Small Family Farms; A Perspective from Indonesia,
Challenges and Investment
Endar PURNAWAN1, Gianluca BRUNORI2, Paolo PROSPERI3
1. Department Agriculture Food & Environment, University of Pisa, Via del Borghetto 80 - 56124 Pisa, Italy
2. Department Agriculture Food & Environment, University of Pisa, Via del Borghetto 80 - 56124 Pisa, Italy
3. Institut Agronomique Méditerranéen de Montpellier, 3191 Route de Mende, 34093, Montpellier, France
Small farms, also known as small family farms, have been defined in a variety of ways. Key
features of small family farms are run by a family using mostly (or only) their own labour, relies
on its agri-activities for at least part of food consumed, the family also engage in other activities
(locally or through migration, the resource bass considered to be “small”, resource are scarce
(especially land). Definition of small: depend on the context. The most commonly used criterion
is land, and sometimes complemented by other productive assets (by livestock), or by measure
the productivity of the land (such as irrigation). Land is easier to compare, many sources define
small farms as those with less than 2 hectares of cropland (Thapa, 2009). Others describe small
farms as those depending on household members for most of the labour or those with a
subsistence orientation, where the primary aim of the farm is to produce the bulk of the
household’s consumption of staple foods (Hazell et al., 2007). Yet others define small farms as
those with limited resources including land, capital, skills and labour. The World Bank’s Rural
Development Strategy defines smallholders as those with a low asset base, operating less than 2
hectares of cropland (World Bank, 2003). An FAO study defines smallholders as farmers with
limited resource endowments, relative to other farmers in the sector (Dixon et al 2003).
According to the FAO, a family farm is ‘an agricultural holding which is managed and operated
by a household and where farm labour is largely supplied by that household’ (Lowder, Skoet &
Singh, 2014; Brunori & Bartolini, 2016). This definition brings family farming closer to that of a
‘peasant farm’ – relating to ownership or tenure of land and means of production, to a strong
component of household labour, to a relative autonomy from conventional markets and
technologies (Ellis, 1993; Van der Ploeg, 2013) and to the concept of ‘simple commodity
production’ (see Friedmann, 1978).
In an EU economic briefing note (EU 2011) it is stated that for any given criterion for defining
small farms, the fixation of a (maximum and/or minimum) threshold can be made in absolute
(ex: below 5 ha of land) or relative (ex: below 20% on regional average size) terms (EU 2011)
considering each region specificities (represented, for example, by the average income level, or
the average farms' size). Another structural criteria as the general definition, with a common
threshold: small farms are those with less than 5 hectares of land (EU 2011). The analytical
approach may allow the identification of a particular size distribution within the group of the
farms smaller than 5 ha, even when possible and relevant, farmer with less than 2 hectares of
farms, also considered as micro-farms (Grando et al, 2016). From all thresholds, however, the
appropriate size threshold must be adapted to regional and national situations. For example, the 1
and 2 ha thresholds are relevant in Asia, while a small Brazilian farm measure may up to 50 ha.
In Latin America and in the Caribbean there are essentially 2 main categories of smallholders:
first, relies significantly on non-farms source of income, and second, their livelihood
predominantly depends on the operation of their farms (HLPE, 2013).
In Indonesia, different scientists have used different definition of small farmer. For instance,
Sayogyo 1976 (in Sudaryanto et al, 2009) classified farmer into four different groups, namely:
peasant with farm size less than 0.25 ha, small with farm size between 0.25 ha and 1.0 ha,
medium with farm size between 1.0 and 2.0 ha, and large with farm size with more than 2.0 ha.
This classification is commonly used for food crops farming. For horticulture and estate crops
farmer we use different concept, because the average size is usually larger, which are: small with
farm size less than 2.0 ha, medium with farm size from 2.0 to 5.0 ha, and large with farm size
more than 5.0 ha (Sudaryanto et al, 2009). On the other hand, Badan Pusat Statistik (BPS) or
Central Bureau of Statistic considers small farmer as farmer with farm size less than 0.5 ha,
where family farmers holding less than 0.5 hectares of land is called “Gurem Farmer".
The purpose of this chapter is to review the existence of small family farms in Indonesia, its
challenges, and investments to farmers for food security. After introduction in the first section,
the second section is about the role of small family farms and its contribution to Sustainable
Development Goals (SDGs). The third section present an overview of Indonesia, agricultural
sector in Indonesia, and small family farms in Indonesia. Then, the fourth and the fifth sections
analyze the challenges face by the farmers, the investments that could be done for the farmers.
