Country Context

Indonesia is an important neighbour in our region due to both its proximity and strategic importance to Australia. While it has achieved strong progress in poverty reduction, 13% of its population still live under the poverty line of around US$1.25 per day, and 49% live on less than US$2.00 per day. A high proportion of the poor are engaged in agriculture. Strengthening agriculture (including the crop, livestock, forestry, marine fisheries and aquaculture subsectors) is critical for poverty reduction and equitable development across Indonesia.

Agriculture is a key strategic sector for the Government of Indonesia. The main policy priorities include: achieving self-sufficiency in key commodities; achieving national food security; balancing the needs of producers and consumers; increasing farmer welfare through higher incomes; diversifying food sources away from cereals; increasing the competitiveness of agricultural production, value-added processing and export; and managing the effects of climate change.

Agricultural research has an important role to play in addressing these policy priorities. ACIAR has been supporting Indonesia for 30 years, with substantial benefits flowing to farmers and the agriculture sector as a whole through the development of technologies and innovations. Recent evidence from Indonesia shows that returns on public investment in agricultural research are substantial and sustained, with an estimated real rate of return of 13% from increased investment.

The geographical focus of this program includes some of the poorest regions (e.g. six provinces in eastern Indonesia and Aceh) as well as the more developed provinces of Java, Bali and Sumatra. This diversity gives the program flexibility in improving livelihoods using alternative approaches, including ensuring food and nutritional security through enhanced productivity and food quality, as well as developing improved market linkages for high-value products sourced from smallholder production systems.

Wherever opportunities exist, ACIAR seeks to implement its Indonesian research program as part of a whole-of-government approach, especially with the Department of Foreign Affairs and Trade and the Department of Agriculture. In 2014–15 ACIAR will contribute to development of the whole-of-government strategy for the Australian aid program in Indonesia. Increasingly, ACIAR is involving Indonesian research skills and experiences in a trilateral approach to supporting agricultural development in Timor-Leste.