Other Agriculture Study

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  • Publication
    Improving Governance of Indonesia's Peatlands and Other Lowland Ecosystems
    (World Bank, Washington, DC, 2021-02-01) World Bank
    The report aims to advance a policy dialogue on how to address sustainability challenges from lowland developments. The specific approach discussed in this report is the "landscape approach" which, in turn, calls for improved "landscape governance." As a technical background study, the report serves four functions. First, it summarizes the principles of a landscape approach, elaborated in the context of Indonesia's lowlands through two previous technical studies. Second, it takes stock of current governance challenges in Indonesia's lowlands, focusing on those related to the government sector, and discusses how these challenges currently prevent a landscape approach from being implemented in Indonesia's lowlands. Third, it reviews Indonesia's recent efforts to address the governance challenges in the management of peatlands and other lowland ecosystems. Fourth, it offers recommendations on options to improve lowland governance in order to shift toward integrated management of Indonesia's lowlands based on a landscape approach.The report focuses on the lowland areas in eight fire-prone provinces, and on key landscape governance issues related to peatlands. Indonesia suffered many years of repeated fires and haze crises, with landmark events in 1982/83, 1997/98, 2002, 2006, 2009, and 2015. The 2015 El Niño-driven fires were particularly extensive and costly. Almost 80 percent of the 2015–16 fires occurred within the lowland areas in eight fire-prone provinces—Central Kalimantan, East Kalimantan, Jambi, Papua, Riau, South Kalimantan, South Sumatra, and West Kalimantan—which together account for 87 percent of lowland areas nationally. The report highlights the importance of sustainable landscape management of lowland areas, particularly of the peatlands within lowland boundaries, for achieving the Government of Indonesia’s objective in preventing land and forest fires.
  • Publication
    Sustainable Lowland Agriculture Development in Indonesia
    (World Bank, Washington, DC, 2021-02-01) World Bank
    For Indonesia's agricultural sector to continue to make a significant sustainable social and economic contribution, it will need to undergo a transformation. While the contribution of Indonesia's agriculture sector to national gross domestic product (13 percent) has declined greatly over the past three decades, it is still significant, ranking in third place in 2019 after the oil and gas processing sector (20 percent) and the non-oil and gas processing sector (18 percent). To ensure continued contribution of this sector, the Indonesian government has implemented a number of strategies and measures, including REDD+,1 low carbon development, Sustainable Development Goal (SDG) action plans, and green growth strategies. However, despite these efforts, performance in terms of environmental sustainability indicators and contributions to smallholders' livelihoods, particularly in lowland areas, is still suboptimal. Indonesia's lowland areas, in particular, have significant potential to contribute to increased agricultural production, especially in the case of rice, but also for a range of other food and non-food commodities. Indonesia's lowlands cover about 20 percent of Indonesia's total area of which about half are peatlands. Most of this area is found on Indonesia's three largest islands (Sumatra, Kalimantan, and Papua) amounting to 33.7 million hectares, or about 25 percent of the total land area of these islands (World Bank 2018). Indonesia has the largest area of tropical peatlands of any nation, of which more than 90 percent are distributed in the lowland areas of these three islands. However, lowlands are also of great importance for biodiversity, including mangroves, peat swamp forest and freshwater swamp forest with their specific flora and fauna. Despite the significance of lowland agriculture for the achievement of higher levels of national economic growth and environmental sustainability and for improving rural livelihoods in Indonesia, lowland agriculture must overcome several challenges if it is to realize its full potential.
