Description of Agriculture and Fruits Industry in Indonesia

Description of Agriculture and Fruits Industry in Indonesia
Sumber : DR. Yul H. Bahar (Senior Staff the Directorate General of Food Crops, MOA-GOI)   
Senin, 23 Juni 2008
Indonesian economic growth is measured based on macro economic approach through trend analysis and economic indicator, which can be used to support problems analysis and solving empirically, however these indicators are not only factors that fully reliable to analyze economic growth of the country. As macro approach, better economic growth on certain sector should be placed on context of the whole economic of the country, because faster economic growth has to be followed with economic distribution and expansion of job opportunities. Indonesian economic growth can be measured from several indicators: the growth of Gross Domestic Product (GDP), labor absorption (unemployment rate), inflation rate and national trade value.



Indonesian economic growth is measured based on macro economic approach through trend analysis and economic indicator, which can be used to support problems analysis and solving empirically, however these indicators are not only factors that fully reliable to analyze economic growth of the country. As macro approach, better economic growth on certain sector should be placed on context of the whole economic of the country, because faster economic growth has to be followed with economic distribution and expansion of job opportunities. Indonesian economic growth can be measured from several indicators: the growth of Gross Domestic Product (GDP), labor absorption (unemployment rate), inflation rate and national trade value.

The history of Indonesian economic growth showed that in the first phase of national economic development was in the worst situation (1969), at that time, private economic almost paralyzed. Government through fiscal policy, monetary and economic sectors policy, supported by high government earned from oil becomes the main source of economic development. Along with the economic growth, investment in the first development period almost 75% comes from government, and the rest 25% from the private sector. In the 6th Development Plan (Repelita VI), investment from private sector was become 77% and government was 23 %.

Almost three decades, the average of Indonesian economic growth was 7% per year. High economic growth coinciding with the success of population growth control and increased of income per capita from US$ 70 in 1970 to be US$ 1024 in 1995. Also change of economic structure to be more balance among sector and region. GDP structure has changed from agro-industry based economic, from 49.3 % in 1969 to be 17.2 % in 1995, meanwhile processing industry sector increase from 9. 2 % in 1969 to be 24. 2 % in 1995. Also, the export has changed from oil and gas domination previously to be non oil and gas. In 1995, the Indonesian total export value was US$ 46.296 million, comprise of 78 % (US$36,121 million) non oil and gas export and 22 % (US$ 10,175 million) oil and gas. Tax has become government main source income, while previously was dominated by oil and gas product. In fiscal year of 1995/96, the domestic income portion from tax reached 67.7 %, it increased from 30.5% in 1982/83.
During 1996 – 1998 period, Indonesian economic was in crises situation, in total it decreased by 13.7%, resulted in decreasing national labor absorption by 2.13%, or 6,429,500 people, this economic condition was in worst situation. From surveys result by independent institution showed that in 2000 was also in the same situation. The low level of people and businessmen trust was becoming serious threatened in economic sector. The same condition also in political field that influenced national economic situation.
On the effort to conduct the economic recovery, the short challenge is to restructures corporation debt, debtor assets selling, privatization of government enterprises, as well as improvement of banking role as financial intermediary. In general, the economic condition indicator in 1997 – 2001 can be seen in Table 1.
National economic development that described by GDP based on constant price, indicated that during 2001 growth by 3,32 % compare with 2000, and almost all sectors economic showed the growing up. Indonesian economic growth in 2001 was more depend on consumption activities (house hold and government consumption). The highest growth economic sector in 2001 occurs in electric, gas and drinking water sectors by 8,43 %, transportation and communication sector by 7,51 %, trades, hotel and restaurant by 5,11 %, processing industry by 4,32 %, property and housing by 3,96 %, financial and leasing service sector by 2,99 %, and services by 1,97 %. While, mining sector decrease by 0.64 %.

