Study of Subsidized Fertilizer Distribution System in Karawang Regency, West Java-Indonesia

Abstract

Fertilizer is a crucial and strategic requirement for enhancing production, productivity, quality, and competitiveness of agricultural products across various sectors, including food crops, horticulture, smallholder plantations, livestock, and fisheries. Given its importance, it is deemed necessary to subsidize fertilizers. However, issues arise with fertilizer subsidies, such as the yearly increase in the budget allocated for these subsidies, which poses a significant burden on the government. Additionally, the low cost of urea (N) makes it susceptible to misuse in terms of excessive and unbalanced application, non-agricultural use, and leakage of subsidized fertilizer to the state. It is suggested that targeted cash transfers be implemented, and demand and supply market forces determine domestic fertilizer prices. This study aimed to identify the system of distribution, distribution channels, and aspects of equity and distribution of subsidized fertilizers in Karawang Regency. The methodology involves field research, data analysis, policy review, stakeholder consultation, and implementation monitoring. The aim is to ensure effective subsidy distribution and increased agricultural productivity. The study found that subsidized fertilizers provide several benefits to farmers, such as affordable prices, guaranteed availability even in remote areas, assured quality due to SNI standards, increased interest in sustainable farming, and contribution to national agricultural productivity improvements. However, eliminating fertilizer subsidies at the farm level could reduce productivity by up to 9.50%. The study recommends maintaining the budget for fertilizer subsidies in Karawang Regency with adjustments made to the distribution system based on the unique needs of each farmer in different locations. It also suggests assisting extension workers through local government regarding the suitability/accuracy of dosage and environmentally friendly fertilizer.