Development of Agribusiness Enterprises - Asian Productivity ...

Introduction of high-yielding varieties (HYVs) of rice led to the “Green Revolution”
in late 1960s. The introduction of HYVs, greatly increased use of fertilizers and other
agrochemicals as well as the reform of agricultural laws, which resulted in increased
production (except for Thailand) and stable crop production within the region. Up to the
mid-1970s, the use of HYVs reached 41 percent, 36 percent and 62 percent of the area under
rice cultivation in Indonesia, west Malaysia and the Philippines, respectively. In Thailand,
the area under HYVs during the same period was only 6.5 percent.
In the 1970s, due to increased rice exports by Thailand, and increased investment in
agricultural development and land improvement for rubber and oil palm in Malaysia,
agricultural production in those countries recorded expansion with an annual agricultural
growth rate of 2-3 percent with 50-60 percent of the population engaged in agriculture.
Increase in production during 1970s was attributed partially to diversification of agricultural
crops and livestock expansion.
AGRICULTURAL SITUATION OF SELECTED COUNTRIES
The relationship of agriculture to other sectors in the national economies of Indonesia,
Malaysia, the Philippines and Thailand, as well as a brief outline of trade, are described
below.
Indonesia
1. Economy
The economic development of Indonesia began in 1969 with the full implementation
of the first Five-Year Plan. At that time, per capita income was an estimated US$70. In
1996, per capita income exceeded US$1,000, which was one remarkable result of
development undertaken during the 25 years that elapsed from the first to the fifth plan
(1969-94). The average yearly per capita growth was 6.7 percent. But the average yearly
growth of the agriculture sector was limited to 3.6 percent during that period. The GDP
composition ratio clearly showed that the proportion of industry increased from 8 percent in
1969 to 23 percent in 1994 while agriculture, forestry and fisheries decreased from 47 to 17
percent. The trend towards industrialization accelerated from 1980 and, by 1991, the relative
shares of agriculture and industry had been reversed.
2. Agriculture and Agro-industry
The devaluation of the rupiah in 1986 greatly increased the export levels of plantation
products and processed goods. In addition, the export competitiveness of the food processing
industry increased. By the 1990s, the major proportion of exported agricultural products
comprised estate-produced palm oil, rubber, tea and cocoa. From 1985, the share of palm oil,
coffee and cocoa accounted for an increased share of small-scale farming products.
Many types of cottage industries or small-scale businesses were created for the sake
of rural development, in order to absorb the abundant labor supply. However, many
unemployed workers were unable to find jobs because of their low skills level, poor supplies
of raw materials, inadequate infrastructure, etc.
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