Minister admits anomaly in sales of fertilizer

JAKARTA (JP): The Ministry of Agriculture admitted yesterday that malfeasance occurred in the distribution of subsidized fertilizers earmarked for farmers.

Mohammad Jafar Hafsah, the secretary of the Mass Guidance Engineering Unit (Bimas) of the ministry, said much of the subsidized fertilizer ended up instead with plantation companies.

He said the probe was still underway into the amount of government losses caused by the irregularities.

"I can't give you the amount of the loss of the subsidy because we are still investigating it," Jafar said after a hearing with House of Representatives' Commission III for forestry and plantations, agriculture, transmigration and food affairs.

Bimas, established in 1967, is assigned to develop the food crops sector.

The government has subsidized three common fertilizers -- urea, ZA and superphospate 36 -- to assist farmers amid soaring prices of fertilizers and to boost the country's rice and food crop production. Subsidies for other types of fertilizers have been abolished gradually since 1990.

Subsidies are limited to food crops and horticulture farming and are exclusive for farmers.

Sources at the ministry said many major plantation firms bought the fertilizers at subsidized prices due to dubious distribution practices and collusion committed by officials of state fertilizer producer PT Pupuk Sriwijaya and village cooperatives.

Most of the misconduct occurred in fertilizer distribution at the regency level and in village cooperatives' warehouses.

A source said the deviation caused huge losses to the government.

Jafar said the government would order PT Pusri to distribute fertilizers directly to farmers to ensure transparent distribution and help farmers.

Under the new scheme, PT Pusri would distribute a particular amount of fertilizer according to orders from farmers.

"The move will be taken to cut the distribution chain and to end the unfair practices."

Jafar also said the government would need around Rp 393.9 billion (US$39.4 million) to lower the price of the Kalium Chloride (KCl) fertilizer to Rp 1,250 per kilogram.

He said that the country's consumption of KCl fertilizer reached 315,120 tons this year. The government's subsidy -- which had been abolished -- is 60 percent of KCl's current price of Rp 2,100 per kilogram.

Early this month, Minister of Agriculture Soleh Solahuddin announced the government would reintroduce the subsidy on the fertilizer to boost rice production.

Reduction of KCl use in rice farming resulted in a downward trend in the country's volume of production, Soleh said. He attributed the reduction to farmers no longer being able to afford the fertilizer. (gis)