The agricultural sector is of crucial importance for the economy of Indonesia. It accounts for 18 percent of the national gross domestic product, provides the staple foods and employs 70 percent of the population of 215 million people (or 44 percent of the work force). About 127 million (59 percent of the total population) people reside in the more fertile areas of the densely populated inner islands of Java, Madura, Bali and Lombok, which together account for only 8 percent of Indonesia's land area. The remaining 88 million inhabitants occupy the less fertile soils in the more sparsely populated outer islands, of which the larger are Sumatera, Kalimantan, Sulawesi and Papua. Similarly, the most intensive (food) cropping systems have been developed on the inner islands and the less intensive perennial crops on the outer islands.
Six fertilizer plants provide the country's fertilizer requirements. Five of them produce urea, one produces superphosphate (TSP/SP-36) and ammonium sulphate (AS). During the period from 1998 to 2002, 6.5 million tonnes urea were produced annually, mostly for domestic use. The raw materials for TSP production and the potassium chloride have to be imported.
Large increases in the use of mineral fertilizer during past decades resulted in a substantial increase in crop production, especially of lowland rice. They also improved the phosphorus and potassium status of large areas of lowland rice soils. However, fertilizer use has tended to decline in recent years and generally to become less balanced. This has resulted in a deterioration of the food security situation. The supplies of rice, maize, soybean and sugar have become critical food security issues and the importation of each of these commodities amounts to around 0.5 to 1.0 million tonnes annually.
Although fertilizer use has a long history and has made an important contribution to agricultural development, the last official fertilizer recommendations for the economically important crops date from 1984.
Despite the economic crisis, the production of rice has remained constant. Rice is the major staple food in Indonesia and its stable production contributes meaningfully to economic stability. However, the production of seven food and vegetable crops (upland rice, maize, soybean, sweet potato, potato, cabbage and mustard green) has fallen. Apparently, the decreases were due to a reduction in the harvested areas rather than in crop yields per unit area. On the other hand, the production of most fruit, plantation and industrial crops increased. The increases were mainly a result of larger harvested areas, but the yields per hectare of some fruit and industrial crops (banana, papaya, rambutan, oil-palm, sugar cane and clove) also increased considerably. The production of oil-palm and sugar cane has risen substantially due to significant increases in both their harvested areas and yields per hectare. However, the production of rubber has fallen due to a reduction in the area, presumably due largely to the conversion of substantial areas to oil-palm production.
The governmental regulations concerning the production, distribution and use of fertilizers have been modified frequently in recent years, in order to adjust to the prevailing conditions. The consistent objective has been to provide adequate and affordable supplies of fertilizers for farmers. The fertilizer subsidy was an important policy tool for this purpose but became too great a burden on the government's finances, especially during the economic crisis. Also, subsidized fertilizers frequently did not reach the intended beneficiaries. Subsidies on certain fertilizers have been reinstated but only for use on food crops and smallholder plantations. The dual pricing system is inefficient and leads to a distortion of the marketing systems. The provision of fertilizers of the appropriate type, available at the place and time required, with guaranteed quality and affordable prices, should be the objective.
Research has shown that integrated plant nutrient management (IPNM) systems based on soil and plant analyses, with the application of appropriate types of fertilizer integrated with the use of available organic materials, and with proper application techniques, are keys to increased agricultural productivity.
It is estimated that the national fertilizer manufacturers are able to satisfy the domestic fertilizer requirements until 2006, the time period of the assessment.
