Indonesian Rice Production

Although Indonesia is the third-largest country in terms of global rice production, it still has to import rice almost every year (although usually to keep the reserves at a safe level). This situation is caused by farmers’ use of non-optimal production techniques in combination with large per capita rice consumption (and the massive¬†population). In fact, Indonesia is among the largest rice consumers across the globe. The nation’s per capita rice consumption was recorded at nearly 150 kilogram (of rice, per person, per year) in 2017. Only Myanmar, Vietnam, and Bangladesh had higher per capita rice consumption.

Rice production in Indonesia is dominated by the smallholder farmers, not by big private or state-owned enterprises. Smallholder farmers account for around 90 percent of Indonesia’s rice production, each farmer holding an average land area of less than 0.8 hectares.

For multiple decades Indonesia has been striving to reach rice self-sufficiency but only succeeded in the mid-1980s and 2008-2009. In recent years Indonesia has needed to import around three million tons of rice annually, mainly from Thailand and Vietnam, to safeguard the country’s rice reserves. These imports are handled by state procurement agency Bulog (the National Logistics Agency). This agency holds a monopoly on both import and export of rice, deals with the distribution process and safeguards rice price stability in the country. It usually maintains a rice stock of between 1.5 and 2.0 million tons by buying from domestic suppliers or foreign exporters.

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