Comparing the economic growth in 2001 and 2000, it showed the decreased portion and role of several economic sectors such as agriculture, mining, processing industry, electric, gas, potable water and services. Significant decreasing portion was occur in agriculture sector from 17,03 % in 2000 to 16,39 % in 2001, also in mining sector decrease from 13,78 % to 13,59 %, industrial sector decrease from 26,16 % to 26,11 %, electric, gas and potable water sector decrease from 1,18 % to 1,16 % in the same period. Property sector and services decrease from 5,94 % and 9,49 % in 2000 to become 5,64 % and 9,46 % in 2001. Oppositely, trades sector, transportation and communication sector, financial sector increase in GDP 2001 compare to 2000. Trade sector portion increase from 15,20 % in 2000 to be 16,09 % in 2001, transportation and communication sector from 5,04 % to be 5,35 %, and financial sector in 2000 and 2001 was at the same portion by 6,20 %.

National economic growth in 2001 was very much depend on consumption expenditure both government and households. The government consumption and household’s expenditure in 2001 grew by 8,24 % and 5,94 % respectively. While, the development of activity related to capital brutto establishment, export of goods and services grew by 3,96 % and 1,88 % respectively. Import of goods and services in 2001 also increased by 8,05 %. Based on GDP distribution, shows that household consumption was still the biggest portion, although decreased from 67,71 % in 2000 to 67.02 % in 2001. GDP per capita in 2001 was Rp7,2 million or about 14,53 % higher than previous year. It also showed that GDP per capita based on current price showed the increasing from Rp 5,8 million in 2000 to be Rp 6,9 million in 2001.


