The Potential Agriculture Industry in Indonesia

by | Nov 19, 2021 | Study Insight | 0 comments

How Agriculture Industry impact the Indonesia Agriculture Market

Any business related to agriculture will allow for many opportunities. For example, companies that export-related pesticides, agricultural machinery, and even supply seeds. Most of the largest agribusiness companies have many businesses, with agriculture being part of it.

The agriculture business continues to grow rapidly in Indonesia. According to data from the Indonesia Central Statistics Agency (BPS), Indonesia has an export in the agricultural sector potential market attraction of USD 394.6 million in July 2021.

The Organization for Economic Cooperation and Development (OECD) said that global agricultural production is expected to increase by 1.5% annually. Export destination countries include ASEAN countries, the European Union, and other major countries.

Which global agriculture brands have successfully expanded their market in Indonesia? What is the outlook for the agriculture industry in Indonesia? Read this article to know more!

Overview of the Agricultural Industry in Indonesia

World population growth correlates with a sharp rise in demand for food production. This opens up opportunities for agricultural companies.

This agricultural opportunity is strengthened by referring to the Indonesian Ministry of Agriculture (Deptan) in 2016, the export of major agricultural commodities has always increased. Annually, in 2015 the trade balance of agricultural commodities had a surplus of USD 13,59 billion.

Popular Global Agriculture Company in Indonesia

Here is a list of agricultural companies that successfully expanded their business to Indonesia:

  1. Cargill

Cargill is a giant of agricultural and food production, responsible for about a quarter of America’s meat and grain exports. Cargill operates in 40 countries, conducting business with livestock and aquaculture farmers, feed producers, and distributors to provide animal nutrition through research.

Cargill generated total revenue of USD 134,4 billion in 2021 with 155,000 workers all over the world. Cargill Indonesia’s revenue is USD 107,20 billion in 2020 and it makes Cargill the first top 10 global agricultural industry in Indonesia

2. Bayer

Bayer has long been known as a German conglomerate and pharmaceutical company. But it turns out that Bayer is also one of the world’s major players in plant science.

Currently, Bayer’s agro division has more than 35 research sites and 175 breeding sites worldwide. In 2016, a corporate restructuring made Bayer Crop Science one of Bayer AG’s three main divisions.

Bayer generated total revenue of USD 41,4 billion in 2020 with 15,100 workers all over the world. Bayer Indonesia’s revenue is USD 11,66 billion in 2020.

3. BASF

The German-based conglomerate is an important player in the agribusiness sector. BASF is one of the world’s leading suppliers of fungicides, herbicides, and insecticides.

BASF generated total revenue of EUR 16,99 million in 2021 with 115,490 workers all over the world. Its artificial chemical technology is used by golf courses, sports grass companies, in forests and greenhouses around the world.

BASF has also invested significant time and resources in researching nutrigenomics, the study of the effects of nutrition on human genes. BASF Indonesia’s revenue is USD 6,55 billion in 2020.

The Prospects of the Agriculture Business in Indonesia

Data from Indonesia’s Central Statistics Agency (BPS) shows that three sectors contributed greatly to Indonesia’s economic growth in the first quarter of 2019. One of those sectors is the agricultural industry at 12.65%. In the agricultural sector, in the first quarter of 2019, there was a growth of 1.81%.

BPS recorded economic growth in the first quarter of 2019 reached 5.07%, better than in the same period in the last three years. BASF Indonesia has completed a series of business and asset acquisitions from Bayer.

Agricultural development programs and policies run by the government are currently able to boost and contribute markedly to national economic growth. During the period 2013-2018, the accumulated additional value of Gross Domestic Product (GDP) of the agricultural sector, which was able to be generated, reached Rp1,375 trillion and the GDP value of the Agricultural Sector in 2018 rose 47% compared to 2013.

In addition to growing positively, the role of the agricultural sector in national economic growth is also increasingly important and strategic, this is seen from its increasing contribution. In 2014, the Agricultural Sector (including forestry and fisheries) contributed about 13.14% to the national economy and in 2017 increased to 13.53%.

The agricultural input industry is currently supplied by only ten multinational corporations (MNC) with sales value reaching USD 40 billion. The five giant companies are Syngenta, Monsanto, Bayer Crop, BASF AG, and Dow Agro.

The top ten of MNC controls food sales worth 409 billion US dollars. Five of them are Nestle, Cargill, ADM, Unilever, and Kraft Foods. The transaction is a strategic transition that complements BASF’s crop protection business, biotechnology, and digital agricultural activities and is a sign of its entry into the seed business, non-selective herbicides, and nematicide seed care.

BASF signed agreements in October 2017 and April 2018 to acquire Bayer’s business and assets to be divested in connection with Bayer’s acquisition of Monsanto, BASF made a cash purchase worth Euro 7,6 billion, which will adjust the figure at closing. About 4,500 employees will join BASF through the acquisition.

From these facts, it can be concluded that to maximize the potential of the agricultural business in Indonesia, more in-depth research is needed on the tastes of the Indonesian market.

Enter Indonesia’s Agriculture Business With Bright Indonesia

Indonesians are very welcoming toward an international agriculture company. And looking at the success of international agriculture companies such as Cargill, Bayer, and BASF, one must be quick and take the opportunity right away to gain the benefit from the industry, but they also need to understand the market.

Due to the high number of agriculture export users in Indonesia, Indonesia certainly has a large agriculture industry service market potential. However, to enter the Indonesian market, it is easier to have a local partner to assist you.

Thus, BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

  1. Provide assistance for you in expanding and developing your business by identification of potential partners.
  2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
  3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
  4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

For more information, email info@brightindonesia.net.

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