Indonesia–US Trade Pact Dilemma: Illusory Stabil ity and Eroded Food Sovereignty

The signing of the Agreement on Reciprocal Trade (ART) between the Government of Indonesia and the United States on 19 February 2026 in Washington, DC is often hailed as a visionary step toward a New Golden Era. With promises of tariff elimination to zero percent for 1,819 flagship Indonesian product lines, the agreement appears to be a dazzling diplomatic victory. Yet, if we look more deeply into the agrarian sector, particularly the soybean commodity, we find a major paradox that runs counter to the fundamentals of food sovereignty and farmers’ welfare in Indonesia.

Within ART 2026 structure, soybeans are not merely a commodity but an instrument in a big transaction that binds Indonesia to an obligation to purchase minimum US$4.5 billion of agricultural products. Indonesia is legally obliged to absorb at least 3.5 million metric tonnes of US soybeans every year for the next five years. This figure is not just statistics; it’s a very large volume considering the national demand for soybeans is around 2.9 to 3 million tonnes per year. Technically, the agreement locks the domestic market so that it remains dependent on Uncle Sam’s supply, while closing gaps for local products to take a dominant role in their own market.

The greatest irony arises when contrasting this import commitment with the national food self-sufficiency target for 2027. The government has allocated a particularly large agricultural self-sufficiency budget, namely Rp 40.1 trillion in 2026, to realise food self-reliance. But how can self-sufficiency be achieved if at the same time the government signs an import obligation whose volume exceeds national demand?

This results in policy dissonance. On the one hand, farmers are encouraged to boost productivity through various programmes, but on the other, the certainty of the market for harvests is eroded by the flood of imported soybeans enjoying zero tariffs. Without a government-backed, competitively priced purchase guarantee, local farmers will rationally abandon soybean cultivation in favour of other commodities, worsening the decline in cultivated area that has been ongoing since the 1990s.

Diplomatic Premium and Illusory Stability

Economically, the discourse of low prices is to be scrutinised. CORE Indonesia analysis indicates that the price of US soybeans (US$418/tonne) is actually relatively higher than alternative sources such as Argentina (US$405/tonne). By binding itself to the mandatory procurement list, Indonesia voluntarily pays a diplomatic premium for the sake of stable relations with the United States.

For around 160 thousand tofu and tempeh artisans under the Gakoptindo umbrella, supply certainty is indeed crucial to prevent large-scale production stoppages triggered by raw material shortages. The removal of import tariffs does help to reduce costs, but this dependency keeps the informal industry vulnerable to fluctuations in the rupiah exchange rate. Because the transactions are conducted in dollars, a depreciation of the rupiah will automatically raise soybean prices for artisans even though the tariff is zero. The stability offered by ART 2026 is supply stability, not genuinely sovereign price stability or what could be called illusory stability.

Unequal Battle

The empowerment aspect for farmers in ART 2026 is the most worrying point. This is not a level playing field. Indonesian soybean farmers, who generally operate on plots of less than one hectare using traditional tools, are compelled to compete with industrial-scale agribusiness in the United States. It should be remembered that US farming is supported by massive subsidies through the US Farm Bill, including price supports and crop insurance.

Without a strong base price protection scheme, local farmers will never be able to compete with subsidised imported products by the superpower. Another potential impact is the risk of losing the genetic diversity of local seeds and our traditional agrarian knowledge, as farmers lose incentives to cultivate non-GMO soybeans which are actually healthier and have a richer flavour.

Soybeans in the Spin of Digital Geopolitics

Furthermore, we must recognise that the ease of access to soybean imports is a bargaining tool in a broader negotiation. As compensation for market access to agriculture and energy, Indonesia yields major concessions in the digital economy sector. Indonesia agrees to grant freedom of cross-border data flow without server localisation requirements and to ban new taxes on digital services. This is a very high price. Trading away data sovereignty and potential digital tax revenues from 280 million people to ensure a steady supply of tofu and tempeh raw materials.

Towards Just Solutions

To ensure ART 2026 does not become a death knell for food sovereignty, the government must take extraordinary steps. First, the Rp 40 trillion budget should be focused on strengthening the institutions of Farmer Groups and Cooperatives, so they can become the main absorbers of local harvests at advantageous prices. Cooperatives should be empowered to govern agricultural product management at the lower levels so they have bargaining power against large importers.

Second, cooperation with the US through the Council on Trade and Investment forum should be used not merely for shopping, but to demand the transfer of high-quality seed technology and agricultural mechanisation. Indonesia should not be a market forever; going forward it must be an equal partner in terms of agricultural technology innovation.

Third, integrating soybeans into strategic programmes such as the Free Nutritious Meals (MBG) should be prioritised to absorb local soybeans. Although the US has committed to supporting this programme, Indonesia