Jakarta (Indonesia Window) – The production cost in the agricultural sector in Indonesia is relatively higher than other countries due to a number of factors, Head of Research Center for Indonesian Policy Studies (CIPS) Felippa Amanta said at a G20 discussion on food security and sustainable agriculture here on Thursday (Feb. 17).
She revealed CIPS’ research which indicated several factors causing the high cost of Indonesian agricultural productions, among others limited lands and quality seeds, as well as lack of access to fertilizers.
Commonly, farmers in Indonesia own 0.6 hectares of land. This area of land has caused high production costs and is inefficient when compared to cultivating agricultural lands on a larger scale, according to Felippa.
In addition, farmers in the archipelagic country also face limited access to quality seeds and fertilizers. Subsidized fertilizers could not meet the needs, while the non-subsidized fertilizers price is very high compared to the former.
In addition to high production costs, Indonesia’s agricultural productivity is also much lower than other countries.
Felippa pointed out an example of coffee, which is one of Indonesia’s leading commodities, yet is still unable to compete with those produced by Brazil and Vietnam as the number one and second coffee producers in the world.
Low productivity and high production costs cause the selling price of Indonesian coffee to be costlier and less competitive than other countries.
“If we look at the relationship between productivity and the cost structure, in the end, the selling price of our agricultural products is higher than the international price,” Felippa said.
However, the CIPS research also reveals the enormous potential of the Indonesian agricultural sectors to be developed, underscoring that the COVID-19 pandemic does not affect the sector when others are contracted.
Reporting by Indonesia Window