Wednesday, May 29, 2024

How-to understand regulation of agriculture business sector in Indonesia

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Advisor IBP




Agriculture has contributed 13.70% to GDP in 2016 including Fisheries & Livestock and the number employed in the sector is 46 million. Foreign investors wishing to operate in Indonesia are allowed to explore the possibilities offered by the agricultural industry, one of the most productive sectors of the economy today. Foreigners must comply with the Cultivation Rights Act under which they can lease a plot of private or state-owned land and grow various crops on it. This lease is granted for a period of 35 years.

Governing law and regulation 

  • Law No. 39/2014 on Estate Crops
  • Law No. 29/2000 on Plant Variety Protection
  • Law No. 22/2019 on Sustainable Agricultural Cultivation System
  • Law No. 13/2010 on Horticulture
  • Law No. 41/2014 on Livestock and Animal Health
  • Government Regulation (PP) No. 26/2021 on Implementation of the Agriculture sector

Plantation crops

One of the plantation management aims to manage and develop plantation strengths in an optimal, responsible and sustainable manner towards increasing production, productivity, quality, competitiveness, and market share. In relation to the contents of PP No. 26/2021, the sub-sectors are land use regulation for plantation businesses, community plantation business development, and plantation development for processing units and certain plant seeds. This change is to further improve welfare and prosperity, increase foreign exchange sources and business opportunities, increase production, productivity, quality, added value, competitiveness and expand markets, improve and meet the needs of domestic industry, consumption and raw materials, providing protection to plantation business actors and the community, managing and developing plantation plant resources in an optimal, responsible and sustainable manner, and increasing the utilization of plantation services. Land use for plantations is classified according to the maximum and minimum criteria applied to a particular commodity strategy. The determination is based on the type of plant and the availability of land in accordance with the characteristics of the agro-climate.

Companies that have obtained permits to cultivate plants from areas other than the Right to Cultivate (HGU) originating from the release of forest areas, are plants to facilitate agricultural development for local communities who are members of institutional organizations (farmers), farmer groups, farmer group associations, farmer economic institutions and cooperatives, which is 20% of the total plantation area cultivated by the company. The development of local community farming is carried out no later than three years after the land for plantation business is granted the right to cultivate. The surrounding community is obliged to cultivate and utilize the land by following the provisions on the use and utilization of the land in accordance with the nature and purpose of granting rights, and to carry out cultivation activities according to good cultivation procedures. The implementation can be done through credit schemes, profit-sharing patterns and other forms of funding agreed upon by the parties and/or other forms of partnership. The pattern and form of facilitation for farming development are contained in the cooperation agreement. With regard to the type of processing product and the time period, each product processing unit requires the production of imported raw materials – in this case raw crystal sugar from sugar cane – to build an integrated farm with a processing unit no later than three years afterward. The integrated sugarcane industry is based on its specific characteristics in one or separate stretches between plantations and processing units. 

Seed facilities are in line with the search, collection, utilization and preservation of genetic resources, introduction of seed breeding, release of varieties, production, certification, labeling and supervision of seed circulation. For the search and collection of genetic resources can be done inside and/or outside the habitat of plantation crops. Genetic resource collection activities are carried out in genetic resource banks either through farm collection or cold storage. Utilization of genetic resources can be carried out individually or jointly in a sustainable manner through breeding, research and development activities, and/or genetic resource bank maintenance. Preservation of genetic resources is carried out by determining the location as a source of genetic diversity of native Indonesian plants based on genetic resource banks inside (in-situ) and outside (ex-situ) by involving the community. The introduction of seed breeding is produced in the form of seeds or parent material for plant breeding. The introduction must obtain approval by submitting an introduction application accompanied by a proposal that contains at least the purpose and description of the required introductory material along with the amount. The approval holder who has made the introduction must submit a written report and a sample of the introduced seed or parent material.

Plant variety rights

Plant variety rights are the granting of special intellectual property rights determined by the state, represented by the government and implemented by the Office of Plant Variety Rights on plant varieties produced by plant breeders through breeding activities. Therefore, the enactment of PP No. 26/2021 is in line with the regulations concerning the process, application, registration, inspection, announcement, recording and acquisition of plant variety rights certificates. This can be applied alone and/or transferred to another party to use plant varieties commercially through a rights agreement. Plant variety rights can be granted to plant varieties resulting from new breeding, uniform uniqueness, stable characteristics and given names and differentiated into annual plants and annual plants.

