The Prabowo administration will cut the Ministry of Agriculture’s budget by over 70%—from the initially allocated US$6.79 billion (Rp 110.95 trillion) to US$1.79 billion (Rp 29.57 trillion) this year. The reduction, which is part of the government's new efficiency policy, is expected to lead to a sharp decline in planned agricultural infrastructure projects and food production. The number of new irrigation networks set for construction has been reduced, while irrigation network rehabilitation will shrink from 45,000 hectares to 16,000 hectares. Additionally, dam construction projects will drop from 16 to just one this year.
Minister Amran Sulaiman has reassured the public that the remaining funds will be allocated to safeguard national food security. However, the reductions could also affect rural development and farmers' welfare, exacerbating existing challenges in the agricultural sector, particularly amid climate change and global market fluctuations. Geopolitical tensions and climate-related crises have already led countries such as the Philippines and Malaysia to restrict exports, increasing Indonesia’s reliance on food imports and potentially straining the national economy. Additionally, the budget cuts may disrupt rural economic empowerment programs operated through Village-Owned Enterprises (BUMDes), leaving many without the necessary support and resources to sustain their operations. The private sector should watch for shifts in Indonesia’s agricultural import demand, which remains buoyed by the Prabowo administration’s Free Lunch Program.
