The Impact of COVID-19 on the Agriculture Sector: How to Feed Indonesia?
By: Gianina Amira Zahra
Tags: Market Research, Covid 19 Impact, Indonesia, Agriculture, Food Security

Analysis of the implications of COVID-19 pandemic towards the agriculture sector and food security in Indonesia.

Source: CNN Indonesia, 2020

In Indonesia, population pressure, unstable environment, land degradation, and poverty have been the main cause of food security is difficult to attain. This has been compounded by the COVID-19 pandemic. The most important sector of food security is agriculture and has been one of the sectors most affected by the pandemic (Wang et al., 2020). It is expected that employment in agriculture will reduce by 2.87% and domestic agricultural supply by 6.2%. Moreover, imports of agricultural products are expected to decrease by 17.11% with import prices will rise by 1.2% in the short term and 2.42% in 2022 (Neliti, 2020).

The declining agricultural sector due to a reduction in supplies and imports significantly affects the food security issues in Indonesia as the country still heavily relies on crop importation to meet domestic demand. Indonesia’s source of protein heavily relies on white rice consumption and its protein source comes from soybean products such as tofu and tempeh. However, the country still has to import rice and soybean to meet domestic demand. Thus, COVID-19 exacerbates food shortages due to price inflation and limited domestic production.

It is important to discuss the implications of COVID-19 to agriculture, and food security, especially in Indonesia. New and enhanced strategies are needed for the country to achieve the 2030 Agenda, specifically on the Sustainable Development Goal 2 that states by 2030 Indonesia will end hunger by achieving food security and improving nutrition, and promoting sustainable agriculture.

Indonesia’s Agriculture Sector

Agriculture Landscape

Indonesia has an estimated 57 million hectares of agricultural land, making agriculture one of the prominent sectors of Indonesia contributing to 12.72% of the share to GDP in 2019 (The World Bank, 2019). Also, it is estimated that 29% of the Indonesian workforce works in the agriculture, fisheries, and livestock sector and is the third-biggest contributor to the economy after manufacturing and trade (BPS, 2019).

The agriculture sector in Indonesia comprises large plantations that are both state-owned and private that tend to focus on commodities that are important to export including palm oil and rubber. On the other hand, smallholder production modes focus on rice, maize, soybeans, vegetables, and fruit. Indonesia’s palm oil plantation and processing industry is a key industry in the country’s agriculture sector contributing between 1.5% to 2.5% of the nation’s GDP (Indonesia Investments, 2016).

Although Indonesia’s staple food is rice and is the third-largest country in terms of global rice production, it still has to import rice to feed the nation. The nation’s rice consumption per capita was recorded at nearly 150 kilograms of rice, per person, per year in 2017 (Indonesia Investments, 2018). The dependency on rice importation is mainly due to the domination of smallholder farmers, not by big private or state-owned enterprises that account for 90% of the country’s rice production with each farmer holding around 0.8 hectares of land area (Ministry of Agriculture, Republic of Indonesia, 2016).

Indonesia’s agricultural production in thousands of tons (Source: Ministry of Agriculture, Republic of Indonesia, 2019)

Another popular staple food for Indonesian households would be maize and cassava that demonstrate high levels of production according to the figure above. Sweet potato, mungbean, peanut, and soybean are secondary crops usually planted after the rice has been planted. Crop availability is needed by Indonesian society because many areas consume these crops as their main staple food or supplementary source of carbohydrates.

A lot of Indonesia’s source of protein comes from soybeans that are used to produce tempe and tahu, products that are cheap, high in protein, and probiotic and whose consumption has become a tradition. However, the country is still dependent on soybean importation to fulfill domestic demand or to secure domestic food stock. Average soybean demand in Indonesia is approximately 2.3 million tons per year, but domestic production is less than 1 million tons per year (Ningrum et al., 2018)

Post-COVID Situation

Indonesia’s agriculture sector relies heavily on external inputs such as pesticides and fertilizers making the crops at higher risk from pest attacks, climate change, and pandemics. The COVID-19 pandemic has disrupted the stock availability and accessibility, in which price has become uncertain, conditions that had the potential to stop farmers’ activities in production, affecting food supply (Rozaki, 2020). The social distancing restriction has proved difficult for farmers who commonly work in fields, live in rural areas, and are disproportionately uneducated.

Some regions in Indonesia have faced water shortages, mainly during the drought season. Some of the worst water shortages are felt in Java, which is home to 60% of the population, having the largest cities, and most of them are home to agriculture production. Compared to Papua that holds 70% of the water supply in Indonesia with only 13% of the population, Java is seriously lacking in the water holding just 10% of the nation’s water supplies (Piesse, 2016). The COVID-19 has exacerbated that problem, producing an additional dilemma whether water is going to be used for farming or used to clean bodies and wash hands. This can lead the agriculture sector to be more vulnerable to water shortage.

