GLOBAL FERTILIZER CRISIS: THE IMPACT ON INDONESIA

Abstract

The increase in fertilizer prices impacts production costs since contribution of fertilizer costs to the total production cost is very significant (10-30%). Some factors influencing the price hike include higher price of raw materials for fertilizer, Russia’s invasion to Ukraine, the covid-19 pandemic, climate change, natural disasters, and export restrictions by fertilizer producers. This paper examines the word fertilizer crisis concerning the phenomena imposed by prices, consumers, exporting and importing countries,  the condition of fertilizers in Indonesia, and their impact on Indonesia from the aspects of domestic fertilizers conditions and farmers’ socio-economic conditions as well as food security. As global fertilizer prices continue to increase, this effects domestic fertilizer prices. This condition disrupts farmers' availability and affordability of fertilizers, resulting in the withdrawal of consumption by farmers, which can reduce production and productivity. The increase in fertilizer prices impacts the government's budget allocation for fertilizer subsidies or can also decrease the volume of fertilizer subsidies. From the socio-economic aspect of farmers, the increase in fertilizer prices causes an increase in production costs and reduces production, thereby reducing farmers' income. The impact of decreased production can trigger food price abuse. Increases in food prices affect the purchasing power of farmers and the public and cause inflation death, which can disrupt economic growth. This can lead to increased poverty, decreased living standards, and social instability. The decline in the production of food commodities can disturb the stability of food security to cause a food crisis. The policy implication for the government is maintaining the existing fertilizer subsidy policies in the short or medium term till the price of fertilizer stabilize while building  an efficient and effective subsidy system. It is necessary to increase the efficiency of using fertilizers by farmers assisted  by extension agents and other parties.