From Farm to Table: Agritech and The Next Supply Chain Gatekeeper

Agriculture has long played a central role in Indonesia’s development, providing livelihoods for millions of households and ensuring national food security, even as industry and services have taken a larger share of economic output.

While millions depend on farming for their livelihoods, farmers remain among the lowest earners. This reality stems largely from a deeply fragmented and inefficient traditional supply chain. In this multi-layered system, farmers sell to collectors, who then distribute to wholesalers, traders, and retailers before produce reaches consumers. Each layer adds costs and takes a significant margin, leaving farmer with only the smallest slice of value.

At the same time, inefficiencies—from logistics bottlenecks to crop spoilage—resulting in significant food loss. According to Bappenas, Indonesia wastes an estimated 20.94 million tonnes of post-harvest crops annually, which could otherwise enough to feed 29-47% of the population (economically this amounts to IDR213-551 trillion). This substantial food loss highlights a critical problem in Indonesia’s agricultural system.

The Rise of Agritech Platforms

In recent years, technology has begun to disrupt this pattern. Agritech platforms are stepping in as new supply chain “gatekeepers,” promising to streamline the farm-to-market journey. These platforms don’t just connect farmers to buyers; they embed services across the entire value chain:

• Market access: Direct digital marketplaces for selling crops.

• Financing and inputs: Embedded fintech, seed and fertilizer provision.

• Logistics: Cold storage, transportation, and demand forecasting to reduce waste.

• Data and insights: Price discovery, traceability, weather updates, and yield predictions.

By centralizing these functions, platforms act as one-stop partners for farmers, potentially replacing multiple intermediaries. This empowerment is reflected in the Nilai Tukar Petani (NTP). This index measures the ratio of prices farmers receive for their goods against the prices they pay for production and household expenses. An NTP value above 100 indicates that the prices farmers are getting for their produce are increasing faster than their expenses.

Based on BPS’s NTP survey, the NTP has risen significantly from 102.03 in 2014 (before agritech started to boom in Indonesia) to 119.62 in 2024. This is a strong indicator of agritech’s positive impact, demonstrating that these solutions are not only improving efficiency but are also helping farmers secure a larger share of the value created in the agricultural supply chain, directly contributing to their economic well-being.

Opportunities, Risks, and Legal Dimensions

The opportunity is clear: agritech can democratize access, raise incomes, and reduce systemic inefficiencies. For consumers, it can mean more affordable food, greater transparency, and assurances of quality. For farmers, it offers a chance to move beyond subsistence toward sustainable livelihoods.

Yet, new risks emerge. Platforms could replace traditional middlemen only to become new monopolistic gatekeepers, controlling prices and farmer access. Digital adoption barriers—literacy, trust, infrastructure—remain challenges in rural communities.

This is where the legal dimension becomes relevant.

As agritech platforms expand, regulatory oversight and legal frameworks will be essential to:

• Ensure fair competition and prevent abuse of dominant position by large platforms.

• Protect farmers’ contractual rights in digital agreements, particularly with respect to pricing transparency, data usage, and dispute resolution.

• Address data protection and privacy, as agritech platforms increasingly collect sensitive farm and household information.

• Support the development of inclusive financing and insurance regulations, ensuring fintech products offered to farmers are lawful, fair, and do not result in over-indebtedness.

Looking Ahead

The future of agritech in Indonesia will depend on how platforms balance power with partnership. Will they empower farmers with data, fairer pricing, and efficiency? Or will they capture the lion’s share of value, leaving farmers as dependent as before—just on new players?

One thing is clear: the farm-to-market journey is being rewritten. As agritech platforms rise to prominence, the question is not whether they will become supply chain gatekeepers, but what kind of gatekeepers they will choose to be. For law and policy makers, this is a pivotal moment: legal frameworks must evolve alongside technological innovation to ensure that platforms enable—not exploit—the farmers who remain at the heart of Indonesia’s food system.

By: Gracia Elrica

DISCLAIMER:

This material is prepared for general information purposes only. It is not intended to give legal or any other professional advice, opinion or recommendation and, accordingly, it should not be relied upon. Specific legal advice should be sought before taking any action based on the contents in this material. Please contact us if you need any assistance regarding this matter.