Indonesia: Product Specific Support to Rice Under WTO
Food security policy in Indonesia is designed to fulfil basic human necessities which provide fair, equal and sustainable benefits based on the concepts of food resilience, self-sufficiency and food security. BULOG procures rice for the implementation of
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Indonesia: Product Specific Support to Rice Under WTO
7.1
Introduction
In Indonesia, agriculture plays an important role in poverty alleviation, rural development and employment creation. Agriculture sector accounts for 14 % of GDP and 35 % share in total employment (Table 7.1). Agriculture accounts for 23.3 % of merchandise export and 11.5 % of merchandise import in 2013. Indonesia protects the agriculture sector from foreign competition through tariffs. However, the applied duty is significantly less than the bound agriculture duty as shown in the tariff profile of the agriculture sector (Table 7.2). Agricultural production in Indonesia is concentrated in the islands of Java, Sumatra and Sulawesi. Small farmers with an average landholding of one hectare occupy 87 % of cultivated land and account for 90 % of total rice production (WTO 2007). Indonesia is the third largest producer of rice as well as a major importer of rice. Trade Policy Review of Indonesia (WTO 2007) noted that “relatively high poverty, low welfare of farmers; inadequate incentives to invest in production, low level of technology transfer, low productivity, high dependence on rice consumption as major food crop, lack of basic infrastructure; and poor access to markets etc. were identified by the Medium-Term Development Plan (MTDP) 2004–09 as the main constraints to growth in the agriculture sector in Indonesia”. Hence, the priority of the government is to increase the investment in key infrastructure, encourage diversification into higher-value-added crops, improve agricultural research and ensure that exports meet world standards. Various food security indicators such as prevalence of undernourishment and depth of food deficit improved significantly during the past two decades. Though the number of people undernourished declined during 1990–1992 to 2012–2014, 21.6 million people still face the problem of undernourishment. Indonesia’s dependency on cereal imports also increased during the same period (Table 7.3). In case of multidimensional poverty index, around 6 % of population in Indonesia is in the vicious circle of poverty. Besides this, an additional 8.1 % population is near © Centre for WTO Studies (CWS), Indian Institute of Foreign Trade (IIFT), New Delhi 2016 S.K. Sharma, The WTO and Food Security, DOI 10.1007/978-981-10-2179-4_7
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7 Indonesia: Product Specific Support to Rice Under WTO
Table 7.1 Contribution of agriculture sector in Indonesia Year
Agriculture, value added (% of GDP)
Employment in agriculture (% of total employment)
2000 16 45 2001 15 44 2002 15 44 2003 15 46 2004 14 43 2005 13 44 2006 13 42 2007 14 41 2008 14 40 2009 15 40 2010 15 38 2011 15 39 2012 15 35 2013 14 NA Source World Development Indicators, World Bank (http://data.worldbank.org/data-catalog/ world-development-indicators, accessed on 23 December 2014)
Table 7.2 Tariff profile of agricultural goods in Indonesia in 2013 (%)
Products
Final bound tariff
Applied tariff
All goods 37.1 6.9 Agricultural goods (AOA) 47.0 7.5 Non-agricultural goods 35.6 6.7
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