After that, the sixth section will discuss Kawasan Mandiri Pangan (KMP) Program and
Pengembangan Usaha Pangan Masyarakat (PUPM) Program, while the last section will be the
2. The Role of Small Family Farming and Sustainable Development Goals
Family farmers already make a predominant and indispensable contribution to feeding the world,
as it has been generally acknowledged. They face the increasingly challenging climatic and
environmental conditions, the lack investment that affect the availability of rural infrastructure to
support their enterprises, and the prevailing political economic structures that tend to benefit
large private companies in food systems. In order to promote food systems that are sustainable,
enabling and supporting the role of family farmers, will give particular advantage. The reasons
that food systems built upon family farmers are more sustainable may be summarized as follows:
1) Food systems where family farms are the main actors are key contributors to food security
and nutrition, producing most of the food in many regions of the world and producing more
food and nutrition in the world’s most populous, and food-insecure, regions. Equally
important, family farms are key for maintaining nutritional diversity, with shifts to larger-
scale industrial farming being associated with declines in the diversity of nutrient production
(Herrero et al., 2017).
2) Land productivity is often relatively higher on family farms, including relatively small-scale
units – as is the diversity of production – as posited by a vast literature (FAO, 2014a, pp. 16-
17; FAO and OECD, 2012; Larson et al., 2012; Wiggins, 2009; Lipton, 2006; Sen, 1966).
This is largely as a result of the relative efficiency of family member as labor, their
dedication of farming associated with self-belonging, family’s livelihood and food security,
the ability to withstand price slumps, and their knowledge of the specific characteristics of
landscapes on their farms.
3) Small family farms are better at promoting social equity and community well-being. One of
the key rationales for promoting small family farms is the acknowledgement that these farms
contribute to addressing key challenges related to equity, poverty and employment. It is not
surprising that better opportunities for civic and social engagement have been found in
communities dominated by family farms, more attachment to local culture and landscapes,
and higher levels of trust within communities (Pretty and Bharucha, 2014; Donham et al.,
2007; Lyson et al., 2001; Jackson-Smith and Gillespie, 2005). In contrast, models of large-
scale industrial farming managed by corporate managers place the interests of local
communities at risk (MacCannell, 1988; Lobao and Stofferahn, 2008; Lyson, 2004; Crowley
and Roscigno, 2004). In additional, the positive spillover effects of family farming-generated
growth on local rural non-farm sectors have been found to be especially strong (Ngqangweni,
1999; Bautista and Thomas, 1998), even shaping wider poverty reduction progress at the
national level over the longer term.
4) Family farms have advantages in terms of environmental sustainability and addressing
climate change, as they generally known as environment custodian. They have great
attachment to local communities and landscapes, higher level of interest and care for the
natural environment and climate, on which they rely for agricultural production. Further,
intricate knowledge of family labor on farmland and local ecosystems, tend to shape them to
be more adaptive to sustainable approaches. Key issues, therefore, related to
intergenerational transfer of natural resources, traditional knowledge and culture are bound
up in family farming systems.
Enabling family farmers to fulfil the roles described above can impact on accelerator of progress
across key elements of the Sustainable Development Goals (SDGs). Most obviously, to ending
hunger, the role of small family farmers are central, as recognized by their being the explicit
focus of SDG target 2.3, which begins: “by 2030, double the agricultural productivity and
incomes of small-scale food producers, in particular women, indigenous peoples, family
farmers”. Further, small family farmers offer particular advantages across the other SDG 2
targets, notably in contributing to feeding all people, in particular the poor and those most
vulnerable to hunger (target 2.1). They predominate in local and domestic markets, where their
produce feeds both poor rural and urban people, while larger industrial farms predominate in
export markets, which is less important in terms of providing food for those vulnerable to food
insecurity and malnutrition, but more important for trade and gross domestic product figures. It is
equally important to recognize family farmers’ role in: promoting healthy nutrition with
enhancing nutritional diversity (target 2.2), prioritizing sustainable food production systems, as
they are already playing as custodians of land and natural resources (target 2.4), and maintaining
agricultural biodiversity with promoting diversity of food and nutrition production systems
Family farmers, therefore, must be seen as key protagonists in advancing progress against SDG
2. But in reality, family farmers are themselves among the groups most vulnerable to
malnourishment, with more than three quarters of the world’s poor living in rural areas, most of
whom rely on family farming to some extent for their livelihoods, and the imperative to invest in
and enable this group becomes even stronger (FAO and IFAD, 2019). But, as key
transformational actors, the role of family farmers is not limited to SDG 2. In SDG 1, they make
up a large share of the poor themselves and, at the same time, family farmers can also create
opportunities to reduce poverty, from the benefits of improved livelihoods among them that flow
to wider communities and beyond the agriculture sector. Multiple other interlinked goals are
linked to the role of small family farming (FAO and IFAD, 2019), such as:
1) Key environmental sustainability goals are affected by and affect the livelihoods of family
farmers. Goals related to water (SDG 6) and terrestrial ecosystems (SDG 15) have linkages
with the ways that family farmers are enabled to access, manage and use these resources.
2) Family farmers are important actors in taking action on climate change (SDG 13). This group
operates in some of the most climatically vulnerable areas of the world – in tropical regions,
on low-lying coastal plains, and in areas vulnerable to extreme and slow onset weather
events. Their work, by its very nature, is highly dependent on the vagaries of climatic and
weather conditions. It will be important, therefore, in the context of SDG 13 implementation
(in particular under target 13.1 to “strengthen resilience and adaptive capacity..”), that
sufficient investment is committed to enable family farmers to adapt to the increasingly
damaging impacts on their production systems.