  • Publication
    Indonesia Agro-Value Chain Assessment: Issues and Options in Promoting Digital Agriculture
    (World Bank, Washington, DC, 2020-06-23) World Bank
    This background paper aims to provide an assessment of the issues and options in promoting digital agriculture in Indonesia, within the broader technology landscape of the country, with the primary aim of informing the design of the proposed World Bank investment project. The study considers global best practices as well as the status of Indonesia in product traceability, e-commerce, agriculture fintech service providers, weather index insurance providers, and precision farming technology providers. Although digital agriculture is cross-cutting across all commodities, the focus was on the horticulture and small ruminant value chains as those were identified as priority commodity categories by the Ministry of Agriculture. The study also offers high-level recommendations for policymakers on reforms and programs that can accelerate the adoption of digital agriculture. In the first section, the national context and the importance of ICT technology in agriculture are summarized. Section two presents the current landscape of digital agriculture in Indonesia, followed by section three that suggests key areas where ICT can play a role in agriculture, based on global experience. As scaling up the digitization of the agriculture sector involves a complex set of policy, investment, innovation, and capacity-building measures, several high-level recommendations are provided for policymakers and practitioners in the fourth and last section.
  • Publication
    An Exploratory Overview of Agriculture Finance in Indonesia
    (World Bank, Washington, DC, 2020-06-19) World Bank
    The Government of Indonesia is aiming to diversify the country’s food system by developing and strengthening high-value-added and more nutrient-rich value chains. In this regard, the government is focusing on diversifying into horticulture and small ruminant livestock. Undertaking Value Chain Analysis (VCA) is a critical part of this process as it helps in the identification of constraints and opportunities in relevant sectors. Agriculture funding and finance are vital components of this analytical process. This report presents a preliminary overview of opportunities and constraints as well as areas for future interventions. The analysis is based on a World Bank and FAO scoping mission to Indonesia that took place between March 2 - March 13, 2020. This report focuses on the supply-side of capital. The key findings suggest that supply-side constraints are minimal. The liquidity in Indonesia’s banking system is enough and there already exist extensive physical banking networks within the country. The Indonesian banking networks include a selection of commercial and specialized banks, membership-based groups, and fintech organizations. Also, there exist several large food manufacturers that could potentially aid in the process of financing and the creation of linkages through vertical integration of value chains. The Small and Medium Size Enterprises (SMEs) in the food and agriculture sectors have been growing strongly, and they can act as accelerators and facilitate the process. The Indonesian government is supporting the development of value chains and has been actively promoting the creation of farmer organizations to aid the process. Lastly, there exists a demand for the creation of a blended finance facility that could help amplify the effects of the value chain projects, and the Tropical Landscapes Finance Facility (TLFF) is a proof of such a concept that is working well in Indonesia.
  • Publication
    Addressing the Aggregation and Coordination Problems in Smallholder-based Value Chains
    (World Bank, Washington, DC, 2018) Shepherd, Andrew W.
    Smallholder production predominates in many areas of primary food production in Indonesia. Yet, outside of oil palm and poultry, contract farming is rare as are other forms of collective action or vertical coordination. Fragmented production and market interfaces give rise to high transaction costs and problems in matching supply with downstream or consumer requirements. Yet, there is a growing body of international experience promoting multiple models to help realize some economies of scale within smallholder-based production systems and effectively addressing the aggregation and market-matching problems. These include different forms of joint farming operations, shared services, farmer organizations, contracting arrangements or partnerships with agro-enterprises, and other models. Their suitability and need for public enabling support varies depending upon the underlying circumstances. This note synthesizes experiences, lessons learned, and success factors with potential relevance for Indonesian staple food crop and horticultural production.
