In the first quarter of 2025, agriculture has emerged as a significant engine of Indonesia’s economic growth. The sector encompassing agriculture, forestry, and fisheries recorded the highest growth among all economic segments, posting an impressive 10.52% increase. This surge was primarily driven by a substantial rise in rice and corn production, which soared by 51.45% and over 39% respectively.
This robust performance was largely due to favorable weather conditions and an earlier-than-expected harvest season. The main harvest coincided with the Ramadan and Eid al-Fitr period in March and April, a time when consumer demand for staple foods typically spikes. This alignment between peak agricultural production and high market demand provided a timely boost to the sector’s output and economic contribution.
Beyond production and GDP impact, the agriculture sector has also reinforced its importance as a major employer. As of February 2025, agriculture accounted for 28.5% of the national workforce more than any other sector, including trade and manufacturing. This highlights agriculture’s continued role not just in food security and economic growth, but also in ensuring livelihoods for millions of Indonesians.
In the past six months alone, agriculture generated approximately 850,000 out of the 890,000 new jobs created across the country. This remarkable figure underscores the sector’s strong labor absorption capacity, making it a crucial pillar in sustaining economic stability, particularly in rural and lower-income communities. The increased labor demand is closely linked to the expanded cultivation and harvesting activities during the season, creating more job opportunities both on and off the field.
The bumper harvest also had a stabilizing effect on food supply and prices during the fasting and festive periods, ensuring greater food security at a time of high consumption. The surplus production helped meet domestic needs while also potentially opening opportunities for export, thereby contributing further to economic growth.
However, sustaining this momentum requires a more strategic and inclusive approach to agricultural development. Key recommendations to build on current gains include reforming agricultural trade policies to enhance competitiveness and market access. Strengthening the role of the national logistics agency, Bulog, is also crucial. This includes ensuring efficient procurement, storage, and distribution of staple crops to stabilize prices and reduce post-harvest losses.
Another critical recommendation is the implementation of fair pricing mechanisms that protect farmers’ incomes during peak harvest seasons when market prices typically decline due to supply gluts. These mechanisms could include minimum price guarantees, subsidies, or innovative digital platforms that connect farmers directly with buyers to improve bargaining power.
Investment in infrastructure, research and development, and technology adoption is equally essential. Mechanization, climate-smart agriculture, and access to real-time market information can enhance productivity and resilience, particularly in the face of climate variability.
Overall, the agricultural sector’s outstanding performance in early 2025 highlights its potential not only as a growth engine but also as a foundation for inclusive development. By fostering a more equitable and efficient agricultural system, Indonesia can ensure that this vital sector continues to contribute significantly to national prosperity, food security, and social stability.
