Indonesia Mitigates Impact of Global Fertiliser Crisis, Analysts Deem Prabowo's Policies On Target
The global fertiliser crisis, sparked by geopolitical conflicts in the Middle East, is beginning to affect various countries. Iran’s closure of the vital Strait of Hormuz route is said to disrupt worldwide fertiliser distribution and trigger a significant surge in prices.
Rector of Perbanas Institute, Prof. Hermanto Siregar, stated that around one-third of the global fertiliser supply typically passes through that route. Distribution disruptions directly impact food security, particularly in Africa and South Asia.
“Dependence on international distribution is highly vulnerable. What is happening now serves as a serious warning for many countries,” Hermanto said on Monday (4/5/2026).
The crisis’s impact is also felt in Europe. German fertiliser company SKW Piesteritz has ramped up production to meet market needs. However, high energy prices pose a major challenge. Around 80 per cent of fertiliser production relies on gas, whose prices have skyrocketed since the conflict erupted.
In contrast to this situation, Indonesia is deemed to have stronger buffers. The national fertiliser production capacity, supported by domestic industries, ensures supply continuity even under global market pressures.
Currently, the total production capacity of PT Pupuk Indonesia (Persero) reaches 14.65 million tonnes per year, comprising 9.36 million tonnes of urea, 4.52 million tonnes of NPK, 750,000 tonnes of ZA, and 20,000 tonnes of ZK per year. Meanwhile, domestic needs are below this figure, creating a surplus margin estimated at around 1.5 million tonnes in 2026.
“Amid this global pressure, President Prabowo has instead lowered subsidised fertiliser prices by 20 per cent. This policy is seen as a strategic response in maintaining national food production sustainability,” he said.
According to Hermanto, this precise step was taken at a crucial moment like the present. Since February 2026, conflicts in the Middle East region have led to the closure of the Strait of Hormuz, while China has halted exports of major nitrogen fertilisers.
“As a result, global urea prices have surged more than 40 per cent in a short time,” he said.
The government is not only lowering prices but also implementing structural reforms. Through a Presidential Instruction, 145 fertiliser regulations have been cut to accelerate distribution from the Ministry of Agriculture (Kementan) to PT Pupuk and directly to farmers.
“Fertiliser access is now expanded through KTP-based integration and strengthening of kiosk networks down to the village level. The government targets distribution to reach all food production sub-districts before the 2026 gadu planting season,” he said.
This policy is estimated to reduce farmers’ production costs by hundreds of thousands of rupiah per hectare per planting season. More than 16 million farmers are also said to benefit from easier fertiliser access and reduced potential shortages.
Not stopping at the upstream sector, the government is also strengthening protection in the downstream sector. The Government Purchase Price (HPP) for unmilled rice has been set at Rp 6,500 per kilogram to safeguard farmers’ profit margins amid global price fluctuations.
This upstream-downstream approach distinguishes Indonesia’s policies from other countries in the region. Several Southeast Asian nations are now facing serious pressures due to reliance on fertiliser imports.
“Vietnam, for instance, is heavily dependent on fertiliser supplies from China, while the Philippines imports around 75 per cent of its needs from that country. Thailand is also affected, with some farmers delaying planting seasons due to high production costs,” he said.
Amid this situation, Indonesia is deemed to be in a stronger position. In addition to policy support, government rice reserves that have exceeded 5 million tonnes serve as an important buffer in maintaining national food stability.
“These reserves are said to be the highest in history and result from consistent production policies, including pompanisasi programmes, expansion of planting areas, and strengthening of unmilled rice absorption by Perum Bulog,” he said.
With a combination of subsidy policies, deregulation, and reserve strengthening, Indonesia is deemed capable of maintaining food security amid the global fertiliser crisis threats and world economic uncertainties. “So I see the policies of the President implemented by the Minister of Agriculture as very appropriate,” he said.
Along with this situation, Indonesia’s position in the global supply chain is beginning to shift. Several countries are reportedly exploring fertiliser supplies from Indonesia to secure their needs amid the crisis. India is said to have submitted a request to meet its planting season needs, while Australia has also opened supply cooperation as a precautionary step against global distribution disruptions.