The DHC-6 Twin Otter took off from the city of Timika for a short flight to Ilaga, a mountainous region in the remote eastern province of Papua.
The plane, carrying three crew members, a police officer and 1.7 tonnes of rice, went missing after it failed to land hours after taking off.
According to the agency, the location was difficult to reach because of the dangerous terrain.
Indonesia relies heavily on air transport to connect its thousands of islands but mountainous Papua is a particularly difficult area to reach.
The Southeast Asian archipelago has a poor aviation safety record and Papua is covered in mountainous terrain with frequent poor weather.
In June, a military helicopter with 12 people on board lost contact just minutes after it took off from a remote part of Papua. The remains of the aircraft have yet to be found.
