The United Nations International Fund for Agricultural Development (IFAD) and the Government of Indonesia have agreed to deploy a new initiative that aims to transform rainfed agriculture to increase its profitability and climate resilience, thereby , boost the livelihoods of more than 200,000 farmers in the next five years. The Arid Sector Horticulture Development Project is co-financed by the Asian Development Bank (ADB) and aims to improve food availability, accessibility and quality, while increasing resilience to climate change.

“This project represents an important step forward in the transformation of Indonesia's agricultural sector, empowering smallholders to adapt to climate change, increase their incomes and produce more nutritious food for their communities,” said Hani Abdelkader Elsadani, Director. IFAD Country Manager for Indonesia. “IFAD is proud of the partnership forged with the Government of Indonesia and the ADB to implement this innovative project, which is in line with our commitment to sustainable agriculture and rural development.”

Indonesia is a rapidly growing country and has a large population of diverse nature. Agriculture plays a key role in the Indonesian economy, employing one third of the workforce, or some 38 million people. Most farmers are smallholders working less than one hectare of land. Poverty is more pronounced in rural areas; Agricultural households are 3.5 times more likely to be poor—and exposed to climate-related shocks—than non-agricultural ones. Poverty, regional inequalities and climate change pose a tremendous challenge, while rising sea levels, unpredictable rainfall patterns and intensifying extreme weather events threaten the livelihoods of millions of farmers and put food security at risk. Rainfed farmers are particularly disadvantaged because they live in remote locations. In addition to not having access to irrigation systems, they are limited by poor local institutional capacity and lack of access to inputs, technology and financing.

The project is designed to respond to the challenge of climate change in Indonesia in 13 districts in North Sumatra, West Java, Central Java, East Java, Bali, East Nusa Tenggara and South Sulawesi. To achieve this, it is planned to promote climate-smart agricultural practices, improve the resilience of infrastructure and strengthen the capacity of farmers and communities to adapt to changes in climatic conditions. Additionally, it will encourage the use of drought-resistant crop varieties that can withstand water stress and maintain productivity in drier conditions; Train farmers on a range of water conservation practices, such as efficient irrigation techniques and rainwater harvesting, to optimize water use and reduce dependence on rainfall; and promote sustainable agricultural practices – such as organic farming and agroforestry – to improve soil health and reduce dependence on chemical inputs.

The project will also invest in improving irrigation infrastructure to ensure that farmers have reliable access to water, even in times of scarcity. It will also support the construction of infrastructure, such as flood-resistant roads and storage facilities, to protect crops and livelihoods from extreme weather shocks. Farmers will receive training and extension services on climate risk management strategies so they can make informed decisions and adapt their agricultural practices to changes in climate conditions.

The project also focuses on boosting production by facilitating access to high-quality planting material and integrating digital technologies into seed production. It aims to create horticultural villages and, through them, consolidate smallholder initiatives, promote economies of scale and create effective farmer organizations that produce high-value crops.

The project, valued at a total of 129.04 million euros, is financed with a loan from IFAD worth 36.93 million euros and another from the ADB for 78.49 million euros. Since 1980, IFAD has supported 21 programs and projects in Indonesia, involving an investment of US$709.50 million and benefiting more than 3.9 million rural households.