The government’s move to reduce subsidized fertilizer prices by up to 20 percent amidst global pressure is considered a strategic policy that not only responds to the situation but also anticipates the potential for a broader food crisis. Minister of Agriculture Andi Amran Sulaiman revealed that President Prabowo Subianto’s decision was formulated long before geopolitical conflicts in West Asia triggered disruptions to the global fertilizer supply chain. This policy demonstrates an ability to anticipate global instability early on and emphasizes that national food policy is not made reactively, but rather based on long-term projections.
In Andi Amran Sulaiman’s view, this fertilizer price cut represents a form of state intervention to maintain the sustainability of national food production. Current global conditions show a significant spike in urea prices, even reaching US$720 per ton before declining to around US$585 per ton, according to Trading Economics data. This price increase was triggered by the conflict between Israel and the United States against Iran, which resulted in the closure of the Strait of Hormuz, a strategic distribution route. Furthermore, China’s decision to halt exports of key nitrogen fertilizers has further exacerbated the situation, leaving many countries facing the threat of a fertilizer crisis.
The impact of this global situation is particularly felt in Southeast Asian countries that still rely on fertilizer imports. In this context, the Indonesian government’s policies are highly relevant, as they can mitigate potential turmoil in the agricultural sector. The 20 percent discount on subsidized fertilizer, which has been in effect since 2025, with a total volume reaching 9.8 million tons, valued at IDR 46.87 trillion, is clear evidence of the government’s commitment to farmers. This policy not only reduces production costs but also provides farmers with certainty in planning their planting season.
In addition to lowering prices, the government is also implementing structural reforms by reducing 145 regulations related to fertilizer distribution. This step is considered a significant breakthrough, as the fertilizer distribution chain has often been considered too long and complicated, making it difficult for farmers to obtain fertilizer on time. With regulatory simplification, fertilizer distribution has become more effective and efficient. Fertilizer can now be received before planting, unlike the previous situation where fertilizer often arrived after the harvest.
Coordinating Minister for Food Affairs Zulkifli Hasan emphasized that the current availability of subsidized fertilizer is secure and even abundant. During his visit to Palembang, he stated that fertilizer stocks not only meet domestic needs but also allow for exports to Australia. He also noted an increase in fertilizer absorption from around 6 million tons per year to 9 million tons. This increase has directly impacted agricultural production by 8 percent, demonstrating the effectiveness of fertilizer policies in supporting farmer productivity.
Data from South Sumatra reinforces this picture. The allocation of subsidized fertilizer in 2026 reached 315,000 tons, with realization of 129,000 tons as of the end of April. Meanwhile, national fertilizer stocks stood at 1.1 million tons, with stocks in the South Sumatra region recorded at 8,100 tons. These figures demonstrate adequate logistical readiness to support farmers’ needs in the field and indicate that fertilizer distribution is running better than in previous years.
Furthermore, the change in Pupuk Indonesia’s system from a cost-plus to a mark-to-market scheme has also been a crucial factor in increasing efficiency. Zulkifli Hasan estimates that this change could generate savings of up to 20 percent and open up opportunities for the construction of seven new factories over the next five years. One of these factories is planned for South Sumatra, which is expected to strengthen national fertilizer production capacity while sustainably supporting domestic demand.
In a broader context, the achievements of Indonesia’s agricultural sector show significant progress. This change is a strong indicator that government policies in the agricultural sector are beginning to show tangible results. Furthermore, the price of unhusked rice has also increased from around IDR 3,500 to IDR 6,500 per kilogram, directly impacting farmers’ welfare.
Deputy Minister of Transmigration Viva Yoga Mauladi emphasized that the subsidized fertilizer distribution policy is implemented through a structured mechanism, starting with the Definitive Group Needs Plan compiled by the government and forwarded to the Ministry of Agriculture. Under this scheme, PT Pupuk Indonesia is responsible for providing and distributing fertilizer directly to farmers. This mechanism is considered a concrete implementation of President Prabowo Subianto’s directive to strengthen national sovereignty through three main pillars: food, water, and energy.
Therefore, the policy of reducing subsidized fertilizer prices is not merely a short-term measure, but rather part of a broader strategy to build a resilient and sustainable agricultural sector. Going forward, consistent policy implementation and strict oversight are key to ensuring its benefits are felt equally by farmers throughout Indonesia. Support for the agricultural sector must continue to be strengthened, as this sector is the main foundation for achieving food sovereignty and national economic resilience. Therefore, all parties are expected to play an active role in maintaining the sustainability of this program for a more advanced and prosperous future for Indonesian agriculture.
*) Observer of Food Policy and National Security