In regards to the importation of agricultural products, disruptions to Indonesia’s supply chains are appearing due to the closure of some roads and ports, and reduced processing capacity have slowed the distribution of food. There have been shortages of some crucial products like sugar and garlic (CIPS, 2020).

Despite the challenges faced by the agriculture sector, the sector managed to grow 2.19% YoY in the second quarter of 2020. An economist at the Institute for Development of Economics and Finance (Indef), Bustanul Arifin, stated that the growth could be partially attributed to the resilience of farmers to the crisis aided by a delay in the rice harvest following last year’s drought (The Jakarta Post, 2020).

Indonesia’s Food Security

Food Security Issues

“Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life.” (World Food Summit, 1996)

Indonesia is considered as a lower-middle-income country and the largest economy in Southeast Asia. With significant rapid economic growth and government investments in social development, the country managed to meet its Millennium Development Goal of halving the number of malnourished or undernourished people by 2015 (WFP, 2016).

Food security index for 34 provinces in Indonesia (Source: Food Security Bureau, Republic of Indonesia, 2020)

However, poverty is still concentrated in rural areas with 14.3% of the population living below the poverty line. Because of high food prices, access to food is uneven with rice being 50% to 70% more expensive than in neighboring countries resulting in 19.4 million Indonesians being unable to meet their dietary requirements (WFP, 2020).

Because a lot of Indonesians eat poorly varied diets, based mainly on rice, the country is faced with three simultaneous nutrition-related challenges. It is estimated that around 37% of children under the age of five years old suffered from stunted growth due to malnutrition, with higher prevalence among families living in poor areas, rural areas, and mostly farmers. Moreover, there is an increasing number of people over the age of 25 who are overweight or obese and one-quarter of women of reproductive age are anemic due to lack of iron.

Moreover, the Indonesian Ministry of Agriculture stated that six provinces, Papua, East Nusa Tenggara, Maluku, West Kalimantan, Bangka Belitung Islands, and West Papua, have a low food security index, thus, the development should be considered a priority (Food Security Bureau of Indonesia, 2020). This shows that food security is unevenly distributed in Indonesia.

Post-COVID Situation

Research done by (Kharisma and Abe, 2020) found that before the pandemic hit Indonesia, 27.4% of people in an urban area were at a level of food insecurity and has undoubtedly increased due to the pandemic. Even under normal conditions, the country cannot meet the demands for self-sufficiency and is more incapable during the COVID-19 pandemic. Limitations on imports and exports during the pandemic applied have meant that countries relying on food importation are more vulnerable to food insecurity due to trade disruption.

With the increasing unemployment rate across Indonesia, people are losing their income and resulting in higher food insecurity that mostly affects the lower socioeconomic classes. A survey done by J-PAL SEA in 2020 involving 5,500 Indonesians indicated that since the beginning of the pandemic, food insecurity remains high in Indonesia. The surveys have estimated that only 24% of Indonesian households reported eating as much as they should during the pandemic. However, in rural areas of Districts, food insecurity is improving significantly.

Although Indonesia has not applied strict lockdown measures to minimize the spread of the virus, some regions have applied PSBB. Limitations on economic, and non-economic activities have disrupted the food supply chain as food production is commonly centered on particular regions, with other regions importing that food. This disruption affects the market system and food price as increases in fluctuation cannot be avoided when the pandemic occurs.

Way Forward

It would not be easy to fulfill the demand for food during the pandemic and thus, a food crisis could arise if no measurements are applied. Food security adaptations arising from the COVID-19 pandemic need to be employed as soon as possible by considering the possible short and long-term impacts. With the hope of the new vaccine for the virus, Indonesia could control its food stock, distribution, and price better through strategies both at the national level and household level.

It is important to increase local food production to achieve food security in Indonesia. Relying on local production is much more sustainable rather than relying on imported food (Bishwajit et al., 2013). Thus, the government of Indonesia should focus on regulation regarding supporting local production, importantly in this time of crisis, in which movement of goods is complicated and unstable by limited governmental activity. The success of agricultural production should be followed by accessibility to quality inputs such as seeds, pesticides, and fertilizer (Rozaki, 2020).

Another way to support local food production is through food diversification to reduce the dependence on a single food product. In Indonesia, food diversification has its potential as some regions’ staple foods are sago, cassava, and maize. Moreover, the government has implemented the One Village One Product approach to support food diversification since 2006 (Kompasiana, 2018).

However, planting only one crop makes the farm more vulnerable to disease, weeds, and pests, increasing dependence on chemicals (Alteri and Nicholls, 2020). Thus, to support food and farming system diversification, the government of Indonesia should invest in information and mechanization regarding farm-level production through technological development.

An increase in local production can also be supported in the context of individual properties, houses in Indonesia’s rural areas commonly have a yard that can be used to plant food crops for self-consumption. In this way, both non-farmers and farmers can participate in meeting domestic food demands. If one cannot afford to plant its food crops, buying from local farmers to support small and medium enterprises can help to increase local food production.