3) Related to equitable growth, employment and equality goals (SDG 8 and SDG 10), when
family farmers’ rights are realized and their activities enabled, they can be drivers of
equitable and sustainable growth, reducing inequalities and creating employment.
Based on the projection of population in 2018, the population of Indonesia amounted to
265,015,300 inhabitants, with details of the population of 133,136,100 males and female
population of 131,879,200 people. Indonesia has 34 provinces, 514 regencies, and 7,240
subdistricts, with total 83,706 villages. The population distribution of Indonesia is uneven among
the provinces with each other. When viewed from the density of its population, the densely
populated subdistrict is Jakarta province, which is 15,764 people per km2, more than 114 times
the population density of Indonesia which is 138 people per km2. While the province with the
smallest population density are North Kalimantan and West Papua provinces, which are 9 people
per km2 each province. Judging from the population distribution, West Java province occupied
the first rank with the largest population of 48,683,700 people. While North Kalimantan is the
province with the least population, which is 716,400 inhabitants.
Figure 1.1. Map of Indonesia
Based on the projection population results, the population growth rate of Indonesia from 2010 to
2016 is about 1.33 percent per year, lower than in 2000-2010 which is around 1.49 percent per
year. By comparison the male population to women (sex ratio) of 101. This value means that
every 101 men's souls there are 100 female souls.
3.1. Agricultural, Plantation, Livestock and Fishery Sectors
According to report from Badan Pusat Statistik (BPS) or Statistic Central Bureau in 2018, wet
farmland in Indonesia is about 71,051.45 (sq.km), from total area of 1,916,862,20 (sq.km),
means cover 3,71% of the total area. Mainly wet farmland is produced paddy/rice as a main
source of staple food in Indonesia. Other food crops which are large produced are maize,
soybean, cassava, and sweet potato. Table 1.1 below shows the harvested area, productivity and
the production for food crops such as paddy, maize, soybean, cassava, and sweet potato.
Table 1.1. Harvested Area, Productivity, and Production of Paddy and Rice in Indonesia, 2018
Harvested Area (ha)
Note: 1 The production is in term of dry unhusked paddy
Source: BPS,2019 and FAOSTAT
For horticulture sector, there are vegetables, fruits and biopharmaceutical data. In 2018,
vegetable with harvested area and highest production amount is chili which is 2,542,358 tons
from 308,547 hectares, followed by shallot and cabbage with total production 1,503,438 tons and
1,407,932 tons from 156,779 and 66,110 hectares harvested area respectively. The lowest
vegetable harvested area in 2018 is mushroom with only 438 hectares, while the lowest annual
production of vegetable is radish with only 27,239 tons in 2018. Banana, mango and orange are
fruit commodities with the highest annual production in 2018, which are 7,264,383 tons,
2,624,791 tons, and 2,510,442 tons respectively. While annual fruit with the lowest production is
cantaloupe that is 32,055 tons. Biopharmaka plants are also varied in Indonesia. In 2018, the
highest production of these kind of medical plants is ginger, that is 207,411 tons. It also has the
largest harvest area, which is 10,196 hectares. On the other hand, sweet root/calamus has the
lowest both harvested area and production. In 2018, calamus production is only amount of
281,511 tons of 134,556 hectares.
Main plantation in Indonesia are oil palm, rubber, coconut, cocoa, coffee, tea, sugar cane. Based
on data from the Badan Pusat Statistik (BPS) or Statistic Central Bureau, the plantations divided
to large estate crops and smallholder estates. Large estate crops dominated by oil palm, rubber,
and sugar can. The production of crude palm oil in 2018 increased to 26,576.4 thousand tons
from 21,749.1 tons in 2017. While the production of palm kernel also increased to 5,313.5
thousand tons from 4,349.8 thousand tons from the previous year. On the other hand, production
of rubber and sugar cane decreased from 2017 to 2018. About 625.3 thousand tons rubber
production in 2018, compare to 630.2 thousand tons rubber production in 2017, as well as sugar
cane in which decline from 976.9 thousand tons in 2017 to 919.9 thousand tons in 2018.
Smallholders estates also dominated by oil palm with total 5,811.8 thousand hectares in 2018.
The production is consisted of 13,999.0 thousand tons of crude palm oil, and 2,800.0 thousand
tons kernel. The second crop is rubber, with total 3,005.0 thousand tons production of 3,113.4
thousand planted area. In the third place is coconut, which produced 2,886.6 thousand tons of
total 3,113.4 thousand hectares planted area.
In livestock sector, the highest number of livestock dominated by goat, sheep, and beef cattle,
which are 18,720.7 thousand heads, 8,542.7 thousand heads, and 17,050.0 thousand heads
respectively (BPS, 2019). However, the highest number of meat production among livestock are
beef cattle (496.302 tons) and pig (327,215 tons). In the same year, broiler produced more meat
production (among other kind of poultry), which is 2,144,013 tons. While for egg production,
layer produced 1,644,460 tons eggs, following by duck and native chicken, which produced
332,401 tons eggs and 226,911 tons eggs respectively (see table 1.2).
