Understanding where Agritech and Agriculture lead despite the pandemic.

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With more than 17000 islands spread across the country, Indonesia has been widely known for its vast commodities of agriculture such as rubber, palm oil, cocoa, tea, and clove. Agriculture in Indonesia is indeed one of the major industry sectors, to be exact, the second-largest contributor to Indonesia’s economy, following mining and manufacturing, has shown resilient work despite the pandemic. It is stated from Trading Economics that in the second quarter of 2020, Indonesia managed to have GDP growth of 2.19% year-on-year from agriculture. This number also expected to grow until 2022, more than 5.3% (percentage of GDP Growth from agriculture in 2019). 

The demand for consumption is getting higher than before as we are rapidly growing in population. Soon enough, the bonus demographic will show that the youth will be the majority of the population in Indonesia, mirroring the needs of getting healthier and organic food is also a trend. With its huge opportunities to grow and increase the production of commodities, the question lies in the area of how advanced the technology in the sector and its human resources to support it. 

A decrease in employment over the past 10 years

Employment in the Agriculture sector has decreased significantly for the last 10 years. It is caused by the rapid urbanization in Indonesia, giving more opportunities and access to more jobs in the urban area, rather than rural areas, which covered most of the agricultural areas and production of its main commodity. Does this necessarily affect the overall production and also the quality of the crop? Not really, as it is stated above, with the lowest employment in the sectors, the crop growth is still happening, even in the middle of a pandemic. 

2020 by far has the lowest number of employees working in agricultural sectors in Indonesia. Where the number of employees is consistently decreasing every year, the agricultural sector still managed to give the most GDP to Indonesia in the second quartile of 2020.

Deep-tech innovation is needed

Quoted from CompassList, numbers of start-ups have been a major player in terms of developing technology and helping farmers to make decisions wiser, having cost-effective production. But this is still not covering the majority of production and this has been the least priority from bigger communities, governments, or even investors which can be seen by the sub-focus of startups that exist in Indonesia which are focusing on investing in farmers, education, and training, e-commerce and technology development. Now imagine having 25x less water in tomato production like in the Netherlands, which is also happening in Indonesia, which could reduce a lot more costs and other unnecessary materials. 

With these, there are several options for Indonesia to grow in agriculture, which will be stated below and it will be a huge opportunity for any investors, agritech company, or importers to meet the huge demand in Indonesia. 

1. Investments in agricultural chains

“Increased investment in agriculture to modernize food systems and markets and make them more efficient is key to breaking this vicious cycle,” the Asian Development Bank (ADB) wrote in its 2019 report Policies to support investment requirements of Indonesia’s food and agriculture development during 2020-2045.

Agritech startups are the potential to be invested in looking at the challenges that agricultural sectors in Indonesia face right now. The 4 broad group categories of agritech are financing, e-commerce, education and guidance, and technology development. From these categories, 4 largest agritech startups can potentially reach more markets such as TaniGroup, Chillibeli, Kedai Sayur, and e-Fishery.

2. Technology to breakdown the barriers and challenges in reshaping agriculture

Right now, the inefficiency of sources and materials still becomes a problem for many farmers, resulting in more wastes to produce and a lot of unnecessary budgets. Technology can play a crucial role in this state, where farmers can detect the surplus of materials like fertilizers or water.

Currently, there are 4 huge startups players with its investors to ensure technology development in agriculture sectors, and covered a lot of areas of support. Even though startups are still growing every year, it still hasn’t met the maximum needs to ensure innovation in the agri-sector. The start-ups are 8villages, Aruna, JALA, and TaniHub. 

Another company example that breaks the barrier of the technology in agriculture is HARA. HARA is a blockchain-based data exchange for the food and agriculture sector that has been operating since 2015. HARA gets data from lands that are hard to be acquired to ensure all of the decisions are data based. HARA provides farmers and other players in the agricultural sector with valuable data. In 2018, HARA parent company called Dattabot was honoured with one of the “30 Most Promising Growth-stage Startups” awards, and HARA was nominated for the Innovator award. 

3. Young people for agriculture sectors

With its bonus demographic shortly, with around 70% of Indonesia’s citizens in the productive age, Indonesia can benefit from this, making sure youth are involved and see limitless opportunities by using its intelligence and high-end technology to support the industries. 

Quoted from the article “Role of Youth in Agricultural and Economic Development”, At the agricultural input supply level, youths can engage by supplying inputs in respect of agricultural practices of choice. For example, crop production inputs: seeds, buds, seedlings, chemicals, tools/equipment, and machines; poultry production inputs: pen pages, feeders, water systems, feeds, chemicals and vaccines, crates; aquaculture inputs: culturing and holding tanks, water testing and treatment kits, fish seeds, fish feeds, weighing scales, harvesting nets, drugs and vaccines; to mention a few. All these inputs are most important to the success of agricultural production. Therefore, there are demands for them; the opportunity is available.

Youth can also engage in agricultural productions, both consumables (foods – plant and animal production) and non-consumables (such as rubber, cotton). Areas that can be explored include, but not limited to: crop productions – maize, rice, beans, wheat, vegetables (green vegetables, tomatoes, pepper, onions, cabbage, cucumber, carrots, garden eggs, and other vegetables), yam, sweet potatoes, and cassava; tree crop plantations – palm tree, banana/plantain cocoa, rubber, coffee; animal productions – fish, poultry, piggery, ranching, snails, and many others area.

BRIGHT Indonesia as a Partner to Help Your Company Join Indonesia Agricultural Industry 

Any foreign company or startup can consider entering the agricultural sector in Indonesia, keeping in mind the three important points to ensure the growth is happening and solving its core problems. An additional trade mission, assistance, also as important as getting to know the business itself, to ensure a smooth transition and creation of the company/startups in Indonesia. Furthermore, one thing to note is to enter Indonesia’s agricultural industry it is crucial to have the right local partner.

BRIGHT Indonesia is a perfect partner for your company. BRIGHT Indonesia will assist on the ground, including virtual assistant during the mission, logistic arrangement, and communication of every detail. It can make your company focus on developing partnership cooperation without thinking further about the hassle during the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, and  Business Registration and Establishment services that can help you in expanding and developing your business, register and establish your products and company, as well as obtain the work and stay permit in Indonesia ((expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), limited stay permit (KITAS) easier. 

BRIGHT Indonesia always strives to give excellent services designed only to fulfill your company’s needs with experiences in assisting multiple global clients in entering Indonesia and Southeast Asia Market. Having successfully collaborated with several clients, BRIGHT Indonesia has an extraordinary experience with global companies. These collaborations are proof of our unrivaled service. For more information, email  info@brightindonesia.net.