Indonesia is agriculture based country because most of the population relies on agriculture sector, and agriculture sector is the main key in national economic development. Agriculture sector contribution increase significantly along with the failing of industrialization in Indonesia. In the other hand, agriculture sector is more resistant to high pressure economic crises, therefore agriculture sector still reliable in national economic.
There are five qualifications of main sector for economic development; strong, progressive, big magnitude (big scale), articulate and responsive. Agribusiness sector can fulfill all of these five qualifications and hopefully ensured as main economic development sector. Through agribusiness development as reliable sector also should be able to achieve economic growth, equity of economic distribution, as well as environmental management through integrated and holistic approach.
Strong agribusiness sector was indicated by the ability to grow positively (0,22%) during high pressure crises period in 1998. At the same time, almost all economic sectors (except electricity) decreased in labor absorption, while agribusiness sector can increase the capacity in labor absorption by 432.350 people. This empirical fact shows that agribusiness sector is the strongest sector in facing high crises and honorable in unemployment absorption.
In 1998, the role agribusiness sector in national GDP was in the second big position after industrial by 18,84 %. Role in national employment absorption was in the first position by 45,0 % from total national employment. However, there is a big gap labor productivity of agriculture sector compare to non agriculture sectors, it’s around four times and unemployment rate in rural area is bigger than in urban area. It means that agribusiness sector has a strategic position and dominant role to handle national unemployment and to decrease productivity gap among sectors. As implication, improvement of agribusiness sector has a strong direct impact and can solve the problematic in national economic structure.
Articulate and responsive ability of agribusiness sector can be seen from consumption relationship. All sub-sector under agribusiness sector included in medium and high category of labor absorption. Portion of agriculture households expenditure, that is 48,01 %, is higher than non-agriculture households expenditure in urban and rural areas as 42,53 % and 30,63 % respectively. Elasticity of agriculture household’s expenditure for food consumption is higher than non-agriculture household expenditure. It means that income improvement impact on consumption of agriculture household expenditure is higher than consumption of non-agriculture household expenditure. This fact implicate that improvement of agriculture household expenditure is very important in increasing consumption level. Thus empirical evidence showed that small and medium scale agro-industry in food sector, fisheries and livestock are complemented sector that can be developed to support the agriculture sector. Agro-industry development is a strategic aspect for reliable agriculture sector development.
The ability of agriculture sector contribution on national economic growth can be seen by GDP value of agriculture sector. GDP of agriculture sector during 1997 – 1998 period dropped drastically. In 1997, agriculture sector was in declining situation because of El Nino attacking, Food crops sub-sector contracted by -2,85%, estate crops sub-sector in recession from the average 4,65%/year during period 1994 – 1996 to be 1,37% in 1997. In 1998, the contraction due to El Nino and prolong economic crises resulted recession of estate crops sub-sector was by 0,71%, and contraction on livestock sub-sector by -4,52%. Contraction on food crops sub-sector decreased from -2,85% in 1997 to be -0.41% in 1998. As a whole, the decreasing of agriculture sector was 0,16%.
During 1999 – 2001 period, the growth of agriculture, forestry and fisheries sector was very low and tend to decrease, from 2,16% in 1999 to 0,98% in 2001. While in 2001, food crops sub-sector was also contracted by – 0,97%. It can be concluded, that during 1999 – 2001 period, the agriculture sector was trapped in low growth.
In 2002, agriculture sector performance begun to enter in recovery stage, eventhough not in fully condition as before crises. The growth sector of agriculture, forestry, fisheries reached 1,74% per year, still below than before crises (1994 – 1996) that reached 2,64% in average per year. The agriculture growth by 1,74% was equal with population growth that reached 1,2%. As whole, agriculture sector in 2002 was in positive growth and was able to escape from low growth spiral trapped. Agriculture sector growth positively in 2002 as indicated, food crops sub sector that contracted in 2001, but in 2002 was growth positively by 0,53%/year. Livestock sub sector growth by 3,07% and estate crops sub sector by 3,17%.
Agriculture sector performance in 2003 until the second quarter showed in the faster growth phase. As whole, agriculture sector, forestry, fisheries growth by 2,92% or above the average of the growth condition before crises by 2,64%. Meanwhile, the agriculture it self growth by 3,31% or higher than condition before crises by 2,63%. In 2003, agriculture sector positively growth that was support by food crops, estate crops and livestock sub sectors that positively growth by 1,91; 10,69 and 1,34% respectively. Actually, since 2002 agriculture sector GDP index has increased consistently. It means that agriculture sector in 2003 was in faster growth period.
The role of horticulture sub sector (fruits, vegetables, ornamental and herbal crops) as a source of new economic growth has taken more attention since 2000, proved that significantly contributed in national economic development. Horticulture sub sector contribution to national economic growth can be seen from :
  1. In macro level, GDP and labor absorption increased as well as the increasing of foreign earning from horticulture export
  2. Production increased significantly as result from the increasing of productivity and production area.
  3. Improvement of farmer’s income and other horticulture agribusiness players.
GDP horticulture commodities growth in 2000 – 2003 is shown in Table 2. In 2001, this GDP growth by 13,87 % compare with 2000. Meanwhile in 2002 growth by 7,32 %, and in 2003 growth by 5,66 % compare with 2002 condition.

Since the average GDP growth by 8,95 % per year, it shows that added value and economic value of horticulture products growth continuously. Horticulture sub sector contribution to agriculture sector GDP in 2002 reached 23,41 % or the second position after food crops sub sector. In national level, in 2002 the GDP value of horticulture sub sector based on current price reached 3,17 % to National GDP.
During high pressure economic crises, horticulture farmers have received economic advantage due to high value of US dollar, particularly the farmers with export horticulture product oriented. In general and fact, the horticulture farmers are more prosperous than other farmers due to high economic value and value added of horticulture products.
Farmers Change Value (FCV) and Received Price Index (RPI) are usually utilize as indicator to determined level of people prosperous. Figure of FCV and Received Price Index (RPI) of horticulture farmers before economic crises, during crises and post crises periods can be seen in Table 3.

National FCV average value in 2000 – 2003 was higher than condition on high crises period (1998 – 1999) or before crises (1996 – 1997). National FCV trend from 1996 to 2003 also increased except in 1999 to 2000. Although trend of FCV growth from 1996 to 2003 was very low (103,83 in 1996 to become 124,00 in 2003) it means that during that period the level of farmer’s prosperity relatively stabile. High volume and export value of agriculture products consequently lead to higher FCV.