Table 1.2. Livestock & Poultry Population, and Meat, Eggs & Milk Production, 2017 & 2018
Eggs & Milk
Source: Modified from BPS,2019
The last sector is fishery, where its development is directed to expansion efforts of capture
fisheries and aquaculture. The activity of capture fisheries are marine capture fisheries and inland
open water capture fisheries, such as river, lake, reservoir, swamp, and puddle. On the other
hand, aquaculture has many kinds of methods and activities. In 2017, fishery production reached
23,186,443 tons with total production value more than 384 trillion rupiahs.
3.2. Small Family Farming in Indonesia
The classification of farmer in Indonesia are varied as described in the introduction. For food
crops farming, common classification used is, peasant with farm size less than 0.25 ha, small
with farm size between 0.25 ha and 1.0 ha, medium with farm size between 1.0 and 2.0 ha, and
large with farm size with more than 2.0 ha. For horticulture and estate crops farmer, different
concept is used, which are: small with farm size less than 2.0 ha, medium with farm size from
2.0 to 5.0 ha, and large with farm size more than 5.0 ha. However, the lowest classification of
farm field hold by farm household according to BPS is less than 0.5 ha (Gurem farmer), but the
majority of farmer is generally carried out on modest plots averaging 0.6 hectares, which is also
still considered as small family farming.
Table 1.3. Number of Farm Households by Farm Size, 2018
Farm size (ha)
Number of Farms
0.50 – 0.99
1.00 – 1.99
2.00 – 2.99
3.00 – 3.99
4.00 – 4.99
5.00 – 9.99
Source: Modified from BPS,2019
Table 1.3. shows classification of farm size and number of farm households, where 58.73% of
total farm household (16,257,430 households) hold below 0.5 hectare of farming-land. On the
other hand, FAO report in 2018 stated that 93% of total farmer in Indonesia are smallholders
(FAO, 2018). It means, the number of smallholder cover family farming holding a farming-land
from 0 to 2.99 hectares. Hence, we simply can use this standard of “small” for family farming.
Based on cultivated subsector, agricultural household in Indonesia divided into several categories
as shows by table 1.10 below. Most of the household cultivated livestock, paddy, and estate
crops, with total number 13,561,253 households, 13,155,108 households, and 12,074,520
households respectively. While household who rely on fish capture are the lowest number with
780,037 households (table 1.4).
Table 1.4. Number of Agricultural Households by Cultivated Subsector, 2018
Number of Agricultural
Source: Modified from BPS,2019
The farming activities is operated and managed by a family and predominantly relies on family
labor, including both men’s and women’s and even their children. Total of agricultural
household member is 98,311,908 persons, consist of 49,529,459 males and 48,782,449 females.
From total 27,682,117 farm households, there are 2,886,408 females as the head of households.
(see table 1.5)
Table 1.5. Number of Agricultural Headed Households and Number of Household
Members by Sex, 2018
Number of Agricultural
Number of Household
Source: Modified from BPS,2019
Java is predominant in the country’s food production of crops like rice and maize despite the fact
that the amount of land owned by each household in Java is much smaller than in the outer
islands. The farm size in Java is about a quarter of a hectare or less per farm household, while in
the outer islands like Sumatra, it is about one hectare or more for each farm household.
Table 1.6. Distribution of Farms Household by Farm Size in Java and Off-Java, 2018 (%)
Farm size (ha)
Percentage of Farms
0.50 – 0.99
1.00 – 1.99
2.00 – 2.99
3.00 – 3.99
4.00 – 4.99
5.00 – 9.99
Source: Modified from BPS,2019
According to table 1.12 above, around 50.53% of farm household are situated in Java island, and
most of them are small family farming. Based on sex classification, around 50% of total male
farmers and 50% of total female farmers are also live in Java island (see table 1.7 below).
Table 1.7. Number of Farmers by Sex in Java and Off-Java, 2018
Source: Modified from BPS,2019
Many native people in the outer islands own larger areas of land, which they have inherited from
their ancestors (Septiani, 2015). In Kalimantan, they can have more than one hectare per
household, due to the population in Kalimantan only 6.17% of total population of Indonesia,
while the island size is more than 4 times bigger than Java island, which have 56.46% of total
population (see table 1.8).
Tabel 1.8. The Five Largest Islands in Indonesia and the Population
Name of Island
Source: Modified from BPS,2019
Thought we can conclude that small family farms are farm household who are holding farming
land below 3 hectares, based on mix information between BPS and FAO reports, means when
they can upgrade their farm-land size to more than 3 hectares, they are not considered as small
family farms anymore. In fact, this standard is not applicable to all regions or islands. Especially
native farmers who live in Kalimantan and Papua islands. They could have more than 3 hectares
land per household, but still consider as small family farms. Because most of the land is
cultivated with estate crops, or even most of it is not cultivated both food crops or estate crops.
