The government’s policy of reducing subsidized fertilizer prices by 20 percent is seen as a strategic step to protect farmers while maintaining the stability of national food production amid increasingly complex global pressures. This policy is considered not merely a short-term response, but part of an anticipatory strategy to address a potential global fertilizer crisis due to soaring international prices and supply chain disruptions. Minister of Agriculture Andi Amran Sulaiman views President Prabowo Subianto’s decision as a correct reading of the global situation, especially when global fertilizer prices have soared by more than 40 percent due to conflicts in the Middle East, the closure of the Strait of Hormuz, and China’s policy of halting nitrogen fertilizer exports. Under these circumstances, the government has taken the bold step of lowering domestic fertilizer prices to maintain farmers’ purchasing power and ensure production sustainability.
This policy covers urea, NPK, and ZA fertilizers, which are essential for farmers throughout Indonesia. In addition to price intervention, the government has also implemented major reforms in fertilizer governance by cutting 145 regulations through a Presidential Instruction. This measure aims to accelerate the distribution of fertilizer from producers to farmers, eliminating the bureaucratic hurdles that have historically been a major obstacle. Fertilizer access has also been expanded through an ID card-based system and the strengthening of kiosk networks down to the village level, allowing farmers to obtain fertilizer more easily and on time. The impact of this policy is considered significant, as it can reduce production costs by hundreds of thousands of rupiah per hectare per planting season, a significant saving for smallholder farmers.
More than 16 million farmers are said to have directly benefited from this policy, while also reducing the risk of fertilizer shortages in the field. To maintain balance downstream, the government has also set a Government Purchase Price for unhusked rice of IDR 6,500 per kilogram to ensure farmer incomes remain stable. Andi Amran Sulaiman considers this upstream-downstream approach to be the key difference in current agricultural policy, as it focuses not only on production but also on guaranteeing the selling price of the harvest. This approach is considered capable of creating economic stability for farmers amidst volatile global price pressures.
The success of this policy is also reflected in the increase in national rice reserves, which have exceeded 5 million tons, the highest in Indonesian history. This achievement is the result of consistent production increase programs, such as pumping, expanding planting areas, and strengthening the absorption of grain by the National Logistics Agency (Bulog). With a strong stockpile, Indonesia is considered better prepared to face a potential food crisis than other countries affected by global fertilizer price fluctuations. This situation demonstrates that government policies are not only short-term but also capable of strengthening the foundation of long-term national food security.
Meanwhile, Yustina Retno Widiati, Head of the Subsidized Fertilizer Allocation Working Team of the Fertilizer Directorate, Directorate General of Agricultural Infrastructure and Facilities, Ministry of Agriculture, highlighted that global geopolitical conflicts, particularly in the Middle East, have triggered price increases for fertilizer and raw materials due to logistical constraints following the closure of the Strait of Hormuz. Indonesia’s dependence on imported raw materials, such as phosphorus and potassium, presents a unique challenge that must be anticipated. Therefore, the government is taking mitigating measures by accelerating subsidy payments for raw material procurement so that purchases can be made before prices increase further. The government is also ensuring that the Highest Retail Price for subsidized fertilizer remains stable to protect farmers’ purchasing power.
Furthermore, the government is opening up the opportunity to increase the subsidy budget if demand increases and is encouraging the use of organic fertilizers as an alternative to reduce dependence on imported inorganic fertilizers. The use of locally sourced organic fertilizers is considered a strategic solution to address global uncertainty while strengthening the independence of the agricultural sector. In terms of governance, the allocation of subsidized fertilizers in 2026 will focus on the agriculture and fisheries sectors, with priority given to 10 main commodities, including rice, corn, soybeans, cassava, chilies, shallots, garlic, coffee, smallholder sugarcane, and cocoa.
From an industrial perspective, Junianto Simare Mare, Senior Vice President of Marketing at PT Pupuk Indonesia Persero, confirmed that national production capacity remains sufficient to meet domestic demand. With a urea production capacity of approximately 9.4 million tons per year, Indonesia is strategically positioned as one of the world’s largest producers. The urea production target of 7.9 million tons by 2026, with domestic demand of approximately 6.4 million tons, represents a surplus that can be utilized for export.
The policy of reducing subsidized fertilizer prices reflects the government’s integrated strategy through price intervention, governance reform, and strengthening national production to maintain food security amidst global uncertainty. Over the past year, the government has also succeeded in increasing national rice reserves, stabilizing food prices, accelerating the distribution of digital fertilizers, and expanding planting areas. Therefore, this policy is considered worthy of being maintained and continuously refined to protect farmer welfare.
*) Observer of People’s Economy and Agriculture