El Nino threatens Indonesia's rice production and commodity exports

The ongoing El Nino phenomenon is impacting Indonesia's economy by threatening food production, distribution, and commodity exports. According to data from the Central Bureau of Statistics (BPS), the drought has led to a significant reduction in rice planting areas. In August 2026, the proportion of rice standing crops was only 28.07%, a decline compared to the 29.79% recorded during the 2023 El Nino period.

This reduction in planting area has directly affected yields. Rice production in August 2026 fell to 3.15 million tons, a 2.90% decrease from the same period in the previous year. Economists note that the phenomenon is expected to persist into early next year, potentially delaying planting seasons and impacting harvest cycles.

Beyond agriculture, El Nino poses risks to Indonesia's trade balance. Low water levels in rivers, particularly in Kalimantan, may hinder the transportation of key export commodities such as coal and crude palm oil (CPO). Additionally, food-related inflation is expected to remain a pressure point, with economists forecasting annual inflation to sit between 3% and 3.5% by the end of 2026.