Half of the country’s population is living in rural areas. Family farming is the predominant
activity in these areas, not only providing food for the nation but being also important for the
socio-economic, environmental and cultural roles of Indonesia (Septiani, 2015).
Figure 1.2. Percentage of national population (Source: FAOSTAT)
Based on the report of FAO (2018), on average, on-farm activities contribute only 49 per cent to
the annual income, which is one of the lowest shares for smallholders in Asia, with 47 per cent of
the total household income is originated through crop production. The occurrence of shocks,
such as a delay in monsoon rains which can harmfully impact on agricultural production,
motivates small family farms to diversify their annual income with non-agricultural sources.
Nonetheless, one-fifth of the family farms in Indonesia is still live below the national poverty
line (FAO, 2918).
As small family farms diversify their income, table 1.9 shows the number of family farms based
on their main income in 2018, which were 17,616,298 family farms gain main income from
agriculture, and 10,065,819 households gain their main income from non-agricultural sectors.
Table 1.9. Number of Agricultural Households by Main Source of Income, 2018
Source of Main Income
Number of Agricultural
17 616 298
10 065 819
Source: Modified from BPS,2019
Although the average smallholder farmer partially allocates labour to off-farm activities,
agriculture continues to be the most labour intense family activity; the share of family labour-
days spend on-farm (0.78 person days) remains higher as the one allocated to off-farm income
activities (0.24 person days). (FAO, 2018)
Table 1.10. Smallholder Farmer Data Portrait in Indonesia
Small Family Farms in Indonesia
Average farms size (ha)
% of smallholders on total farmers
% of female headed households
Income and Poverty
% of income from crops production
% of income from on farm income
% of income from agricultural wage labor
% of income from non-agricultural and self-employment
% of income from public and private transfer
smallholder poverty rate (national poverty line)
Capital & Input
% of household using motorized equipment
% of credit beneficiary households
Distance of household from road (km)
Source: Modified from FAO (2018)
4. The Challenges of Small Family Farms in Indonesia
4.1. Low Technology Implementation
Small family farming plays a vital role in national food production, but at the same time, they
face some difficulties. They often practised without the benefit of modern tools or improved seed
varieties. So, slow implementation of technology penetration is one of the problems. Data from
BPS (2019) shows that around 17.10% of agricultural household used mechanization, and only
10 per cent of the country's smallholders practices a high level of mechanization (FAO, 2018).
For example, not many farmers in rural areas are able to access the technology for maize, as well
as for rice threshing. Therefore, manual threshing becomes the only option for post-harvest
handling, which is certainly less efficient. In other case, and when available, they can also go to
the threshing machine service in other village or other area, which means more production cost.
Table 1.11. Percentage of Agricultural Household by Agricultural Technology Utilization,
Agricultural Technology used
Not Using Agricultural
Source: Modified from BPS,2019
4.2. Access to Financial
Financing is one of the important components in realizing a profitable and sustainable
agricultural business. However, the accessibility of farmers to finance is a major problem that is
often complained of by farmers. This is due to the lack of information on various financing
schemes that can be accessed by farmers. On the other hand, financial institutions still place the
agricultural sector as a less attractive sector because it is considered very risky (high risk),
depending on the season and uncertain price guarantees.
The 2016 National Socio-Economic Survey (Susenas) states that only about 15 percent of the
approximately 8,000 sample of farmers have accessed bank credit, while the majority of 52
percent still rely on their own capital, cooperatives, relatives, and other non-bank financial
institutions. Meanwhile, 33 percent of other farmers rely on credit for the National Community
Empowerment Program (PNPM) and people's business credit (KUR). Even though the
agricultural business financing scheme has been available, the condition of the farming
community is still faced with the small scale of control and exploitation of farmers' land which
results in limited ability of farmers to increase capital through financing and investment
institutions. The government has provided various financing facilities to make it easier for
farmers to access capital for their farming business. However, in its implementation, it is still
difficult for farmers to get capital assistance so that the results are not as targeted. This can be
seen from the low realization of KUR distribution for the agricultural sector (Table 1.12).
Table 1.12. Realization of KUR of Agricultural Sector
Amount of KUR
Number of Debtors
11.90 trillion rupiahs
17.28 trillion rupiahs
19.65 trillion rupiahs
30.40 trillion rupiahs
Source: Modified from Kementan,2019
The inability of farmers to access formal sources of capital is the result of incomplete credit
application procedures and a lack of required collateral. The challenge in the future from this
condition is how to collaborate with financing institutions to take sides and be willing to channel
their capital to the agricultural sector. Thought certain program to simplified access to credit
schemes have enhanced the livelihood of the farmers. Nevertheless, only 17 percent of the
farmers are beneficiaries in 2017 and 2018. While in the next year, around 21 percent of the
farmers are able to access the financial schemes. A high share of income spent on food and
agricultural inputs limits the potential of smallholders to sustainably re-invest the amount of
credit (FAO, 2018).