Absolutely, trend of price index that received by horticulture farmers (producers price) tend to increase significantly from 1996 to 2003. The increasing was: from 350% in 1996 to become 962% for vegetable, while fruits increased from 292 % to become 543%. Price index data that received by horticulture farmers also shows that vegetable provide higher portion income to the farmers than fruits.
Labor absorption of horticulture sub sector from 2001 to 2003 also increased yearly, from 2,275,951 people in 2001 to become 2,731,205 people in 2002. In 2003, based on temporary data showed that labor absorption was 2.950.282 people (increased by 8,02 %). Actually, labor absorption of ornamental crops was not a real illustration yet, because too many unregistered company or people who engaged in ornamental business and not yet covered all provinces in Indonesia. Condition of Labor absorption in horticulture sub sector is shown in Table 4.


So far, the development of national fruits industry has been able to fulfill domestic demand. Almost all of them in fresh fruits, and only small part in processed fruits. Indonesia has abundance resources to support the fruits development, such as land resources, good and appropriate agro climate, and various fruit varieties, good and experienced human resources (farmers). By such resources, so there is a big chance to develop fruits industry in Indonesia.
1. Production Area
Land availability of Indonesia that can be used to support the development for 8 tropical fruits commodities (papaya, banana, pineapple, citrus, mango, salacia, durian and rambutan) is still abundance in large acreage. As general, condition of fruits production area in Indonesia is shown in Table 5.

Production area of such fruits (8 commodities) spreads out in various production centers area in Indonesia. Figure of fruits production area in 2000 and 2002 are shown in Table 6 and 7.


Acreage of production is one important factor to determine fruits development strategy. Production area from year to year has fluctuate tendency, therefore this condition also influence the fruit demand. Good result obtained on production and production area increasing is reached because of fruits agribusiness development program and fruit production centers development programs. As initial, integrated fruit development approach by Japan Bank for International Cooperation (JBIC) loan started since 1997 and completed in 2002. This project area spreads in 31 districts (15 provinces) with the was 21.600 ha, covers; oranges, mango, durian, salacia, rambutan, banana, marquisa (peason fruits) and melinjo. Currently, almost all these crops have produced their fruits. Fruit development locations through Integrated Horticulture Development Project in Upland Area (IHDUA) in detail is in Table 8.

Through Sulawesi Rainfed Agriculture Development Project that implemented in 1995 – 2002 (ADB Loan) had been developed some main fruit commodities (mango, durian, rambutan, pineapple, citrus, and banana). Total area was 5000 ha, spreads out in 4 districts / 4 provinces namely South Sulawesi, Gorontalo, Central Sulawesi and South East Sulawesi . The other one, through Upland Farmers Development Project (UFDP) funded by ADB Loan, since 1995 has developed five fruits commodity namely mango, durian, rambutan and banana in 12.000 ha, spreads out in three districts in three provinces namely West Java, Central Kalimantan, and East Nusa Tenggara.
Increasing in harvesting area and fruit production also occurred by increasing of new production area in new locations, the expansion was 22.027 ha, covered commodities: citrus (in district of; Jember, Banyuwangi, Sambas, Sumbawa, and Batanghari); banana (in district of; Kutai Kertanegara, Kutai Timur, Pasir, Berau and Klungkung); pineapple (Kepulauan Riau); papaya (Pontianak and Balikpapan). An illustration of fruit new production area development is in Table 9.

Expansion of new production areas in 2003 also implemented through fruit (banana) improvement program, by using Special Additional Budget (ABT). The location of this project were 80 ha in North Sumatera, 40 Ha in West Sumatera, 40 Ha in Jambi and 60 Ha in West Kalimantan. Through agro tourism program in Kuningan (West Java) has expanded fruits acreage by 50 Ha. Others activities that contributes to fruits expansion area is distribution of good quality seed in several centre production, to handle natural disaster, reforestation as well as emergency programs.

