OECD Review of Agricultural Pol - OECD

Foreword
Table of contents
Abbreviations
Executive summary
Highlights and policy recommendations
	Box 0.1. Indonesia: Contextual information
		Table 0.1. Contextual indicators, 1990, 2010
		Figure 0.1. Main macroeconomic indicators, 1991-2010
		Figure 0.2. Agro-food trade, 1990-2010
	Box 0.2. Overview of agricultural policy instruments applied in Indonesia
	Box 0.3. Major constraints to increased investment in agriculture
	Notes
	References
Synthèse et recommandations pour l’action publique
	Encadré 0.1. La situation en Indonésie
		Tableau 0.1. Indicateurs contextuels, 1990, 2010
		Figure 0.1. Principaux indicateurs macroéconomiques, 1991-2010
		Figure 0.2. Commerce agroalimentaire, 1990-2010
	Encadré 0.2. Instruments de politique agricole appliqués en Indonésie
	Encadré 0.3. Principaux freins à l’investissement dans l’agriculture
	Notes
	Références
Chapter 1. The policy context
	1.1. General aspects
		Political and demographic characteristics
			Box 1.1. Indonesia: “Unity in diversity"
				Table 1.1. Indonesia: Selected regional indicators, 2010
		Natural resources and climatic conditions
			Figure 1.1. Agricultural land, 1990-2009
		Macroeconomic performance
			Figure 1.2. Indonesia: Selected macroeconomic indicators, 1990-2010
	1.2. Agricultural situation
		Evolving roles of agriculture over time
		Agriculture and the food sector in the economy
			Figure 1.3. The share of agriculture in GDP, employment, total exports and imports, 1990-2010
			Figure 1.4. The importance of agriculture in regional GDP, 1990-2008
			Figure 1.5. Evolution of agriculture’s share of GDP and share of employment in selected Asian countries, 1980-2007
		Evolution of market conditions
			Figure 1.6. Output and input price indices and farmers’ terms of trade, 1993-2010
		Changes in capital investment and input use
			Figure 1.7. Use of chemical fertiliser in selected countries (active nutrient kg/ha of cropland)
			Table 1.2. Agricultural machinery in Indonesia per 1 000 workers, 1990-2003
		Farm output
			Figure 1.8. Growth in agricultural output, 1990-2010
			Table 1.3. Changes in the composition of the value of agricultural production, 1991-2009 (%)
			Figure 1.9. Changes in crop production, 1990-2010
			Figure 1.10. Composition of crop area, 1990-2008
			Figure 1.11. Changes in livestock production, 1990-2009
			Box 1.2. The development of palm oil production
			Figure 1.12. Regional distribution of agricultural value added, 1990 and 2008
		Farm employment
			Figure 1.13. Evolution of employment structure by sector, 1990-2009
			Figure 1.14. Level and composition of agricultural employment, 1990-2009
			Figure 1.15. Regional distribution of agricultural employment, 1990 and 2009
			Figure 1.16. Employment structure across regions, 2010
			Figure 1.17. Land-to-labour ratio for agriculture, 1990-2009
		Productivity
			Figure 1.18. Labour productivity growth in agriculture in selected Asian countries, 1990-2009
			Figure 1.19. Agriculture labour productivity in selected regions, 1990-2008
			Figure 1.20. Crop yields for selected food crops, 1993-2009
			Figure 1.21. Crop yields for selected perennial crops, 1990-2010
			Figure 1.22. Evolution of total factor productivity in agriculture, 1990-2006
			Figure 1.23. Total factor productivity in agriculture in selected countries, annual growth rates, 1991-2009
		Farm incomes and poverty reduction
			Figure 1.24. Income structure by rural household activity, 1983-2003
			Figure 1.25. Poverty headcount rates at national and international poverty lines, % of population, 1976-2010
			Figure 1.26. Evolution of rural poverty headcount rates in selected regions, 1996-2010
		Food consumption
			Table 1.4. Percentage of monthly average per capita expenditure by commodity group, 1999-2009
			Figure 1.27. Food consumption per capita in Indonesia, 1990-2007
			Table 1.5. Net rice consumers, %
			Table 1.6. Average daily per capita consumption of energy by commodity group, 1999-2009 (%)
		Agro-food trade flows
			Figure 1.28. Indonesia’s agro-food trade, 1990-2010
			Table 1.7. Agro-food sector's integration with international markets, 1990-2010
			Figure 1.29. Net trade in basic groups of agro-food commodities, 1990-2010
			Box 1.3. The role of fisheries in the Indonesian economy
				Figure 1.30. Indonesia’s fisheries production and trade, 1980-2008
			Figure 1.31. Share of Indonesia in world’s exports of selected commodities, 1990-2010
			Figure 1.32. Composition of agro-food exports, 1990-2010
			Figure 1.33. Indonesia’s agro-food exports by region, 1990-2010