4.3. Farm Size Declining
Currently, the sustainability of the agricultural-food crop sector is facing a serious threat, namely
the area of agricultural land which continues to shrink due to the massive conversion of
productive agricultural land to non-agricultural uses. Now rice fields are more profitable to be
used as real estate, factories, or infrastructure for other industrial activities than for food crops.
The rate of conversion of paddy fields reaches 100 thousand hectares per year. Meanwhile, the
government's ability to produce new rice fields has been limited in recent years with a capacity
of 40 thousand hectares per year. Thus, the amount of land that has been converted has not been
able to be balanced with the rate of printing new rice fields.
In many rural areas where the land is used for rice fields, now it is common to find housing areas
built by developers without proper planning, and certainly this land conversion has a direct
impact on the low figures of rice production (Septiani, 2015). About 80% of paddy field
conversion occurs in the central area of national food production, namely Java Island. This has
an impact on the issue of food security, inevitably it must be supported by productive land.
The Ministry of Agriculture can only support 30 thousand hectares of new rice fields during
2006-2013 or an area of 40 thousand hectares each year. Indeed, the government's ability to
support new rice fields has not been able to match the rate of conversion of 100 thousand ha of
paddy fields per year. One of the reasons is the limited budget that the government has. To print
one hectare of rice fields, at least around 30 million rupiah is required. In addition, it really
depends on the coordination with the regions and also on the various problems faced in realizing
it, especially issues of tenure and land ownership status.
Most of the agricultural land in Indonesia has experienced a decline in quality, many of which
are in the critical category. This is due to excessive use of inorganic chemicals. Excessive use of
inorganic chemical fertilizers causes the soil structure to become dense and the soil bearing
capacity for plant growth decreases. Apart from that, these chemical products, apart from
containing materials needed by plants, can also contain harmful chemicals (such as chlorine and
mercury compounds) for land and living things. In 1992, approximately 18 million hectares of
land in Indonesia have experienced degradation or degradation of land quality. In 2002 this area
increased to 38.6 million hectares (BPS, 2002). If this condition is allowed, it can cause
widespread damage to land and result in decreased productivity of land and crops.
Handling steps to overcome land degradation are through utilizing biotechnology products, such
as bio-fertilizers and pesticides that contain environmentally friendly microbes. The use of
microbes as biological fertilizers can help provide complete nutrients for plants, increase the
activity of soil microorganisms and also greatly important in improving soil structure.
Meanwhile, the use of biological pesticides is expected in addition to overcoming pests and
diseases and being able to maintain a healthy environment.
The total area of national rice paddy fields in 2018 was 7,105,145 hectares or 645,854 hectares
reduced from the 2013 land area. In 2019, the national paddy field area increased to 7,463,948
hectares. Apart from the problem of decreasing land area, another problem related to land is the
narrower land ownership by farmers. Based on the results of the Inter-Census Agricultural
Survey (SUTAS) in 2018, the area of agricultural land controlled by agricultural business
households is less than 0.5 hectares as many as 15.89 million households or 59.07% of the total
farmer households. Farm households whose land ownership is less than 0.5 hectares increased
from 14.62 million households in 2013 to 15.89 million households in 2018. This land ownership
condition is caused by: (1) the increase in conversion of agricultural land for purposes housing
and public facilities; (2) land fragmentation occurs due to inheritance processes; and (3) the sale
of paddy land.
4.4. Infrastructure & Market Linkage
One of the agricultural infrastructure that is currently of great concern is the irrigation network.
Lack of construction of new reservoirs and irrigation networks as well as damage to existing
irrigation networks resulted in a greatly decreased irrigation capacity for agriculture. This
damage is mainly due to flooding and erosion, damage to river basins, and lack of maintenance
of irrigation to the farm level. Table 1.13 shows the average land area held by family farmers by
type of land. It includes irrigation and non-irrigation land of wetland held by the farmers.
Table 1.13. Average of Land Area Held by Agricultural Households by Type of Land (m2), 2018
Type of Land Area
Source: Modified from BPS,2019
Furthermore, weak infrastructure such as poor access roads and ports have become the main
constraint in transporting agricultural products, which can make missing linkages between input
and output markets. For instance, this problem will prevent vegetable products to be delivered in
markets quickly, which means the limitation of the market. In harvest time, farmers face price
volatility due to number of products that is not absorbable by the limited market. Moreover, the
total number of islands in Indonesia is more than 17,000 according to the Indonesian Naval
Hydro-Oceanographic office (ADB, 2015), which uniquely challenging, especially to linkage
food products between islands.
Specifically, what is needed is increasing the number of farm roads, production roads, ports
equipped with air-conditioned warehouses, laboratories and experimental gardens for research,
standard and quality testing service laboratories, quarantine posts and laboratories, seed and seed
breeding gardens and cages, plant health consultation clinics. and veterinary, agricultural
information and promotion centers, extension centers and commodity-specific markets. Other
farming infrastructures that are very much needed by the community to drive the production and
marketing process of agricultural commodities, but their existence is still limited are farming
roads, production roads, ports equipped with warehouses. The challenge that must be faced in the
future is how to adequately provide all the infrastructure needed by these farmers to be able to
reduce the high costs arising from the limited transportation and logistics infrastructure in the
production centers of agricultural food crops commodities.