The application process for plant variety rights can be carried out by breeders, individuals or business entities that employ breeders or order plant varieties from plant variety breeders, heirs, or consultants. The consultant must be registered with the plant variety rights office and must maintain the confidentiality of plant varieties and all application documents until the date the application for plant variety rights is announced. Applications for plant variety rights can only be submitted for single plant varieties. Applications for plant variety rights that have met the requirements are announced by the Office of Plant Variety Rights for six months to provide an opportunity for the public to examine violations or objections to their application. To regulate the process of obtaining a plant variety right certificate, the application must be registered, examined and announced by the plant variety rights office. This can be done alone or transferred to another party to use plant varieties in accordance with commercial agreements. The Office of Plant Variety Rights officially announces in its bulletin the approval for granting certificates of plant variety rights which are valid for a period of 20 years for annual crops and 25 years for annual crops, starting from the date of issue.


Horticulture aims to increase production, productivity, quality, added value, competitiveness, and market share. The PP No. 26/2021 also regulates this sub-sector which has enormous economic potential to drive the economy, create jobs and business opportunities as well as upstream-downstream linkages with other sectors in Indonesia. Therefore, it is necessary to specifically regulate the seed business which includes seeding, seed production and certification, as well as the distribution system and grade of seed products based on quality and price standards.

Breeding is done to maintain and improve the purity of existing varieties or to produce new varieties. New varieties resulting from breeding to be launched must be registered before being distributed. Breeding can be done domestically or introduction is done in the form of seeds or parent materials that do not yet exist in Indonesia. Provisions regarding registration obligations are exempted for individual business actors or groups that carry out domestic nurseries for their own interests and/or are limited to one group in one regency/municipal area. Exceptions are granted providing that individual or group business actors report to the technical implementing unit of the regional agency that carries out their duties and functions in the field of supervising the registration of horticultural varieties with copies to the governors and local administrations, as well as new varieties produced locally and circulated in a limited way within one district/city.

Domestic breeding can be done by selection method, crossing/hybridization, mutation, chromosomal doubling, or genetic engineering technology. The introduction must comply with the provisions of the plant quarantine legislation and the number of seeds introduced in accordance with the requirements that have a description of the variety. The introduction must obtain permission from the owner of the variety or his representative. In addition, it is mandatory to fulfill a business license from the central government which is issued in accordance with the provisions of the legislation. To ensure the availability of quality seeds in a sustainable manner, production is carried out through generative and vegetative propagation. Respectively performed conventionally and tissue culture or hybrid extracts. Horticultural seed certification is carried out through supervision of: (1) Planting and postharvest (field inspection, quality testing of horticultural seeds in the laboratory and/or inspection in warehouses, issuance of horticultural seed certificates, and labeling); (2) Quality management system implemented by Quality System Certification Institute (LSSM) or government agency accredited by the National Accreditation Committee (KAN) in accordance with the scope of the horticultural seed sector; and (3) horticultural seed product testing, or production process assessment. Provisions regarding certification of horticultural seeds are regulated in a Ministerial Regulation.

Livestock and animal health 

Management of husbandry and animal health includes management of exports and imports of livestock, animals and animal products, prevention of animal diseases and zoonoses, strengthening of veterinary authority, requirements for halal animal products and enforcement of animal laws. Based on this, the application of PP No. 26/2021 in this sub-sector covers general grazing areas, minimum standards and technical requirements for feed, and veterinary medicine.

The provision and management of public grazing areas so far has placed more emphasis on the role of district/city governments to determine which areas have land stocks as general grazing areas. In the context of increasing small-scale livestock cultivation, areas that have complied with the provisions of this government regulation may be designated as general grazing areas by the government. Determination of standards or minimum technical requirements and feed safety and good feed preparation methods are intended to meet the criteria for feed production to be distributed commercially in Indonesia.

The general grazing area can be in the form of one or more expanses of land within the regency/city area which can be converted from grazing areas, ex-mining areas, and production forests, or plantation areas which are not cultivated in accordance with the provisions of laws and regulations. Its function is to produce forage plants, natural mating sites, selection, castration, and artificial insemination services, and animal health sites as well as animal husbandry and animal health research and development.

Minimum standard feed contains parameters of water content, crude protein, fat and fiber, as well as calcium and phosphorus levels. Minimum technical and security standard requirements are implemented in accordance with the provisions of the business licensing legislation. In terms of feed safety, there is a prohibition on the use of feed mixed with certain hormones and/or antibiotic feed additives. Feed safety at least contains aflatoxin parameters.

It is stated that each person is prohibited from using and/or mixing certain hormones (natural and synthetic) and/or antibiotics (finished products, raw materials/semi-finished veterinary drugs) into feed to increase feed and stimulate growth. The prohibition is carried out to prevent residues trapped in livestock, health problems in humans who consume livestock products, the emergence of pathogenic microbial resistance that causes hypersensitivity, carcinogenic, mutagenic and teratogenic effects on animals, humans and the environment.

Advisor IBP






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