis in 2008, both leading to negative support to producers. Export taxes imposed on palm oil and cocoa result in negative support for those commodities. The negative price support to palm oil quadrupled in 2021 and 2022 due to skyrocketing world prices not fully transmitted to local consumers for which palm oil is a staple commodity, and fell after world prices normalised. Budgetary transfers to producers (mainly input subsidies) are significantly smaller than the negative or positive support provided through producer prices. Food consumers are penalised by policy because the budgetary support they received represents only a small share of the negative support due to higher domestic prices of staple commodities such as sugar, maize, poultry, rice and eggs.

References

[4] ASEAN Secretariat (2017), ASEAN Economic Community Factsheet, https://asean.org/wp-content/uploads/2012/05/7c.-May-2017-Factsheet-on-AEC.pdf.

[3] Halimatussadiah, A. et al. (2021), “Progressive biodiesel policy in Indonesia: Does the Government’s economic proposition hold?”, Renewable and Sustainable Energy Reviews, Vol. 150, p. 111431, https://doi.org/10.1016/j.rser.2021.111431.

[1] MoA (2024), Draft of Initial Plan of the Ministry of Agriculture’s Strategic Plan 2025-2029., Ministry of Agriculture. Government of Indonesia.

[2] USDA FAS (2018), “Indonesia Grain and Feed Annual Report 2018”, GAIN ID1808, USDA FAS.