			Figure 1.34. Main export markets for Indonesia’s agro-food products, 2008-10 average
			Figure 1.35. Composition of agro-food imports, 1990-2010
			Figure 1.36. Share of imports in Indonesia’s domestic use of selected commodities, 1990-2007
			Figure 1.37. Indonesia’s agro-food imports by region, 1990-2010
			Figure 1.38. Main suppliers of agro-food products to Indonesia, 2008-10 average
		Agro-environmental situation
			Figure 1.39. Forest area in Indonesia, 1990-2009
	1.3. Structural change in the agro-food sector
		Agricultural land tenure system and policies
		Farm structures
			Table 1.8. Changes in average farm size, 1995 and 2007
			Table 1.9. Distribution of farm households by size and region, 2007 (%)
			Figure 1.40. Yields of large and small perennial crop producers, 1971-2007
		Competitiveness and structural change in the upstream and downstream sectors
			Figure 1.41. Subsidised fertiliser distribution channel in Indonesia
			Table 1.10. Standard contractual agreement between a farmer and potato agribusiness in Garut district, West Java province, Indonesia, 2005
			Figure 1.42. Standard marketing channel for agricultural commodities in Indonesia
			Figure 1.43. Farmers and marketing channels for tomatoes, West Java, 2004/05
	1.4. Summary
	Notes
	References
	Annex 1.A1. Indonesia: Projected production, consumption and trade of major commodities by 2021
		Figure 1.A1.1. Production: Per cent change 2021 compared with 2009-11 average
		Figure 1.A1.2. Projected palm oil production
		Figure 1.A1.3. Projected net trade position for selected products
Chapter 2. Policy trends and evaluation
	2.1. Agricultural policy framework
		Agricultural policy objectives: Current and past
			Table 2.1. Self-sufficiency targets for rice, maize, soybean, sugar and beef, 2014
		Phases of agricultural policy development
			Table 2.2. Evolution of agricultural policy in Indonesia
			Table 2.3. Policy responses to rising commodity prices in 2007-08
		Legal framework for policy implementation
			Table 2.4. Major laws, regulations and decrees affecting the agro-food sector
		Institutional arrangements for administering agricultural policy
			Table 2.5. Main tasks and budget share of Echelon 1 divisions under the Ministry of Agriculture
			Box 2.1. Involvement of the World Bank in Indonesian agriculture
			Table 2.6. Farmer-based organisations in Indonesia
	2.2. Domestic policies
		Price support measures
			Figure 2.1. Comparison of different types of rice prices in Indonesia, 1990-2010
			Figure 2.2. Domestic purchases and imports of rice by BULOG, 1990-2010
			Figure 2.3. Comparison of different types of sugar prices in Indonesia, 1990-2010
		Fertiliser subsidies
			Figure 2.4. Fertiliser subsidies in Indonesia, 1990-2010
			Table 2.7. Quantity of subsidised fertiliser provided to farmers, 2003-10
		Seed subsidies
			Table 2.8. Expenditure on seed programmes for rice, maize and soybeans, 2005-10
			Figure 2.5. Provision of certified seeds for rice, maize and soybeans, 2005, 2008 and 2010
		Credit policies for farmers
			Table 2.9. Credit programmes for agriculture, 2010
			Figure 2.6. Uptake of credit provided to farmers through interest rate subsidy programmes in 2010
			Figure 2.7. Government expenditure on PUAP and use of funds by borrowers, 2008-10
		Other input subsidies
		Income support measures
		Agricultural insurance
			Box 2.2. The role of insurance on risk management in agriculture
		Extension services
		Research and development
		Infrastructure
			Table 2.10. Condition of irrigation infrastructure by level of government, 2010
		Consumer support
			Figure 2.8. RASKIN rice distribution and budgetary cost, 2000-10
	2.3. Trade policies affecting agro-food trade flows and agricultural commodity prices
		Main objectives of agro-food trade policy
		Overall reforms of the trade system
		Import policy measures
			Figure 2.9. Average applied MFN tariff for agriculture and non-agriculture, 1990-2010
			Figure 2.10. Frequency distribution of agricultural bound and applied MFN tariff lines and imports by tariff rates, 2010
			Figure 2.11. Average bound, applied MFN and CEPT tariffs by product groups, 2010
		Export policy measures
			Figure 2.12. Export tax rates applied to crude palm oil, 1994-2011
		Trade relations
			Table 2.11. Time line of ASEAN trade agreements with partners
			Box 2.3. ASEAN+ regional trade agreements
	2.4. Evaluation of support to agriculture
		Box 2.4. OECD indicators of support to agriculture
		Box 2.5. Indonesia’s PSEs: What and how?
