Manilla – Phasing out fertilizer subsidies and boosting investments in agricultural research, rural infrastructure, and irrigation can end hunger in Indonesia by 2034, according to a new report commissioned by the Asian Development Bank, released today. The report finds these strategic changes to investments along with reforms to regulation and agricultural extension services can have broad economic benefits for the country, in addition to eliminating hunger.
“Ending hunger in Indonesia will require increased investment in agriculture and the rural sector to boost productivity and modernize food systems and markets, as well as make them more efficient,” said Mark W. Rosegrant, Research Fellow Emeritus at the International Food Policy Research Institute and an author of the report.
Like many other countries in Asia and the Pacific region, the Indonesian agricultural sector and economy have made substantial strides over the past several decades, but 22.0 million people in Indonesia still endure chronic hunger.
The report, Policies to Support Investment Requirements in Indonesia’s Food and Agriculture Development for 2020–2045, examines the potential for agricultural investments to generate faster agricultural and economic growth and to improve food security. Md Abul Basher, natural resources and agriculture specialist, SDCC, ADB asserts that the results show that Indonesia can end hunger in Indonesia by 2034 with a combination of higher investments in agricultural research and development (R&D), irrigation infrastructure ed area expansion and water use efficiency, and rural infrastructure including roads, electricity, and railways.
“To end hunger in Indonesia we must target investments towards the strategies that create the greatest potential for development and prosperity and redirect some funds away from those areas that have proven less ineffective,” said Basher.
Removal of the country’s costly fertilizer subsidy and reinvestment of the funds saved into agricultural R&D also increases agricultural productivity and economy-wide GDP and reduces hunger. In addition to ending hunger, the comprehensive investment scenarios have big economy-wide benefits. The comprehensive investment scenario is projected to increase annual total economic benefits by Rp 1,834 trillion in 2045, or about US$ 129 billion at current exchange rates.
The Indonesia report includes several policy recommendations:
- Expenditure on agricultural research and development, especially crop and livestock breeding, should be increased significantly.
- Infrastructure investments, including rural roads, electricity, cell phone towers, markets, cold chains, and processing facilities, should be expanded in partnership with the private sector
- Increased investment in irrigation expansion and in improvement of existing irrigation systems is warranted, with careful attention to cost-effectiveness.
- Extension services and agricultural education need to be upgraded to expand the adoption of both conventional and advanced agricultural technology such as precision farming.
- Legal and regulatory reforms should be implemented to reduce barriers to the adoption of new seed varieties and other agricultural technologies.
- Fertilizer subsidies should be phased-out and invested in increased agricultural research and development and targeted direct income support for small farmers
Research for the study was conducted by the International Food Policy Research Institute (IFPRI) in collaboration with ADB, using IFPRI’s International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) linked with a computable general equilibrium model to capture both agricultural and economy-wide impacts of climate change and investment.
The report is one of three related ADB reports on food security being released today. The other two reports provide an analysis on investments required to eliminate hunger Asia and the Pacific region more broadly, and the trends and impacts from the application of information and communication technologies in the agricultural sector in rural China. All three reports are available on the ADB website.
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The International Food Policy Research Institute (IFPRI) seeks sustainable solutions for ending hunger and poverty. IFPRI was established in 1975 to identify and analyze alternative national and international strategies and policies for meeting the food needs of the developing world, with particular emphasis on low-income countries and on the poorer groups in those countries Visit: www.ifpri.org