The agriculture sector of Indonesia has witnessed an increased demand for wide varieties of seeds overtime. Having vast and abundant fertile soil has made Indonesia being considered amongst the major agricultural countries in the world. As per the Ministry of Agriculture, Indonesia grows 77 types of carbohydrate-rich produce, 26 types of beans, 389 types of fruits, 228 types of vegetables and 110 types of spices. An increased focus of introducing hybrid seeds by the domestic and global players in the space has significantly boosted the market revenues over the recent past. Rising demand for staple food crops including rice and corn has resulted in augmented revenues from the growing sales of seeds in the market.
The revenues of Indonesia seed market were also triggered due to the revitalization programs of the government for smallholding farmers in order to raise production of various crops in the country. This resulted in increased sales of seeds in Indonesia to enhance the agricultural output during 2011-2016. The growing focus of the farmers towards the use of hybrid seeds to improve the yield has strongly impacted the revenues of the players operating in the space during the period 2011-2016.
Segmentation Of Indonesia Seed Market By Types Of Seeds (Fruits And Vegetables Seeds, Grains And Cereals Seeds And Plantation Crop Seeds)
Grains and cereal seeds dominated the market and contributed ~ to the overall revenues generated from sales of various types of seeds in Indonesia during 2016. This is primarily due to the increased quantity of rice produced during the same year. Rice is the staple food of Indonesia and the inclined consumption of rice resulted in augmented demand for rice seeds, thereby driving the overall revenues in a positive manner.
Indonesia is the largest palm oil producer in the world and the expansion in oil palm plantation area in the country has triggered the growth of revenues from sales of plantation crop seeds during 2016. The islands of Indonesia had about ~ million hectares of land under palm oil cultivation during the same year. Sales of plantation crops seeds accounted for ~ of the overall revenues generated from the sales of various types of seeds in Indonesia during 2016.
The least share in the market revenues from sales of various types of seeds in the islands of Indonesia was contributed by fruits and vegetables seeds sold during 2016. The segment accounted for a mere share of ~ in the overall revenues during 2016. Revenues from sales of fruits and vegetables seeds have majorly been driven due to the growing use of hybrid seeds in tomato cultivation. Higher prices of cross-pollinated seeds have significantly added to the revenues of the segment, thus having a positive impact on the overall revenues of the seed market.
Which types of grains and cereals seeds added the maximum share to the overall revenues in indonesia seed market?
Rice is the staple food of Indonesia and has dominated the overall revenues generated by consumption of various types of grains and cereals seeds in the country during 2016. Indonesia has the largest per capita rice consumption in the world with Indonesians consuming around ~ of rice per person per year. Rice seeds constituted for ~ of the revenues generated by the market from sales of grains and cereals seeds during the 2016.
The restrictions imposed by the government of Indonesia on import of corn have resulted in increased production of the crop locally, to meet the rising demand. The conversion of rice and soybean fields to corn production areas for achieving self-sufficiency to meet the demand have augmented the sales of corn seeds in Indonesia during 2016. The boosting use of hybrid seeds for corn production has also surged the market revenues, making corn seeds contribute ~ of the overall revenues from sales of all grains and cereals seeds in the country during 2016.
Indonesia is dependent on the imports of soybean to meet the local demand in the country. The continuous decline in soybean production has impacted the sales of soy seeds in a negative manner during 2016. Tempeh and tofu are major by-products of soy and provide lowest cost staple protein to the country’s population. Increasing demand for low price protein products in Indonesia has made this segment constitute ~ in the overall revenues generated from the sales of grains and cereals seeds during 2016.
Which types of plantation crops seeds added the maximum share to the overall revenues in indonesia seed market?
Revenues generated from the sales of palm oil seeds added a dominant share of ~ to the overall pie of revenues from sales of various plantation crop seeds in Indonesia during 2016.
One of the major reasons which have led to rubber seeds in acquiring a significant share in the revenues from the sales of various plantation crop seeds is the growing potential of rubber wood as a source of timber for manufacturing furniture in Indonesia. The revenues generated from the sales of rubber seeds constituted ~ in the overall revenues from the sales of plantation crops seeds in Indonesia during 2016.
