Indonesia has been known for centuries as an agricultural hub with an abundant crop potential, but it must improve its agricultural research to boost productivity and food security for its large and growing population.
According to a study conducted by the Center for Indonesian Policy Studies (CIPS), rice consumption in Indonesia will increase to 99.55 kg per capita by 2045 from 97.6 kg per capita in 2017. The figure assumes that the population will grow to about 300 million in 2045.
However, challenges persist as Agriculture Ministry data shows that rice productivity was only 51.92 percent, and Indonesia only ranked 65 out of 113 in the overall Global Food Security Index (GSFI) last year.
“The key to improving our productivity is research and development,” Research, Technology and Higher Education Minister Bambang Brodjonegoro said during a keynote speech at the Indonesian Chamber of Commerce and Industry’s (Kadin) agribusiness national coordination meeting on Monday (4/11).
The minister wants to implement a triple helix scheme which will bring together researchers, farmers and the government to meet the needs of all stakeholders.
He said that the super tax deduction of up to 300 percent for research activities should encourage the private sector to undertake more research and development.
Bambang said many Indonesian researchers were able to create prototypes from their research. However, they found it difficult to commercialize their inventions due to a lack of funding.
“So, the private sector needs to dig deeper into R&D and collaborate with independent researchers,” he said.
However, Indonesia-based research company BOI Research cofounder Ingmar van den Brink said that as 93 percent of all farmers in Indonesia are smallholders and spread throughout 17,000 islands, collecting data is challenging and costly.
Nonetheless, he said data collection and research were necessary since the government’s data on agriculture usually comes in aggregate figures, while business players need more contextual data.
“Government data is not necessarily bad, but industries need context, such as why certain regencies produced more rice than others or how many times a flood occurred and so on,” he said.
The research company recently released a rice report in collaboration with Hara, a blockchain-based data exchange app and web portal for the food and agriculture sector. With the app, farmers can input real-time data digitally.
The report explored topics such as weather, irrigation, seeds, fertilization, pests and diseases in addition to the usual government-provided production data.
Hara’s Project Manager Officer Juaneitta Tyas said that retailers, policymakers and even consumers could benefit from the data by analyzing risk factors and product traceability.
“Farmers can use the data to show banks their assets for collateral when they apply for credit, loans or insurance,” she said.
Juaneitta said insurance companies could also use the data to create insurance plans that are tailored to the needs and risks of farmers.
Senior banker Jerry Ng said that conventional banks usually preferred giving loans to the trade sector, as it is “low-hanging fruit,” while few cater to the needs of micro, small and medium farmers and fishermen.
He said banks need to work with financial technologies (fintech) to connect the “unbankable” professions to financial services.
“Technology is only part of the solution but not the ultimate solution. Banks, nonetheless, are still the primary financing institution,” he said on Monday.
Currently, there are 127 fintech peer-to-peer lending organizations registered with the Financial Services Authority (OJK), but only four focus on farm funding, according to the agency’s deputy commissioner for banking supervision Boedi Armanto.
Asian Development Bank (ADB) data showed that 37 percent of Indonesia’s poorest 40 percent had access to formal banks in 2017. The number has increased from only 22 percent in 2014.
One-third of the nation’s unbanked adults consider distance a critical reason behind their lack of a formal bank account. Almost 70 percent of unbanked adults own mobile phones, a significant opportunity for fintech to increase financial inclusion.
According to BPS, the agricultural sector was the fourth-largest contributor to national GDP last year after manufacturing, trade, and construction.
-Written by Eisya A. Eloksari in The Jakarta Post.