By: Gilang Dirgantara)*
A major transformation is underway in Indonesia’s agricultural sector. The government under President Prabowo Subianto, through the Ministry of Agriculture, has emphasized a new direction for agricultural development based on downstream processing. This step is not merely an economic strategy but also a concrete effort to strengthen farmer welfare, create added value, and strengthen the competitiveness of national agricultural products in the global market. In this context, downstream processing is key to ensuring that Indonesia’s natural resources are not simply exported as raw materials but are processed domestically to provide greater economic benefits to the community.
Minister of Agriculture Andi Amran Sulaiman emphasized the urgency of downstreaming the agricultural sector as a key driver of national economic growth. He stated that this strategy represents a visionary step toward changing the old pattern that has left Indonesia solely as a supplier of raw materials. For years, leading commodities such as palm oil, coffee, and cocoa have been exported without significant processing, leaving their added value to other countries. Now is the time for Indonesia to lead the downstreaming process of its own agricultural commodities. This reflects the government’s strong commitment to making farmers key actors in economic development, not simply suppliers of raw materials.
The Ministry of Agriculture has demonstrated its commitment by allocating Rp371.6 trillion in investment to support the national agricultural downstreaming program. This colossal budget will be used to strengthen production capacity, improve raw material quality, and develop processing technology and innovation for derivative products. Downstreaming also includes the development of supporting infrastructure such as processing plants, modern storage facilities, and efficient distribution networks. This step is expected to create an integrated agricultural ecosystem from upstream to downstream, ensuring that economic benefits are not only enjoyed by large industries but also flow directly to farmers.
Some of the main plantation commodities focused on downstream processing include coconut, cocoa, cashew nuts, coffee, sugar cane, palm oil, pepper/nutmeg, and cassava. These commodities were chosen for a reason. Indonesia has a significant comparative advantage in these commodities, both in terms of raw material availability, labor, and export market potential. With proper processing, commodities like coffee and cocoa can provide substantial added value. For example, processing cocoa beans into ready-to-eat chocolate can increase their selling value by several percent. Therefore, downstream processing is not just about industrialization, but also about how each stage of production can provide greater prosperity for farmers as the spearhead.
The Deputy for Production Statistics at the Statistics Indonesia (BPS), M. Habibullah, confirmed that farmer welfare is showing an encouraging trend. Based on BPS data, the national Farmer Exchange Rate (NTP) in September 2025 was recorded at 124.36, a 0.63 percent increase compared to 123.57 the previous month. This increase is not merely a statistic, but a concrete reflection of improving farmers’ purchasing power and income. The increase in the NTP is evidence that the downstreaming policy is beginning to show positive results on the ground. Farmers are now not only selling their crops but also participating in production chains that provide higher added value.
Downstream processing also plays a role in creating new jobs in rural areas. Processing plants built near production centers will absorb local labor and stimulate regional economic growth. This aligns with the government’s vision of building an inclusive and equitable economy. With this approach, prosperity will not only benefit large industrial players in cities but also rural communities, who are the backbone of national food production. The multiplier effect of downstream processing is expected to narrow the economic gap between urban and rural areas.
Riyono, a member of Commission IV of the Indonesian House of Representatives (DPR RI), emphasized that agricultural downstreaming is the key to improving farmer welfare. According to him, downstreaming has a domino effect on the national economy, from increasing state revenue through the export of value-added products to strengthening national independence. Downstreaming can also increase added value by processing raw materials into finished or semi-finished products. Thus, farmer welfare can be truly realized. Therefore, agricultural downstreaming aligns with the government’s policy direction, which positions farmers as subjects of development, not objects.
In addition to increasing farmers’ incomes, downstream processing also strengthens national economic independence. By processing agricultural products domestically, Indonesia can reduce dependence on imported products and maintain stable food prices. At the same time, the export value of processed products will increase, positively contributing to the trade balance. In the long term, this strategy will strengthen the foundation of the Indonesian economy, which is based on domestic resources and the nation’s own innovation capabilities. Downstream processing also opens up significant opportunities for collaboration between the government, the private sector, and research institutions in developing environmentally friendly and efficient processing technologies.
From a social perspective, downstreaming has a transformational impact on smallholder farmers. They are no longer seen simply as raw material producers, but as a vital part of a high-value value chain. Skills development, access to technology, and financial support are key to enabling farmers to actively participate in the processing industry supply chain. The government, through the Ministry of Agriculture, has partnered with various parties, including universities and financial institutions, to ensure farmers receive adequate training and facilities. This effort is expected to foster a generation of millennial farmers oriented toward innovation and entrepreneurship.
Through the agricultural downstreaming program, Indonesia also has the opportunity to strengthen its position as a major player in the global agricultural sector. The potential export of processed products such as coffee, chocolate, coconut oil, and cassava flour can drive sustainable economic growth. When Indonesian agricultural products are able to compete globally, the national image and competitiveness will improve. Downstreaming symbolizes the nation’s transformation from a raw commodity-based economy to one based on added value, innovation, and independence.
)* Agribusiness and Food Security Consultant
