Indonesian Rice Production: Policies and Realities

Indonesian rice production grew rapidly between 1977 and 1982, but the self-sufficiency achieved in 1984 was short-lived. Growth declined gradually from about 1982, eventually stabilising at a low rate in the late 1990s. This paper discusses factors that have influenced these outcomes over the last five decades, in an attempt to inform policy makers interested in trying to restore self-sufficiency. The earlier experience showed that self-sufficiency was technically feasible, but also that its achievement was costly, both fiscally and in economic opportunities forgone. Little appears to have changed in this regard, and recent attempts to shift this cost to consumers by raising rice prices have increased poverty. We show that increases in rice production could best be achieved by rehabilitating irrigation infrastructure and revitalising research and extension activities. However, large investments by the government in rice should not be undertaken in the absence of thorough economic cost-benefit analysis.