2. Production

Fruits production development is very much related with the growth of production area and farm productivity. If there is no productivity improvement efforts, therefore production growth will equal with production area development. Beside that, if this situation coinciding with productivity improvement efforts, so that production area decrease can be compensated with productivity improvement.
Banana, pineapple, and papaya almost can be grown and produce in all Indonesian location (through out provinces and districts), while durian, mango, citrus, rambutan only can be planted in several provinces. As general description of fruit production (8 commodities) in 2000 and 2003 are shown in Table 10.

As general, pressure due to the economic condition, El–nino drought and La–nina heavy rain in 1997-1999, were strongly influence to horticulture commodities performance. However, after the end of such crises, horticulture production has recovered already, and in the last two years shows better situation than previous period. Fruits production shows the tendency to increase, in 2003 condition which is over 1995 production. Increasing of production area tend to increase sharply, but the productivity was relatively stabile. Fruits production graphic and production area from 1997 – 2003 can be seen in Figure 1.

Before 1997 period, fruits production tend to decrease from 10,92 million ton in 1995 to 8,and 16 million ton in 1997. The lowest production was occurring in 1998, by 7,24 million ton, but it improved in 1999. The decrease occurred on citrus both production and production area because of CVPD disease as prominent problem in this period, and hence many citrus trees infected by CVPD disease has to be eradicated (cut). Long dry season (El-nino) in 1997, caused of many crop become unproductive. Later on, fruit production improved from 7,54 million ton in 1999 to 12,4 million ton in 2003. The increasing of fruit production also support by implementation of fruit agribusiness development program in several provinces, and also fruits production centers development such as orchard development funded by Japan Bank for International Cooperation (JBIC) loan from 1997 to 2002.
Commodity based agribusiness development program also contribute to production growth by providing capital investment from central government to the farmers group directly (through de-concentration fund). In 2001, 45 farmers groups have involved through fruit production centers development program, cover the area 675 ha, in 2002 increased to be 122 production centers with area about 6800 ha, and furthermore in 2003 by 233 production centers with the area about 11.650 ha. Small, medium and big scale of private fruit orchard with advanced in technology and innovations also have been contributed to fruit development.

3. Fruits Availability

Fruits availability usually be calculated in form of fruit supply per capita. Fruit availability also shows population consumption level that is calculated from total production, amount of population, additional supply from import and then minus the fruits requirement for export, seed and livestock feed purposes. Compare with FAO fruits consumption standard as 65,75 kg/capita/year, consumption per capita of Indonesia people is still very low. In 2002, fruits consumption level was still 50,06 kg/capita/ year.
During 2000 – 2002 period, national fruit consumption significantly increase. At that time, the consumption was higher than before 1997 period. Comparison of fruit consumption growth in detail is in Table 11.

4. Fruit Trades
a. Domestic Trades

Fruits has enormous potential in agribusiness, because it can be traded both local and international markets. International trade can be seen from the increasing amount of fruits import into country. Nowadays, In Indonesia, a lot of imported fruit can easily buy by the consumers in competitive price at the local fruits. Eventhough, it is better quality and performance compared with domestic produce.
Mostly, fruit trades in Indonesia has a long marketing channel. The market players of fruits commodities in production centre cover; producers, marketing agent (middle trader at rural level, big trader/grocer) and retailer. In the first stage of the marketing, fruits are harvested and sale individually by the farmers in their farms in this model middle trader at rural level come directly to farms land. These middle traders will sell the fruits to the big trader. Through this system there is still no activities for fruit selection grading and sortation . This model of fruits marketing resulted in low selling price at farm gate, because of good and bad quality fruits treated in equal treatment. Therefore, through this marketing pattern, farmers could not receive good value added and remunerative price from their fruit produced. Beside that, middle trader become a party who always get more advantages from farms selling price (because price and quality determined by the traders). Situation and fruit marketing channel can be seen in Figure 2.