In addition, the problem of livestock distribution is not optimal, namely the domestic beef trade
system still relies on the delivery of live cattle and still has obstacles, so it is not efficient. The
causes of inefficiency include: the inadequate number and capacity of transportation means
(trucks and ships) and the inadequate quality of transportation facilities, both trucks and ships.
Not all ports have holding ground for livestock collection and quarantine checks. This condition
is exacerbated again by the existence of fees during the transportation process starting from the
village, sub-district, district, province to the destination area.
4.5. Climate factor
Global climate change is a threat to the agricultural sector that can affect the sustainability of
food security. The impact of climate change is multidimensional, both physically, agroecology of
agricultural resources and welfare of farmers. Climate change changes the hydrological cycle in
the form of changes in the pattern and intensity of rainfall, rising sea levels, as well as an
increase in the frequency and intensity of natural disasters that cause flooding and drought. For
the agricultural sector, the impact of climate change affects the shifting of planting patterns and
calendars, the exploitation of pests and diseases of plants and animals and the reduction of
A significant impact in lowering crop production, especially that of rice, which is El Niño, a
climate cycle in the Pacific Ocean with a global impact on weather patterns. Moreover, since
1998 there has been an increase in temperature reaching 1 degree Celsius, so it is predicted that
there will be more rainfall with a change of 2-3 percent per year. When the rainfall is high, the
plants are attacked by fungi, or like leave vegetable, which is damaged by the leaves due to
heavy rain. In some area, where most agricultural field situated on the banks of river, they have
to deal with flood during monsoon season.
In the last 5 years (Table 1.20) the average area of paddy fields affected by flooding and drought
was 188,662 ha respectively affected by flooding (52,265 ha of which were failed to harvested
due to flooding) and 255,974 ha were affected by drought (75,246 ha of which were failed to
harvested due to drought).
Table 1.14. Harvest Failure on Rice Plant due to Flood & Drought from 2015-2019
Flood & Drought
1. Affected by flood
2. Failed to harvest
1. Affected by drought
2. Failed to harvest
Source: Modified from Kementan,2019
The rainy season usually occurs two times a year, and every rainy season usually occurs for more
than one month. Besides, long period of drought also caused farmer failed to harvest. Crop
failure in many areas in certain seasons also happened due to a wide array of pests and diseases,
which is also associated with climate change. By accurate monitoring and mitigation, outbreak of
certain pests and diseases can sometimes be predicted, and at the same time by the use of tolerant
or resistant cultivars. For pests of fungi, as long as pesticide or herbicide are available, they can
still be controlled. If famer is not preventing pest attacks, they can fail to harvest. It can make
their ability to access farm input such as seed and fertilizer is getting low.
The challenges ahead in addressing the impacts of global climate change are how to increase the
ability of farmers and field officers to forecast climate and take necessary anticipatory,
mitigation and adaptation measures. To build the capacity of farmers in anticipating and
mitigating the impacts of climate change, through the Climate Field School and building a
climate information system and modification of planting patterns and calendars according to the
characteristics of each region. In addition, it is necessary to create appropriate technology and
create varieties that have the potential for low greenhouse gas emissions, are tolerant of rising
temperatures, drought, flooding or inundation and salinity.
The vulnerability of rice farming to climate change has made its production less attractive to
smallholders. Encouraging smallholders to diversify, for example, into high-value fruits is key to
stabilise incomes and reduce poverty. In the light of a rapidly increasing population, long-term
promotions by the government of Indonesia have fostered both the growth of rice production and
a strengthened production of other food crops.
4.6. Fertilizers and Seeds
Increasing rates of fertilizer have boosted production, leading to high values of food production
per hectare and remarkable productivity per working day compared to other smallholders in
Asia, highlighting a shift to more intensive crop farming. However, the value of annual crop
production remains considerably low (USD 573). In general, smallholder agriculture in
Indonesia is also often lack of improved seed varieties. Besides, the availability of fertilizers at
accessible prices is also important for the sustainability of small family farming. Currently,
government has done subsidizing fertilizers and seeds program, but some regulatory burdens
made these programs low impact and even slow to be perceived by farmers. Low assessment of
farmer needs is also another issues, that sometimes occur when farmer receive farming input aid
not in the best time. For example, there are farmers who received rice seed assistance when the
rice planting season was over, so it cannot be used directly. Likewise, with fertilizer, after they
finished harvesting, fertilizer aid comes.
