Investment to Drive Digital Agriculture Practices in Indonesia


During the pandemic, food security has become a central issue in various parts of the world. Consequently, the agricultural sector continues to grow during the pandemic. With the potential to be further developed for national food security and exports, the agricultural sector needs to improve productivity exponentially. Technology can make this happen.

Fourteen percent of Indonesia’s GDP comes from the agriculture sector, which is predominantly run by smallholder farmers (93%). In terms of workforce, the sector absorbs more labor during the pandemic due to the decline in the manufacturing sector and other business sectors that encourage more people to become farmers in rural areas. Labor absorption in the agricultural sector was successfully maintained at 29.5 percent as of February 2021, an increase of 0.36 percent from the previous year.

The sector received some USD21 billion investment in the period of 2015 until March 2021, of which foreign direct investment (FDI) contributed only USD9.5 billion. Most of this modest FDI contribution to Indonesia’s agricultural sector go into oil palm plantations, the Ministry of Investment/BKPM reported.

“FDI can bring technology, connections, and international markets, so the foreign investment is our chance to improve Indonesia’s agricultural productivity,” stated Associate Researcher Center for Indonesian Policy Studies (CIPS) Donny Pasaribu.

Digital Solutions for Better Indonesia’s Agriculture

Digital agriculture has the potential to be a game-changer for agriculture in Indonesia as the country’s startup ecosystem has seen a rapid growth of agricultural technologies (AgTech). Indonesian AgTech startups have helped advance many aspects of traditional agriculture and significantly contributed to the sector’s production, supply chain, market access, transaction, and financing.

Smallholder farmers who may not have the technical knowledge to keep up with technology can learn to use solutions provided by MSMB Indonesia, Habibi Garden, and eFishery that help with precision agriculture practice, hence increasing production efficiency of staple foods and other agriculture produces. EdenFarm and TaniHub Group provide marketplace solutions and farmer support apps that help simplify the agricultural supply chain, increase farmers’ incomes, and stabilize produce prices. Koltiva offers end-to-end business process solutions that allow farmer groups and cooperatives to conduct business activities more efficiently and comprehensively.

With the largest agricultural, forestry, and fisheries land in Southeast Asia, Indonesia holds the key to becoming a prominent provider for the world. To further develop this sector in Indonesia, digital solutions are needed as they have the potential to improve millions of farmers’ livelihoods, elevate productivity in rural communities, and significantly transform Indonesia’s agricultural sector. The investment will be the deciding factor in this sector’s total transformation in Indonesia.