The Agricultural Sector in Indonesia Amidst COVID-19: Crisis or Opportunity?

Department of International Relations, Faculty of Social and Political Science, Universitas Muhammadiyah Yogyakarta, Yogyakarta, 55183, Indonesia

^* Corresponding author: ariekusumapaksi@umy.ac.id

Abstract

The proliferation of COVID-19 has led to a decline in commercial operations and economic performance, along with a shrinkage in output. Globally, the agricultural sector appears to be more resilient to pandemic-induced disruptions. This sector tends to have a more stable demand compared to industrial goods. Utilizing datasets spanning from 2013 to 2022, sourced from seven different Indonesian governmental departments, we evaluate the influence of fluctuations in agricultural output on the real Gross Domestic Product (GDP) of Indonesia. Our findings reveal that the impacts are fairly consistently dispersed across all four financial quarters, suggesting that any lockdown measures affecting agriculture could have prolonged ramifications on the country’s GDP. Despite its resilience, the agricultural sector faced significant operational hurdles due to production cutbacks, market and border closures, and canceled transactions. Additionally, the financial accessibility for farmers was compromised due to the economic downturn. However, our qualitative analysis indicates that the COVID-19 situation has also unearthed new growth avenues for Indonesia’s agriculture. These include the acceleration and broadening of digital transformation, market expansion for exported goods, and an influx of both skilled and unskilled labor. In light of these findings, we put forth five strategic recommendations aimed at ensuring the long-term sustainability of Indonesia’s agricultural sector.