World Rice production Top Five Producers Indonesia 

Richard E. Hicks

Hello and welcome back our Far East tour of the world’s top five rice producers. Today we will take a bird’s eye view of Indonesia. Indonesia as a producer was recently dropped to fourth place as last month’s feature Bangladesh has taken the top three spot. This was an additional upset in the order when India had taken the top spot from China. The drop to fourth place does not play as significantly as the Indian jump to first place. I doubt it will have that great an impact over time as Indonesia tends to be their own best customer, we feel it is highly unlikely that Indonesia will become a real player in the worlds demand for rice. They simply produce it to consume domestically. Imports were necessary up until the mid 80’s when they achieved self-sufficiency. Imports have still been sometimes necessary, and the government controls the supply and price to insure a stable market. We feel India, on the other hand has the potential to aggressively attempt to dominate the supply demand table in the coming years. This would fall in place with their rising status as an economic power. An effort they seem to be making real progress across the spectrum.

An interesting fact only about five presents of the world rice crop is traded on the world market. Indonesia is building a large reserve that at some point in time must be consumed or traded. This seems to be the effort by many of the regions we have highlighted. As we have seen in our other studies, rice has been produced in the country since who knows when. Rice is the staple food, and this fact is very likely to remain a constant for some time. Rice provides more than half the daily caloric intake of the average Indonesian diet. As we have pointed out in the past the water buffalo provide the buffalo power at many points in the production process. Buffalo manure is also an integral part of the production effort. As with the other Asian countries the significant increase in yields in the past several decades has come from the use of government subsidized high yielding varieties rather than any major improvement in agricultural practices. I have often mused about this effort here in the US and can only speculate when we hit the wall with high yielding varieties.

Indonesia has roughly 80 million hectares in arable land. Rice producers plant approximately 33 1/3 of the available acres to rice annually. The 2025 growing season saw a 13% increase over the 2024 crop. This production increase is a record high.

The increase is due to the usual suspects increased acreage, better varieties, improved farming techniques and good weather in the major growing areas. The thirty three to thirty-four million metric ton crop will give Indonesia a roughly four-to-five-million-ton surplus eliminating the necessity for imports. This surplus has given the talking heads ammunition for the prospects of exports; a claim we feel is highly suspect.

The increase is contributing to an increase in world stocks which of course means better price stability. Something I am sure the United Nations is ecstatic about. No the UN does not grow it or has to sell it at a profit, but I digress. Sorry, but I am an unrepentant capitalist pig.

The main growing area in Indonesia consists of Java, Sulawesi, Sumatra. Bali, and Lampung. Java has three major growing regions consisting of central, east and west. all three regions plant roughly the same average 1.5 to 1.6 million hectares and produce about the same 5 to 5.5 million metric tons of rice annually. Java as a region has the best production due to the best soils and rice infrastructure. The other regions produce at various levels depending on the soils, means of production and weather. As stated before, together they are presently making the country self-sufficient in rice production. One point I found interesting is Bali uses hillside terraces and the Subak irrigation system this is a communal water system that dates back to the 11th century. Not really an important fact but a rather interesting one.

Indonesia as with all other countries are becoming increasing dependent upon advancing yields. The population will continue to increase, and available land will continue to shrink. We can only speculate at what point the two factors will mitigate each other. For the present time all of the top producing countries we have highlighted continue to increase production at rapidly increasing levels. These increases are heavily influenced by the government. This seems to me to beg the question how they are doing this without direct subsidies. The programs banned by the WTO and other anti US treaties. A look into the efforts seems to mean the production has a heavy government hand on the scales. They seem to rely on price controls for stable prices. This is especially evident during the “lean times” the November to January period when production levels plummet.

I realize food security is national security and all governments including our own have a cheap food policy. You may be angry or jealous if your neighbor gets a new widescreen TV or a new pick up. If that same chap is grilling steaks when you have nothing to eat. You are going to pick up a rock and chunk it at him. Bureaucrats recognize this and that is why they encourage over production and surplus supply. Countries will go to great lengths to insure a adequate, reliable, and trusted food source.

We saw this when Jimmy Carter embargoed the Soviets when they invaded Afghanistan. I do not think for one minute the Soviets were surprised, however, many of our best customers were shocked we would use food as a weapon. This, forever, branded us as an unreliable trading partner. Sending many to seek supplies elsewhere. As I recall, this particularly upset the Japanese. These facts alone will keep food production on the rise whenever and wherever possible.

The Indonesian rice story is considered by many to be a resounding success. Academics and bureaucrats are sounding the trumpets at the partnership between farms the government and agricultural instructions. New fertilizers, warehouses, infrastructure and a higher fixed price set by the government have given producers confidence, to continue growing more rice. Perhaps I am a bit old fashion but how do we have a record crop and a new government set higher price. Once again, I am lost. I thought Asian rice production originated in poor environments in underdeveloped condition. Having a population of about 270 million people the increase in supply is nothing but excellent news. Having been a net importer for generations and now gaining a surplus is nothing but negative news for producers. If your growing rice in a country that does not provide increasing benefits or subsidies you are starting out at a deficit.

In conclusion, the Indonesian new program has enabled it to increase production. This makes it the largest producer in Southeast Asia and at the same time drops it to fourth place in worldwide production. One of the major takeaways I have come to in our travels around the top five producers is the heavy hand of government influence. As we stated earlier food security is the number one priority. I have no problem with food security, It does seem though the minute one of these countries reaches this level of production. The first thing that comes to their mind is exports. This fascinated me because instead of being satisfied with a food parity. The effort immediately becomes an effort to sell on the world market. Increased supply and competition by definition mean lower prices. I have no problem with that if done by the producers themselves. Using better seed, improving their techniques becoming more efficient. This cannot happen and be sustained when the centrally planned effort comes into play. These farmers are getting free money to compete in the free market. This program have never worked and I am curious as to the end result. Will it ultimately end in more or less rice. Until next time when we visit the “Nam” the country in fifth place. reh

RICHARD HICKS IS THE MANAGING DIRECTOR OF THE R.E. HICKS GROUP LLC AN NFA REGISTERED INDEPENDENT IB.

I can be reached at 618-301-2244, 618-363-0252 sat phone 1-254-219-7336.

Note: Past Performance Is Not Indicative Of Future Results.