Distribution system of fertilizer may change

Adianto P. Simamora, The Jakarta Post, Jakarta

The Ministry of Agriculture will propose to the Ministry of Industry and Trade that the current fertilizer distribution system be revised to help prevent future supply shortages, a senior official said.

Director General of Agriculture Facility Ato Suprapto told The Jakarta Post on Wednesday that under the existing distribution system, introduced by the Ministry of Industry and Trade in 1993, fertilizer distributors in Java could only maintain a one-week supply of fertilizer.

He explained that since the intensity of farming activities differed from area to area, certain places might sometimes suffer fertilizer shortages due to a surge in demand. This forced distributors to "import" it from other areas, which in turn pushed up the price of the product, particularly when transportation was becoming more expensive due to higher fuel prices.

Ato said that ideally, distributors should be allowed to maintain a one-month supply to better manage the supply of the commodity, but added that this would force distributors to spend more money on storage.

He said that given the high storage costs, his office would propose a two-week supply system.

He added that his office would also ask the Ministry of Finance to provide a subsidy scheme to help distributors cover storage costs.

"We will meet with the Ministry of Industry and Trade next week to discuss the revision of the distribution system," he said.

The comments follow a report in Kompas daily that there had been a shortage of fertilizer in some places in Java, which had forced up the price of the commodity.

But Ato said that domestic fertilizer output at 6.5 million tons was more than enough to cover the around 4.5 million ton demand.

He said that the problem was only in the distribution system.

Ato said that according to reports from his officials, there was no shortage of fertilizer in West Java's rice production centers -- including in the areas of Karawang, Subang and Purwakarta -- and that the price of the commodity remained at the normal level of about Rp 1,200 per kilogram.

He said that only in Cianjur was there a supply problem, with prices rising to between Rp 1,300 and Rp 1,400 per kg.