Why are Indonesian Rice Production Costs High?

Indonesia's rice production costs are higher than those of several other Asian rice-producing countries. A presentation by Mohammad Ikhsan and Denny Purbasari, titled "Indonesia's Rice Competitiveness," shows that Indonesia's rice production costs reach Rp 4,079 per kilogram (kg). Meanwhile, in China it is only Rp 3,661 per kg, the Philippines Rp 3,224 per kg, Thailand Rp 2,291 per kg, and even in Vietnam only Rp 1,679 per kg.

The high cost of rice production in Indonesia is due to high land rental and casual labor costs. Agricultural land rent in Indonesia contributes Rp 1,719 per kg to production costs. Meanwhile, in China it is only Rp 988 per kg, the Philippines Rp 549 per kg, India Rp 510 per kg, Thailand Rp 481 per kg, and Vietnam Rp 387 per kg.

Similarly, Indonesia also has the highest casual labor costs, reaching Rp 1,115 per kg. In the Philippines, it is only Rp 978 per kg, China Rp 127 per kg, India Rp 655 per kg, Thailand Rp 172 per kg, and Vietnam Rp 120 per kg.