Agriculture is upcoming sector looking forward to improving their businesses with IoT.
Indonesia’s agricultural sector is undergoing a transformation, as the next generation of farmers look to new technologies to increase efficiency and productivity. Australian agtech companies will find plenty of prospects, as well as the opportunity to work with Indonesia’s ‘agripreneurs’ and growing agtech startup sector.
Agriculture is vital to the Indonesian economy, accounting for 50 per cent of total employment in 2014 (FAOStat, 2014) and contributing 14 per cent to the country’s GDP in the same year (World Bank, 2014). According to 2015 World Bank data, some 33 per cent of the Indonesian working population are in farming, with the majority working less than one hectare (Sensus Pertanian).
The Indonesian Government places a high priority on agricultural self-sufficiency. Indonesia’s National Development Plan aims to boost its farming capability, production and value-added activities, while reducing commodity imports perceived to replace local produce. The country is a leading importer of Australian wheat, beef, livestock and sugar.
However, there is increasing competition for agricultural land from other cash crops and industrial and urban expansion. This means Indonesia is likely to continue to rely on food imports, particularly protein-based foods, regardless of future productivity improvements.
Entrepreneurship on the rise
Indonesian farming has traditionally been hampered by small holdings, limited mechanisation and poor distribution systems. A long supply chain means agricultural products go through a number of middlemen between farmers and consumers.
However, with entrepreneurship on the rise in Indonesia, this is about to change. Data from the Central Statistics Agency (BPS) shows there were 26.7 million entrepreneurs in 2016, compared to 22.7 million in 2006, mainly thanks to the digital sector, which has flourished in the past five years.
Indonesian ‘agripreneurs’ are transforming the agricultural sector by establishing collectives and using modern farming methods. Examples of Indonesian agripreneurs (plantation and distribution) include:
The fast-growing Indonesian agtech startup environment is also creating and applying new technologies, with many of them developed at the country’s universities.
Some of Indonesia’s leading agtech startups include:
CiAgriculture, a spin-off of Indonesian data analytics firm Mediatrac
TerralogiQ offers geospatial data analytics for real-time tracking of objects and people in Indonesian plantations
Open-source Internet of Things and machine-to-machine platform provider Libelium is working with Indonesian cocoa farmers to deploy wireless Waspmote sensors in conjunction with cloud analytics to improve cocoa production and profit margins
Universitas Gadjah Madah Agricultural Technology Faculty has launched AiRi – wireless sensors for nutrients, soil moisture and microclimate analysis
There are opportunities to partner with local companies to sell new technologies and services, and commercialise innovations across the supply chain from farm to primary and secondary processing.
There is a need for solutions at every stage of the agricultural supply chain, from on-farm technology to food processing and distribution systems. Indonesian farming enterprises are seeking new technologies to upgrade farming systems, maximise acreage usage, increase productivity and reduce waste in the agrifood supply chain.
There is demand for and interest in drip irrigation, remote plant sensors, big data analytics, real-time price tracking and financial management. Venture capital and agronomic advice are also welcome.
Agtech suppliers and service providers can leverage EU’s trusted and established reputation for clean, green and safe agricultural goods and practices. European (EU) agtech innovations are also starting to attract international attention, including The Yield and AgriDigital.
A number of EU companies are already undertaking trials in Indonesia. As most agtech has been developed by and for use in developed economies, EU products may need to be customised for Indonesian requirements. Implementation can be a challenge, with access to power and adoption by farming and fishing communities requiring patient and sensitive negotiation. Technology must therefore be affordable and easy to implement.
Indonesia’s 255 million-strong population, youthful demographic (half are under 40 years of age), increasing urbanisation and high smartphone penetration (47 per cent of the population in 2016) make it an ideal market for introducing new technologies.
Indonesia is one of EU’s most valued trading partners for agriculture. With the Indonesia-EU Cooperative Partnership Agreement currently under negotiation, it is an opportune time to enter the Indonesian market and get a headstart on competitors.