As general, lots of rural public facilities provided by government are also useful and supported to improve the horticulture product marketing. For example, faster and better infrastructure of transportation result in good distribution of product and decrease level of fruit damaged. Establishment of special agriculture market (called as Agribusiness Sub Terminal = STA) in some place, horticulture central market at production area as well as Central Market (called as Pasar Induk) at the marketing centre in several province also have been also facilitated by Indonesian government. Market information office in central production and consumption were are also a form of government facilitation, result of price record is broadcasted through Radio Republic Indonesia (RRI) periodically, so it can be listened by the farmers and traders, and its also very useful in monitoring of price fluctuation. Beside that, big traders commonly also monitor the regional price by telephone to determine buying price in production centre. Nowadays, mostly farmers could not get good remunerative from their farm product trading, farmers usually receive 40 – 80 % from consumer’s price.


Problems that are facing in fruit trading at farmers level : 1) price is only determined by traders, 2) farmers or farmers group are only focused on production activities (on farm activities), while post harvest handling fully managed by other parties, 3) weak farmers institution and cooperative, weak farmers bargaining power, and then 4) lack of information in standard quality and consumers preference (so the farmer could not able to met the standard). Indonesian horticulture product standardization is also very weak. Several exporters have bad experience when their export is rejected because not comply with standard quality requirements of importer country. Comply with qualifications and standards no automatically comply with standards and quality of country importer, for example Japan famous as a country with very strict in quality stipulation, included pesticides content. Consequently, Indonesia producers have to enable to comply with horticulture product qualifications and standards of country importers, by such way, the products will easily penetrate and able to compete with other products of other countries.


From 1998 to 2002 showed the increase of fruit price at producers’ level as the result of transaction improvement between farmers and middle trader. This tendency condition obtained from result of observations at producers’ level in several fruit production centers (citrus, banana, pineapple and papaya). Price increases tendency of several fruits can be seen in Figure 3.

General condition of fruit processing industry in Indonesia is as follows : fruit canning industry spreads out in 14 provinces, comprise of 33 companies, with total employment was 32.888 labors, total investment value was Rp. 320.382 million, and total production was 158.678 ton (Source : Deperindag, 2003).
In the development of fruit agribusiness also implemented through farmers group and producers’ association empowerment program through these effort, the farmer group and farmers’ cooperative have been strengthened in order to improve their skill and bargaining position such as determining selling price. Hopefully, the farmers be able to conduct directly selling with the good quality products, and the target of marketing are the medium traders or big traders, or grocers, or distributors with good remunerative price. Beside that, networking among agribusiness players and business partnership among agribusiness men at production centre and marketing centers also have been improved in order to enhance marketing.

b. International Trades

International trades have been carried out in form of fresh and processed products, both fruit export and import in Indonesia. International fruit market is dominated by sub-tropical fruits with a long period storage capability (good durability), good quality and appearance. Predominant fruits involved in international trade such as; citrus (mandarin, sweet citrus, siam citrus, grapefruits), apple, pear, peach, nectarine, kiwi, grape, and Cavendish banana. So far, Cavendish banana is the only one of tropical fruit that is traded in world market with big volume.


Exporting countries are not always the biggest country in the world in term of production aspect, it is very much influenced by the domestic’s fruit consumption and demand. Exporting countries is countries that enable to supply domestic fruit demand in abundant amount with good quality and comply with international standards. Eventhough, the exporting countries does not mean it do not import any fruit, because it is depend on balance of supply and consumers’ demand. Commonly, importing countries are the countries with big amount of production with higher level of living condition such as European Union, United States of America, Japan and Eastern Europe countries.