Indonesia’s coffee plantations cover a total area of approximately ~ million hectares and the seeds used for such plantations contributed ~ share to the overall revenues generated by the market players from the sales various plantation crop seeds in Indonesia during 2016.
The sales of cocoa seeds generated ~ of the overall revenues from the sales of plantation crop seeds in Indonesia during 2016.
Sales of coconut seeds added a share of ~ to the overall revenues generated from the sales of all plantation crop seeds in Indonesia during 2016.
Which types of fruits and vegetables seeds dominated the overall revenues in Indonesia seed market?
Indonesia produced more than ~~ tons of tomatoes during 2016 which significantly raised the demand for seeds. Revenues from sales of tomato seeds contributed ~ to the overall sales of all seeds meant for growing various types of fruits and vegetables in Indonesia during the same year.
Farmers planted over ~ tons of seed potatoes per hectare, thus making this segment constitute ~ of the overall revenues generated from the sales of fruits and vegetable seeds in Indonesia during 2016.
Rising exports of Indonesia green beans to customers in Hong Kong further boosted the production of crop in the country, thereby resulting in rising demand for green been seeds. This led to the segment constituting ~ in the overall revenues generated from the sales of various fruits and vegetable seeds in Indonesia during 2016.
The rising trade of cassava for producing food items, glucose, solvents, alcohol, animal feed, fertilizers, energy and other by-products within and outside the islands of Indonesia resulted in cassava seeds contributing ~ to the overall revenues generated from sales of fruits and vegetables seeds in the country during 2016.
The augmented production and consumption of onion thus made this segment add ~ to the pie of revenues generated from sales of various fruits and vegetables seeds in Indonesia during 2016.
The use of sweet potato seeds contributed ~to the revenues from sales of all fruits and vegetables seeds in Indonesia during 2016.
Trends and Developments in Indonesia Seed Market
Increasing Palm Oil Production and Exports in Indonesia: Indonesia is the largest producer of palm oil in the world and exported ~ million tons of the quantity produced during 2016. The total area of palm oil plantations in Indonesia was around ~ million hectares by 2016, which was limited to four million hectares in 2000.
Growth in Indonesia Horticulture Sector: Vegetable production in the country inclined to ~ million tons in 2014 from ~ million tons in 2013. On the other hand, the production of fruits in Indonesia was increased by ~ from ~ million tons in 2013 to ~ million tons in 2014.
Rising Initiatives to Surge Rice Production in Indonesia: The government introduced mechanized agricultural technology, repaired the damaged agricultural infrastructure and opened new rice fields to supplement rice production in Indonesia. The country’s production of unhusked rice rose to ~ million tons in 2016 from ~ million tons in 2011.
Allocating Free Seeds to Increase Food Crop Production in Indonesia: MOA will allocate ~ kg of hybrid corn seed per hectare or ~ kg of composite corn seed per hectare to the farmers of the country during 2017 The government of the Indonesia planned the allocation of various types of seeds at no cost for MY 2016-2017.
Issues and Challenges in Indonesia Seed Market
New Plantation Law: The new law caps the foreign holding of plantation companies at ~, which was ~ as per the law before 2014. As per the law, plantation product processing players must source at least ~ of the total raw materials from their own plantations. The plantation companies must also develop a plantation area of ~ to be utilized by the local community in Indonesia.
Declining Employment in Indonesia Agriculture Sector: Downfall in the number of people engaged in agricultural sector has thus impacted the market operations negatively, with restricted amount of labor that can be used for cultivating the fields. This has directly affected the demand of seeds to an extent as there has been a shortage of workforce in the country.
Time-Consuming Process to Get the Final Product: Development of new variety of seeds involves time-consuming process, which extends up to ~ years before these are available in the market. This has posed a challenge for the existing companies to timely meet the demand for new seeds. Time-consuming seed development process has also created an entry barrier for the new entrants to wait for longer duration to penetrate in the seed market of the country.
Unstable Climatic Conditions in Indonesia: Agricultural production in the country is hindered by the changing climatic conditions, which in turn affects the consumption of seeds in a negative manner. The major challenge faced by the market players is to deal with the fluctuating demand for seeds by the farmers in Indonesia.
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Ankur Gupta, Head Marketing & Communications
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