Government Regulation Number 7 of 2026 Reforms the Governance of Agricultural Cultivation Businesses by Strengthening Land Use and Business Licensing

Introduction

On February 9, 2026, the Government issued Government Regulation Number 7 of 2026 on the Implementing Regulation of Law Number 22 of 2019 on Sustainable Agricultural Cultivation Systems (“GR 7/2026”). GR 7/2026 restructures agricultural business governance, including affirming restrictions on land tenure by foreign investors, partnership opportunities with micro, small, and medium enterprises, and mandatory certification for production facilities such as seeds, fertilizers, pesticides, and tools and machinery. 

Furthermore, GR 7/2026 governs worker safety and technology utilization in agricultural business activities, while consolidating regulations previously set forth in various instruments into a single overarching regulation for agricultural business management. This regulation addresses land use, licensing compliance, and sustainable production practices.

Comparison

GR 7/2026 repeals six previous government regulations that governed different aspects of agricultural cultivation businesses, namely:

1. Government Regulation Number 7 of 1973 on the Supervision over the Distribution, Storage, and Use of Pesticides (“GR 7/1973”);

2. Government Regulation Number 6 of 1995 on Plant Protection (“GR 6/1995”);

3. Government Regulation Number 44 of 1995 on Plant Seeding (“GR 44/1995”);

4. Government Regulation Number 8 of 2001 on Plant Cultivation Fertilizers (“GR 8/2001”);

5. Government Regulation Number 81 of 2001 on Plant Cultivation Tools and Machinery (“GR 81/2001”); and

6. Government Regulation Number 18 of 2010 on Plant Cultivation Businesses (“GR 18/2010”).

The following is a comparison between GR 7/2026 and the previous provisions:

Key Provisions

Tenure Limits, Crop Changes, and Cultivation Land Abandonment

The Government governs land tenure and use to prevent abandonment by businesses. Article 5 limits land tenure by foreign investment companies to a maximum area of 10,000 hectares for a single food crop commodity, with an exception of up to 20,000 hectares in the Papua region. If businesses change the types of crops and livestock on the land, Article 6 requires approval from the Minister of Agriculture, whereas Article 20 prohibits any person or business entity holding rights over cultivation land from abandoning such land for more than 2 (two) years, subject to sanctions ranging from written warnings to business license revocation.

Land Clearing Standards and Customary Land Use

Companies must consider the environmental carrying capacity and the conditions of surrounding communities when clearing land. Article 14 and Article 15 stipulate that the utilization of agricultural land with a minimum area of 2 hectares must be conducted without burning, while maintaining soil structure, and preventing landslides. Furthermore, Article 17 and Article 140 require any business entity utilizing customary land of indigenous communities to obtain prior approval. Such approval is set forth in a written agreement through deliberation for consensus with indigenous community leaders and acknowledged by the local governor and regent/mayor.

Exploration of Plant Genetic Resources and Breeding

Companies conducting seed research and development are subject to regulations regarding the collection of genetic trait-carrying materials. Article 25 and Article 30 require any person or business entity searching, collecting, and utilizing plant genetic resources to possess a license from the Minister of Agriculture. The results of these activities must be reported, and a portion of the materials submitted to the government for storage in a genetic bank in accordance with Article 27. In addition, Article 34 stipulates that any person or business entity may conduct plant breeding activities to develop new superior varieties.

Quality Standardization, Licensing, and Plant Seed Distribution

Seed businesses are prohibited from distributing substandard seeds. Article 42 and Article 46 stipulate that all distributed food crop seeds must be superior seeds, meet the Indonesian National Standard, be certified, and be labeled. Article 37 requires companies importing seeds from abroad to obtain a license from the Minister of Agriculture. In addition, Article 57 stipulates that the export and import of food crop seeds are conducted in accordance with business licensing provisions. If a company imports seeds from abroad without a license for the first time, Article 39 governs sanctions ranging from withdrawal of seeds from distribution to business license revocation. Article 59 also stipulates that businesses distributing seeds without certification may be subject to sanctions in the form of business license revocation if they fail to withdraw the products from distribution.

Fertilizer Licensing, Production, Effectiveness Testing, and Quality Assurance

Fertilizer producers and distributors are responsible for the constituent materials and performance of their products. Article 64 and Article 66 require any business entity producing fertilizers to possess a business license, ensure the fertilizer formula passes a quality test by an accredited institution, and register its products with the ministry. For businesses conducting independent fertilizer performance tests, Article 68 stipulates that such companies must possess appropriate equipment, land, and qualified analysts in the fields of plant cultivation and fertilization, whereas Article 71 and Article 76 stipulate that distributed fertilizers must meet the Indonesian National Standard, be labeled in Indonesian, and producers must maintain quality during packaging through transportation processes. Article 74 governs sanctions for fertilizer quality violations ranging from product withdrawal to business license revocation.