  • Publication
    Developing Parametric Insurance for Weather Related Risks for Indonesia
    (World Bank, Washington, DC, 2018-01) World Bank Group
    Indonesia is one of the main agriculture producers globally and largely relies on domestic staples for its growing population. Projections of climate change models for Indonesia point towards increasing temperatures and more extreme distributions of precipitation with more frequent dry and wet periods. The Government of Indonesia (GoI) has been focusing on modernizing rice production through improved irrigation infrastructure and early warning systems to better cope with developing droughts and support schemes for rice farmers. While governments use risk transfer solutions mostly for infrastructure, parametric insurance covers have become increasingly available for agriculture assets including crops, livestock, and forestry. This study investigates the development of a parametric insurance product as an ex ante risk management instrument that relies on regional drought indices and provides province-level payouts to the GoI in case of severe droughts. As a case study, the province of Central Java has been chosen given its importance in rice production and a recent request of the Central Java Government to transfer drought risk. This study uses over 50 years of historical gridded precipitation and temperature data to develop standard precipitation indices (SPI) and standard precipitation evapotranspiration indices (SPEI) to quantify drought extents at a resolution of 50 x 50 km. Preliminary results of this study have been shown and discussed with the Ministry of Agriculture of Central Java, the National Weather Service of Indonesia (BMKG), the Office of the Insurance Regulator, the Ministry of Finance, and leading Indonesian insurers in the form of workshops undertaken in Indonesia (Semarang and Jakarta) in July 2017. The availability of longer seasonal rice production data will improve the validation of the developed indices.
  • Publication
    The Economics of Tobacco Farming in Indonesia
    (World Bank, Washington, DC, 2017-10-06) World Bank Group
    This report aims to contribute to the policy debate over the reform of the Indonesian tobacco excise tax system by reporting results of a nationally representative survey of and focus group discussion with smallholder tobacco farmers that examine their livelihoods and how tobacco tax reform may affect these households.
  • Publication
    The Economics of Clove Farming in Indonesia
    (World Bank, Washington, DC, 2017-09-23) World Bank Group
    This report aims to inform the current debate over the taxation of kreteks in Indonesia by examining clove-farming livelihoods. It presents results from a comprehensive, household-level, economically-focused survey of 600 clove farmers across the two largest clove-growing regions, Sulawesi and Central Java. The survey examines the role that clove farming plays in these households’ economic lives, among other related topics.
  • Publication
    Sustainable Management of Agricultural Research and Technology Dissemination (SMARTD) : A Strategic Framework
    (Washington, DC, 2008-06) World Bank
    Revitalizing agriculture is critical for rural Indonesia's economic prosperity. Historically, Indonesia's dramatic poverty reduction was driven by progress in agriculture and agriculture continues to be a potent driver of growth and poverty alleviation. Agricultural sector growth strongly induces non-agricultural sector growth in rural areas, particularly through demand for locally produced and services. Agricultural sector productivity growth (along with price changes) has remained the most important way out of poverty. To shift agriculture along these dimensions, Indonesia needs to transition from its current and ineffective public stance, growing subsidies and selective output protection, to a more aggressive provision of public goods and services that build support systems for farmers to achieve continuous productivity gains. This will require an enabling agriculture policy environment, significant improvement in the delivery of services, agricultural research and extension in particular, and supporting enabling investments, which will encourage small farmers to move to high value agricultural activities. This will boost employment and raise incomes in rural areas while creating a bigger rural market with greater trade and investment opportunities.
  • Publication
    Sustainable Management of Agricultural Research and Technology Dissemination (SMARTD) : A Strategic Framework
    (World Bank, Washington, DC, 2008-06) World Bank
    Revitalizing agriculture is critical for rural Indonesia's economic prosperity. Historically, Indonesia's dramatic poverty reduction was driven by progress in agriculture and agriculture continues to be a potent driver of growth and poverty alleviation. Agricultural sector growth strongly induces non-agricultural sector growth in rural areas, particularly through demand for locally produced and services. Agricultural sector productivity growth (along with price changes) has remained the most important way out of poverty. To shift agriculture along these dimensions, Indonesia needs to transition from its current and ineffective public stance, growing subsidies and selective output protection, to a more aggressive provision of public goods and services that build support systems for farmers to achieve continuous productivity gains. This will require an enabling agriculture policy environment, significant improvement in the delivery of services, agricultural research and extension in particular, and supporting enabling investments, which will encourage small farmers to move to high value agricultural activities. This will boost employment and raise incomes in rural areas while creating a bigger rural market with greater trade and investment opportunities.