René Muschter
Research Expert covering Industry & Mobility
Rubber industry in Indonesia - statistics & facts
Indonesia is the second-largest rubber producer worldwide. It is no wonder that rubber is also one of the most important agricultural commodities in the archipelago. However, low domestic consumption leads the country to export most of its rubber production. There has been a slow decrease in the contribution of rubber and plastic products manufacturing to Indonesia’s GDP in the past few years, following the decrease in rubber production in Indonesia.  
The majority of Indonesia’s rubber production comes from smallholder farmers. These farmers’ roles are becoming more important as the large estates’ rubber production has significantly decreased, with many estates replacing their rubber areas with more profitable commodities, especially palm oil. Palm oil production from Indonesia’s largest rubber companies, such as Kirana Megatara Group, PT Perkebunan Nusantara and Bakrie Sumatera Plantations have been increasing while their rubber production continues to decline.
Besides the infrastructure issues, fungal attacks have been taking a toll on Indonesia’s rubber plantations in recent years, posing threats to the country’s rubber production. One of the major contributors to this outbreak was the use of low-cost fertilizers bought by farmers and plantation owners during times of low prices. These issues highlight the importance of supporting smallholder rubber farmers in Indonesia. Providing better technical knowledge and financial support will reduce the livelihood threats to Indonesia’s smallholder farmers and secure the country’s economy.
Smallholders’ significant role in Indonesia’s rubber industry
There are a total of 150 incorporated rubber tree cultivation companies in North Sumatra, West Java, and East Java. Together with Kalimantan Island, these areas are Indonesia’s primary production areas of natural rubber, with Sumatra and Kalimantan as the largest employers of rubber farmers and farmworkers in the nation. The majority of Indonesia’s rubber production comes from smallholder farmers. These farmers’ roles are becoming more important as the large estates’ rubber production has significantly decreased, with many estates replacing their rubber areas with more profitable commodities, especially palm oil. Palm oil production from Indonesia’s largest rubber companies, such as Kirana Megatara Group, PT Perkebunan Nusantara and Bakrie Sumatera Plantations have been increasing while their rubber production continues to decline.
Challenges facing the Indonesian rubber industry
Despite the significant size of Indonesia’s rubber plantation area, barriers to maximizing its potential still exist. Downstream activities, such as post-harvest handling, manufacturing, and processing, are still not as significant due to a lack of infrastructure and product diversification. Without a new approach, Indonesia’s rubber industry would remain heavily dependent on the export markets in the coming decades while its domestic rubber consumption stays low.Besides the infrastructure issues, fungal attacks have been taking a toll on Indonesia’s rubber plantations in recent years, posing threats to the country’s rubber production. One of the major contributors to this outbreak was the use of low-cost fertilizers bought by farmers and plantation owners during times of low prices. These issues highlight the importance of supporting smallholder rubber farmers in Indonesia. Providing better technical knowledge and financial support will reduce the livelihood threats to Indonesia’s smallholder farmers and secure the country’s economy.