5. Investment in Small Family Farms
5.1. Access to financial services, market linkage, and public goods
The investments in small family farms are mostly realized by the farmer themselves, through at
least, labor investments in order to improve their resource bases, savings and remittances from
family members, to obtain additional resources. Nonetheless, these investments are limited when
they face difficulties, or when they need to put more priority in some basic expenditure, such as
food, health, and education for children. There is a need to reduce or eliminate the constraints
faced by small family farms that limit their investment capacity. So, firstly, how to support them
to do self-investments, but their capacity to do so depends on other related investments in
collective action, private initiatives and in public goods. Integrated policies need to be
implemented, on which each policy should support the other. For example, investments in
intension or extension for better production, need to support by appropriate infrastructure and
market. At the same time, simplification of credit or financial support must be in line with the
effort of tenure rights investment.
To support small family farms investment, there is an urgent need to improve access to financial
services adapted to their needs. This can include facilitating monetary transactions (such as
mobile phone-based money transfers), even though it then appears as another challenge in
Indonesia, where the government still strive to provide telecommunication network around the
country. Safe savings deposits scheme (with incentives to save), low-priced credit (such as
through joint-liability group lending), and insurance (such as index-based weather insurance) are
also important in the effort to improving farmers access to financial service. Novel solutions are
needed that reduce financial risks, lower transaction costs and facilitate long-term investments,
and at the same time, liquidity constraints must be relaxed not only on working capital
expenditures (fertilizers, seeds), but also on medium- and long-term investments, supported by
fair subsidy mechanisms.
Furthermore, small family farms need to get priority in market linkages, whether it domestic,
national, and regional markets, as well as direct link between farmers and consumers, and to
scheme that rely on small family farms for the procurement of food for school and institutional
feeding programs. Investment in SMEs food processors, and small-scale traders at the retail and
wholesale levels also needed in the effort to developing the market linkages. As market failures
and price volatility are major disincentives for small family farmers investment, government
intervention is important to reduce transaction costs on markets and to stabilize prices and small
farmer incomes. Regarding contracting opportunities in value chains, regulatory instruments is
needed to bridge the significant gap in economic and political power that exists between small
family farmers and their organizations on one side, and the other contracting organizations on the
On the other hand, to enable their investment efforts, small family farmers need accessible public
goods on both the production and consumption sides of the household, where both sides can
reinforce each other. On the production side, public investments such as water management
facilities and soil conservation are needed. At the same time, public investments such as health
services, education, water and sanitation, and social protection are needed on the other side. By
increasing the productivity of labor, these consumption goods strengthen the production side of
the smallholder operations. To recognize the differential roles of household members in
production, consumption and the reproduction of the family unit over time, gender-specific
support services are needed, and to make sure small family farmers access adequate public goods
and services is the responsibility of governments and is essential to securing their wellbeing and
5.2. Improving productivity through research and extension.
Upgrade and finance national research and extension systems targeted specifically to the needs
of small family farms is an urgent need to realize, with supporting financial mechanisms.
Increasing productivity and resilience through diversification of the production system would be
the main object, with a high nutrition value as the concern for the self-provision of diverse foods.
Increasing productivity and resilience at the same time will require particular level of investment
in research to develop productive land-use systems. It will then support small family farms
increase their farm productivity with minimal ecological risk where biodiversity may be used
productively and conserved. The research and extension have to include and support the in-situ
and ex-situ conservation of agricultural biodiversity in the context of climate change. Small
family farmers need proper seeds as well as appropriate machinery for farming operation, food
processing and other value-adding transformations. Wider collaboration and the sharing of
experiences in technology development for small family farmers in different regency, province,
or even across countries in certain regions of the world, such as south-east Asia or Asia Pacific,
should be promoted with a strong engagement, if not leadership, of small family farmer
5.3. Investing beyond the farm: rural non-farm economy and territorial development
Small family farmers in Indonesia, if they have a large farming field to manage, many of them
diverse their farm activities with planting food crops and cash crops, for self-provision from food
crops and gain income from selling the cash crops. But in general, they are likely to complement
their annual farm income with non-agricultural sources or self-employment. When facing the
need to escape poverty and malnutrition, small family farmers often need access to
complementary sources of income in the rural non-farm economy. There is a need of innovation
investment in order to create successful rural non-farm employment which linkage to the farm
economy, that support on-farm investments. To realize this climate, investment must able to
support of the rural non-farm economy and the decentralization of economic activity towards
rural areas. Investment must be made in the qualifications of young people in order to support
them to find or create employment either in modernized agriculture or in other related activities
and labor markets. Territorial development can provide an effective platform to gather public and
private investments in agriculture and in the area of non-farm economy.
Extensive market failures for agriculture and small family farmers, and the need to harmonious
public and private investments and programs in a territorial perspective, require appropriate
governance. Governance for agriculture and territorial development requires cross sectoral
ministry and government agency on which different solutions tailored to national political and
institutional contexts. In order to gain appropriate input for the investment in small family
farmers, governments need to better document the evolution of small family farms and its
contributions to various outcomes. These outcomes include measurement of non-market food
production and of the diversity of diets. National agricultural statistic-data and other data
collection efforts should be harmonized to strengthen the evidence-base for investment decisions.
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