In 2000, about 233.000 ton fruit was imported by Indonesia or it is about 0.6% of the total fruit in international market. This data shows that fruit is a world trading commodities, no one country in the world without any fruit imports. However, the export increase is very important in order to increase added value, foreign earning, to improve the scale economic business as well as to sell the over production.
Fruit export in the last five years (1998 – 2002) was very fluctuating, but it has tendency to increase gradually. The highest volume of export reached in 1999 was 472.8 thousand ton. Fruit export volume in 1998 reached 128.1 thousand ton, meanwhile in 2002 increase to become 225.3 thousand ton (increase by 75.85% from 1998).

Canning fruit export volume and value from 1997 – 2002 also had tendency to increase, Indonesian canning fruit traded was surplus compared with canning fruit import in the same years, Processed fruit export comprises of canning and non canning product (fresh product), Condition of canning processed fruit in the last five years can be seen in the following Table 13,

Main destinations of Indonesian canning fruit export are : Singapore, United States of America, Germany, The Netherlands, Malaysia and Argentina, The main export of canning fruit industry was pineapple, with the raw material growth was 6,7 % per year, Canning pineapple industry in 2000 required 258,015 ton raw material (fresh pineapple), Other main fruit that processed in canning fruit industry is rambutan,
Even there was surplus in export-import of canning fruit, there are so many problems facing with canning industry development, such as :
  1. Inconsistency of raw material supply in term of volume, quality, uniformity and fruits maturity,
  2. Weakness in fruit post harvest application technology, so that sortation, grading and packaging aspect do not well implemented,
  3. Weakness in export competitiveness comparing to the other exporting countries because of in-efficiency production, low quality products as well as weakness in market penetration (promotion),
  4. Low production capacity of canning fruit plant which was only 24% of maximum capacity in 2000,
Trades/marketing of horticulture commodities commonly implemented as integrated with processing industry (agro-industry). In term of business, trading/marketing is very important activity, because they have some functions, such as; product selling, information on specifications and volume of product demanded by the consumers, price determination, as well as the agent for change of information, tendency and consumers behavior, and so on. Currently, many weaknesses, obstacles and distortions in fruit trade/marketing, therefore, price transparency mechanism, price discovery is an approach be implemented to increase marketing efficiency, such as through Commodity Stock Exchange and Market Auction,

