Indonesia is an agrarian country with more than seventy percent of her population living in rural areas. The population of Indonesia was 119.2 million in 1971 with a very high growth rate. This population is not evenly distributed, with 63.8 percent of the population concentrated in the Java and Bali Islands, which is only about seven percent of the total area of Indonesia. Java is recognized by its crowded rural region, high unemployment and therefore low standard of living for the rural area. Indonesian economy is still an agrarian economy, with more than fifty percent of national income from agriculture, with low productivity in traditional techniques of production and very small holding size. Rice holds a dominant position in both production and consumption in the economies of Indonesia and most Asian countries. Failure to increase rice production in the decade ahead will create a very serious problem or situation. Higher rice prices can lead to higher wages and higher prices for goods other than rice. This will place inflationary pressure on the economy. For a long time rice has been the main food in Indonesia. The most important agricultural policy objective is to fulfill the increasing demand of the very vast growing population.