Pusri blamed for fertilizer scarcity

JAKARTA (JP): Minister of Agriculture Soleh Solahuddin has laid the blame for a nationwide scarcity of fertilizers on state fertilizer company PT Pupuk Sriwijaya (Pusri).

Speaking on Friday, Soleh said that PT Pusri had failed to ensure that a sufficient supply of urea, ZA, superphospate 36 (SP36) and kalium chloride (KCl) fertilizers reached the nation's farmers.

"The company promised the government it would supply farmers with a sufficient amount of fertilizers during the planting season from October to November," Soleh told a news conference.

"Pusri insists that it has produced and distributed the amount targeted by the government, but in fact farmers in the countryside are crying out for help," he said.

He noted that Pusri had only distributed 60,000 tons of subsidized urea to farmers, far below the 160,000 tons the government has paid to subsidize this year.

Soleh attributed the scarcity to a dubious distribution system and to Pusri officials colluding with village cooperatives to profit from the wide disparity between the subsidized price and the market price by selling large amounts of subsidized fertilizer to major plantation firms.

The subsidized price of urea fertilizer was Rp 450 (6 U.S. cents) per kilogram while the market price was Rp 1,250 per kg.

He explained that the collusion had resulted in a scarcity of fertilizers among farmers whom the subsidies were intended to help.

"This unscrupulous practice has forced the government to lift the huge subsidy on fertilizers and leave the market to determine the price," he said.

Pusri, which is the country's largest fertilizer producer, is responsible for the distribution of fertilizers produced by other state fertilizer companies, including PT Petrokimia Gresik, PT Pupuk Kaltim and PT Pupuk Kujang. It also previously held a monopoly on the import of subsidized fertilizers.

The financial difficulties currently facing Pusri prompted the government to lift subsidies on fertilizers and remove all restrictions to their trade on Dec. 1. In theory, all private companies are now allowed to import fertilizers and distribute them to farmers through cooperatives and retailers at the market price.

To compensate for the removal of the subsidies, the government has raised the producer floor price of unhusked rice to between Rp 1,400 and Rp 1,500 per kilogram from Rp 1,000 per kilogram, Soleh added.

The government has also raised the minimum value of subsidized farming loans to Rp 2 million (US$266.7 million) per hectare from Rp 1.49 million, and has lowered interest rates attached to the loans from 14 percent a year to 10.5 percent a year to encourage farmers to take advantage of the scheme.

Soleh said the changes were intended to make fertilizers more readily available to farmers after a period of scarcity.

"We are currently cooperating with the Ministry of Finance to find ways to help importers bring fertilizers into the country."

Soleh said the country was unlikely to reach its rice production target of 52 million tons of unhusked rice next year as a direct result of the scarcity of fertilizers.

"But it will still be higher that this year's production," he added. (gis)