Rural Transformation in Various Ecosystem in Indonesia

Abstract

The agricultural and rural sectors in Indonesia have experienced a dynamic transformation. This process of transformation reflected the changes in employment and income structure. This paper analyzes the changes in employment, income structures, and dietary patterns in various ecosystems, namely wetland paddy, dry land secondary, vegetables, and plantation. We use micro panel data collected from 1,155 rural households in 8 provinces, and 33 villages in Java and off-Java in 2007-2012 and 2016 -2018. The results showed that the share of agriculture employment decreased from 89.1 % in 2007 to 56.7 % in 2016 in the wetland paddy ecosystem, and the reverse was true for non-agricultural employment. Household income from agriculture was still dominant but showed a decreasing trend. The share of agriculture income declined; the most significant decline is in the wetland paddy ecosystem. Furthermore, a nonfarm income also tends to increase. Share of cereal consumption expenditure tends to decrease while processed foods and instant drinks tend to grow. For accelerating agricultural and rural transformation, government policy should focus on investment in rural infrastructure, promote labor and land markets, and build capacity building based on the need for a different ecosystem of the rural population.