Pesticide Licensing, Environmental Monitoring, and Employment Aspects

Pesticide distribution follows licensing and safety provisions. Article 86 and Article 91 stipulate that pesticides may only be distributed after obtaining a license from the Minister of Agriculture, being registered, meeting the Indonesian National Standard, and being labeled in Indonesian. Article 101 prohibits the sale of pesticides still under trial license status. In addition, Article 101 paragraph (4) requires businesses to implement occupational health and safety requirements for workers conducting spraying. In addition, Article 125 requires individuals or business entities using pesticides to control plant pest organisms to monitor, prevent, and mitigate negative impacts on the community and the environment.

Mandatory Certification, Machinery Dissemination, and Consumer Protection

Producers and distributors of agricultural equipment must ensure product performance and safety prior to use. Article 104 stipulates that all agricultural tools and machinery, whether domestically produced or imported, must be tested, certified, and meet the Indonesian National Standard. Article 105 stipulates that businesses procuring tools and machinery must apply consumer protection principles in accordance with statutory provisions. In addition, Article 109 governs administrative fine sanctions of Rp50,000,000.00 for companies distributing tools and machinery without providing dissemination to users regarding usage procedures, occupational safety, maintenance, and repair procedures.

Pest Control, Unmanned Aircraft Utilization, and Compensation Rights

Companies conduct control measures if plant pest organism attacks occur within their business areas. Article 116 requires businesses that own or control crops to conduct eradication if dangerous and widespread attacks occur. If the government determines eradication of company-owned crops that have not been impacted, Article 117 stipulates that the business entity may obtain compensation in the form of money, cultivation facilities, or other farming business facilitations. In addition, Article 123 governs the use of unmanned aircraft for pesticide spraying activities with technical provisions further governed in a Regulation of the Minister of Agriculture.

Harvest Absorption, Post-Harvest, and Business Diversification

The Government and businesses play roles in harvest absorption. Article 130 stipulates that marketed agricultural cultivation products must meet the Indonesian National Standard. Article 134 stipulates that State Owned Enterprises (SOEs) in the food sector and government agencies purchase surplus harvests of strategic agricultural commodities. In addition, Article 139 stipulates that businesses may diversify agricultural cultivation while continuing to prioritize their main business activities.

Licensing, Capital, Business Partnership, and Levy Provisions

Businesses carry out agricultural cultivation business activities in accordance with licensing, capital, and partnership provisions. Article 138 stipulates that agricultural cultivation business activities above a certain scale must possess a business license. In terms of funding, Article 135 stipulates that businesses may utilize funds from domestic or foreign investments. Article 136 stipulates that companies may establish cooperation with micro, small, and medium enterprises or village-owned businesses through written agreements containing at least:

1. Identity of the parties;

2. Scope;

3. Rights and obligations; and

4. Validity period of the cooperation agreement.

In addition, Article 141 governs the government's authority to collect levies from businesses utilizing agricultural cultivation facilities provided by the Central Government or Regional Governments.

Transitional Provisions

Article 142 states that all implementing regulations of the six previous Government Regulations remain valid as long as they do not conflict with the provisions in GR 7/2026. Businesses continue to follow the prevailing technical provisions, including regarding product registration and land licensing, until a new Ministerial Regulation is issued. Furthermore, companies must adjust their business activities to comply with the applicable enforcement mechanisms, including the imposition of administrative sanctions and license revocation provisions that took effect on the promulgation date of GR 7/2026.

Closing

GR 7/2026 governs agricultural cultivation businesses, including restrictions on land tenure by foreign investors of up to 10,000 hectares for a single commodity, with an exception in the Papua region, obligations to obtain approval for commodity changes, and prohibitions on land abandonment for more than two years subject to administrative sanctions, while governing land clearing without burning and the use of customary land based on the approval of indigenous communities. In addition, GR 7/2026 addresses licensing and utilization of plant genetic resources, breeding activities, mandatory certification and seed distribution, licensing, production, and testing of fertilizers, and licensing and use of pesticides accompanied by the application of occupational safety and environmental impact control, including the use of unmanned aircraft for spraying. Further provisions also encompass mandatory certification of agricultural tools and machinery, dissemination to users, plant pest organism control and compensation for crop eradication, harvest absorption by SOEs and the government, and business diversification while maintaining priority on main activities. On the other hand, businesses are obligated to fulfill licensing and capital provisions, may establish partnerships with micro, small, and medium enterprises through written agreements, and are subject to levies for utilizing facilities provided by the government, as well as administrative sanctions in the form of product withdrawals, fines, and business license revocation. During the transitional period, previous implementing regulations remain valid as long as they do not conflict with GR 7/2026, and businesses adjust their business activities to comply with the applicable provisions, including those regarding licensing, certification, and business cooperation.