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Economic crisis helps boost growth in Indonesia's organic fertilizer sector
The economic crisis appears to be boosting investment and interest in the organic fertilizer industry, despite chemical fertilizers having dominated the agriculture sector for decades
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The economic crisis appears to be boosting investment and interest in the organic fertilizer industry, despite chemical fertilizers having dominated the agriculture sector for decades.
The cost of farming with chemical fertilizer is on average twice as expensive as the use of organic products, while production levels remain the same, if not a fraction higher in the organic sector.
Recently, farmers in Purwakarta, West Java, said farming rice with non-organic fertilizers cost more than Rp 2 million per hectare but productions cost were halved with the use of an organic product.
They also claimed the selling price for organic produce ranged from Rp 7,000 to Rp 10,000 per kilogram, much higher than the non-organic Rp 4,900 to Rp 5,800 per kg.
Organic food is normally sold at a higher price at markets, providing farmers with extra profit.
But so far in Indonesia, the production of organic fertilizer has been very limited, defying the global trend.
Internationally, both farmers and the public have become increasingly aware of the danger chemical fertilizers pose to the environment, and the health benefits of consuming organic agricultural products.
According to data from the Indonesia Organic Alliance (IOA), organic agricultural products have increased on average by 20 percent per year in global markets.
In Asia, the demand for organic food comes mainly from Japan, South Korea, and Taiwan.
During recent discussions with the government, the House of Representatives called on the government to intensify its promotion of investment in the organic fertilizer sector.
"Rather than producing chemical fertilizers, or importing it from abroad, the government should produce organic fertilizers," Afrizal from the Commission VI told a recent hearing with PT Pupuk Sriwijaya, PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Kaltim, and PT Pupuk Iskandar Muda, the countries top five fertilizer producers.
In response, Minister of Industry Fahmi Idris said the government was increasing the production of organic fertilizer.
"We have a national program to push for greater production of organic fertilizers," he said. "They *organic fertilizers* will help preserve our environment."
The Minister of Agriculture, Anton Apriyantono, has also expressed support for increasing investment in the sector.
Based on data from the Central Statistics Agency (BPS) in 2000, Indonesia has a total 75.5 million hectares of available land for agriculture.
Of that land, 25.7 million hectares has been used as agricultural land (irrigated ricefields, farmlands and plantations) farmed with chemical fertilizers. Only around 1 percent is used for organic farming.
It is expected Indonesia will use around six million tons of chemical fertilizers this year, despite production levels from the five state-owned fertilizer firms only being capable of reaching a maximum 5.5 million tons.
Indonesian farmers have been encouraged to mix their use of chemical fertilizers with organic varieties.
In Merauke, Papua, for example, the local government has asked farmers to use organic fertilizers as a way of minimizing farming costs.
"It's not feasible for farmers to continue relying on chemical fertilizers, with costs set at Rp 7,000 per kg at the moment. With the price of raw materials increasing, overall production costs will go up as well.
"We will reduce the use of chemical fertilizers while increasing the use of organic products," Omah Laduani Ladamay, the head of Merauke regency's agricultural agency said.
To catch up with the increase in global demand for organic fertilizers, more and more investors are entering the industry.
Recently, Pupuk Sriwijaya set up partnerships with four investors to build four organic fertilizer plants, each with an annual production capacity of 3,000 tons.
The other four state-owned fertilizer companies have been seeking partnerships with private investors to produce organic fertilizer.
Previously, in Greater Jakarta, the Jakarta administration set up a partnership with the Bekasi administration, PT Trimitra Buanawahana Perkasa and PT Trihantoro Utama to process garbage from the city into organic fertilizer.
In Brebes, Central Java, the regency joined up with PT Multi Kapital Sejati Mandiri and Gapoktan (an association of farming groups).
"Many more investors are wanting to become partners with organic fertilizer producers, which is an interesting phenomenon for us," Dadang Heru Kadri, president director of Pupuk Sriwijaya (Pusri), said.
"We will continue increasing our production levels and will not limit the number of investor opportunities in our business," he said.
With a booming international market and a relatively low investment cost *between Rp 600 million and Rp 800 million can produce 3,000 tons annually*, the organic fertilizer business seems to be the way forward in the future.