		Support to agricultural producers
			Figure 2.13. Level and composition of Producer Support Estimate, 1990-2010
			Figure 2.14. Producer Support Estimate in Indonesia and selected countries, 2006-10 average
			Table 2.12. Indonesia: Estimates of support to agriculture, IDR million
			Table 2.13. Indonesia: Estimates of support to agriculture, USD million
			Figure 2.15. Level and composition of Market Price Support, 1990-2010
			Figure 2.16. Level and composition of budgetary transfers, 1990-2010
			Figure 2.17. Producer SCT by commodity, 1990-94 and 2006-10 averages
		Support to consumers of agricultural products
			Figure 2.18. Consumer Support Estimate in Indonesia and selected countries, 2006-10 average
		Support to general services for agriculture
			Figure 2.19. Level and composition of General Services Support Estimate, 1990-2010
		Support to the agricultural sector as a whole
			Figure 2.20. Level and composition of Total Support Estimate, 1990-2010
			Figure 2.21. Total Support Estimate in Indonesia and selected countries, 2006-10 average
	2.5. Summary
	Notes
	References
	Annex 2.A1. Policy tables
		Table 2.A1.1. Agricultural components of the 1997-98 Letters of Intent to the IMF
		Table 2.A1.2. Ministries with responsibilities relating to agriculture
		Table 2.A1.3. SOEs involved in the agricultural sector
		Table 2.A1.4. Farmers ceiling prices of fertilisers, paddy floor price and paddy/urea ratio, 1987-2010
		Table 2.A1.5. Agricultural commodities classified as sensitive and highly sensitive by Indonesia under AFTA
		Table 2.A1.6. Pakmei tariff reduction schedule, 1995-2003
		Table 2.A1.7. Average applied MFN and WTO bound tariffs for selected agricultural commodities
		Table 2.A1.8. Variable export tax for CPO and its derivatives
Chapter 3. Promoting sustainable investment in agriculture
	3.1. Trends in investment in agriculture
		Domestic and foreign investment since 1960
			Figure 3.1. Gross capital formation and FDI inflows, current USD billion, 1992-2010
			Figure 3.2. Gross capital formation and FDI inflows, % of GDP, 1992-2010
		Investment in agriculture
			Figure 3.3. Share of agriculture in realised investment and in GDP, 1999-2010
			Figure 3.4. Share of agriculture in various economic variables, 2005-10 average
			Figure 3.5. Realised domestic and foreign investment in agriculture, 1999-2010
			Table 3.1. Incremental Capital Output Ratio (ICOR) by sector, 2006-10 average
		Investment per agricultural sub-sector
			Table 3.2. Realised investment per agricultural sub-sector, 2005-10
			Table 3.3. Production structure of perennial crops, 2009
			Figure 3.6. Palm oil production and land area by type of producers, 2004-10
			Table 3.4. Large private palm oil companies operating in Indonesia
			Table 3.5. Foreign direct investment in palm oil plantations by origin, 2009-11
			Table 3.6. Minimum obligations for biofuel utilisation
			Table 3.7. Biofuel production in Indonesia, 2006-10
		Investment in agriculture per source country and destination region
			Figure 3.7. FDI inflows to Indonesia by source country/region, 2004-10
			Figure 3.8. Realised investment in agriculture and agribusiness by region, 2005-10
	3.2. Investment policy in agriculture
		Background
		The FDI regime
			Figure 3.9. FDI Regulatory Restrictiveness Index by country, 2012
			Figure 3.10. FDI Regulatory Restrictiveness Index1 by sector, 2012
			Table 3.8. Agricultural sub-sectors with investment restrictions
			Box 3.1. The Horticulture Law 13/2010
		Land tenure
			Figure 3.11. Land registration
			Table 3.9. Maximum land area per company
		Business licensing
		Investment incentives
	3.3. Sectoral policies supporting investment in agriculture
		Infrastructure development
			Figure 3.12. Infrastructure quality rankings in Indonesia, 2011
			Table 3.10. Private sector investments in infrastructure, 1994-2004
			Table 3.11. Irrigation as percentage of crop land in selected Asian countries, 2000-07
			Table 3.12. Telecommunications: Subscribers/users per 100 inhabitants
			Box 3.2. The Centre for Agricultural Data and Information (Pusdatin)
		Human resource and skills development
			Table 3.13. Sources of agricultural growth, 1961-2006
		Research and innovation
			Figure 3.13. Public agricultural R&D spending as a share of agricultural GDP, 2005
		Access to finance
			Figure 3.14. Getting credit in Indonesia, 2010
			Table 3.14. Bank loans by sector of the economy, 2006-10
		Trade
			Table 3.15. Export tax regulations on palm oil products
	3.4. Responsible investment in agriculture
		Responsible business conduct
			Box 3.3. Successful examples of RBC implementation
		Environmental management
		Forest management
			Figure 3.15. Land use structure, 2009
		Social sustainability
			Box 3.4. Unilever – Building a black soybean supply chain in Java
	3.5. Summary
	Notes
	References
	Annex 3.A1. The Policy Framework for Investment in Agriculture
		Figure 3.A1.1. The nine policy areas of the PFIA
	Annex 3.A2. Methodology for the 2012 FDI Regulatory Restrictiveness Index
		Table 3.A2.1. Scoring of restrictions, FDI index 2012