5. Government Policy

Ministry of Agriculture formulated and determined Agriculture Development Program 2001 – 2004 as implementation of Agriculture Grand Strategy, In order to carry out the agribusiness development efforts, government has released three kind of main policies, namely ; 1) Law Based Policy, 2) Economic and Industry Development Policy, and 3) sector and sub sector Policy,
Several government policies which related to horticulture agribusiness development are as follows:
a. Act No, 12 in 1992 concerning on Crops Farming System and Government Regulation, No, 44 in 1995 concerning on Plant Seeds (Horticulture included),
By these act and regulation, farmers could be done and choice any crops to be developed which is relevant with their business feasibility. Meanwhile, seed system regulation directed to guarantee the seed availability with good quality and sustainability, beside that through this act also encourage the business of seed grower, and whenever domestic seed grower could not be able to supply domestic seed, it is allowed to import the horticulture seed (seed import is regulated by the article 10, 12 and 17 of the Act No, 12/1992).
b. Act No, 16 in 1992 concerning on Animal Quarantine, Fish and Plants
Basically, Act No, 16 is complimentary of Law No, 12 which is specially directed to protect the farmers and crops from pests and diseases as infiltration by the agriculture import product,
c. Agriculture Minister Decree No, 1017/Kpts/TP,120/12/98 concerning on License of Seed Production, Seed Entry Permit and Seed Release, This decree is to support existing regulations, an objective is to encourage domestic seed production through permit regulation and controlling of seed traffic from/to overseas,
d. Industrial and Trades Minister Decree No, 230/MPP/Kep/7/97 concerning on Goods that Trade Import has to be Regulated,
This decree is specially to regulate the import commodities which have to be controlled in order to keep stability of domestic producers and consumers,
e. Finance Minister Decree No, 96/KMK,01/2003 concerning on Determination of Classification System of Goods and Value of Imported Goods related to Tariff.
This decree is directed to protect domestic producers’ price since horticulture commodity has very elastic in demand and supply, so that domestic price stability should be managed well, specially when over supply is happen,
The successful in implementation agribusiness program is also very much influenced by government macro policy (economic and industry policy) covers :
a. Fiscal and Monetary Policy
Fiscal policy that very important is government expenditure allocation for real sectors (investment) and tax treatment, While monetary policy covers loan system with low interest below common rate, as well as flexible and simple procedure.
b. Trade Policy
Existing implemented trade policies are; 1) Anti dumping and subsidy policy (rule of competition), 2) Market access promotion, 3) Utilization issues of Non Trade Concern (farms multifunction, poverty alleviation, etc,) and development box (Special and Differential treatment, Special Safe Guard), as main consideration and a negotiation based in international trades.
c. Industrial Policy
Along with government vision on agribusiness development that covers up-stream subsystem, on-farm, downstream activities (processing and marketing) needs some policies to support to the farmers empowering, so that they will be able to improve the bargaining power in their business.
Policy on infrastructure development also one of concern, beside to support an existing agribusiness also important to stimulate new business, Other policy which is related to institution development policies, such as; 1) finance institution development in order to support farmers capital increasing, 2) research and technology development, and 3) Human resources development,
Beside policies above, Directorate General of Horticulture Production Development of the Ministry of Agriculture has some policies concerning on horticulture agribusiness development, namely:
1. Seed Development Policy
Facilitating on availability of seed with good varieties, reasonable price and conformed with farmer demand, development of seed with good varieties application, as well as developing of seed industry which able to produce good quality seed.
2. Production Development Policy
Increasing of horticulture production covers efforts on; increasing productivity and quality of product, improving an efficiency of management farming to produce good competitive advantage of horticulture product. To proceed to this target it needs an application of good farming practices with application of sciences and technology result as the main instrument, support with economic scale of agribusiness, good orchard management as well as developing the competitiveness of regional products based on region comparative advantage.
3. Horticulture Protection Policy
Horticulture plant protection is carried out through IPM system with focused on ecosystem management approach as whole and concern with all factors related with farms management, Plant protection must be carried out by the farmers, while government role as facilitator to motivate farmers self stand up in IPM application. Whenever, the pesticide is applied in pests control is should be in rational order, and it has to be pesticide minimum residue and safe to the environment and product.
4. Horticulture Business Development Policy
Horticulture agribusiness development is directed to encourage commodity with market oriented by considering characteristic and consumers preference, competitive ability, sustainability approach, effectiveness and efficiently, Horticulture agribusiness development is also directed to optimally utilize of resources that owned by regions, both natural resources and human resources,
5. Horticulture Agribusiness Management Development Policy
Agribusiness development needs strong management support that enable to effectively and efficiently manage of natural resources, human resources, capital and equipment in order to produce high competitiveness product for domestic and overseas market. Agribusiness management development also covers an establishment of coordination, networking and cooperation among stakeholders.


Government policy and strategy, particularly on fruit development is directed to utilize comparative advantage to become competitive advantage through increase of productivity, product quality and business efficiency. Policy and strategy implemented in this matter are; 1) prominent commodity development based on supply and demand side, 2) application of superior seed varieties, superior fruit varieties developed from mother tree that released by Minister of Agriculture, 3) commodity regionalization based on land suitability (type and soil fertility, altitude, rain fall, water resources availability and topographical conditions), 4) advance technology application in order to increase the quality, directed to apply Good Farming Practices (GFP), Integrated Pest Management (IPM) and implementation of Quality Assurance System based on Hazard Analysis Critical Control Point (HACCP) principles, 5) Production centers development through production area expansion and increase the productivity (quality included), 6) Farmers institution development, 7) Agriculture infrastructure development such farm road, irrigation facilities, collection centre, post harvest facilities, etc.
Pemutakhiran Terakhir ( Senin, 14 Juli 2008 )

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