Indonesia's state budget for fiscal year 2010 will show a significant reduction in fertilizer subsidies. The amount of fertilizer subsidy allocation for fiscal year 2010 is planned at Rp 11.3 trillion (US$113 million), a drop of 35.4 percent compared to fiscal year 2009, which amounts to a decrease of Rp 17.5 trillion.
The fertilizer subsidy reduction will naturally increase the market fertilizer price and the government is still considering how to set the highest retailer price (HET) for subsidized fertilizer higher than the current HET. The current HET for subsidized nitrogen-source fertilizer "urea" is Rp 1,200 and for subsidized phosphate-source fertilizer "superphos" is Rp 1,050.
If a policy to increase the HET for subsidized fertilizer is implemented, it may possibly threaten domestic food sufficiency because farmer's purchasing power is still too low, with no significant improvement (Subejo, The Jakarta Post, Nov. 16, 2009) and farmers may reduce the use of fertilizer on their farms. The government needs to take effective action to compensate for the reduction in the fertilizer subsidy.
Deputy Agriculture Minister, Bayu Krisnamurthi, during the National Meeting for Energy Self Sufficient Villages in Bandung (Nov. 23, 2009), indicated that government is still considering how to set the government's base buying price (HPP) for unhulled rice higher than the current HPP as compensation for the increase in the HET for subsidized fertilizer.
A similar statement was made by the newly appointed president director of the Indonesian state-owned logistics company Bulog, Soetarto Alimoeso, who proposed to increase the HPP for unhulled rice as logical compensation for the increase in the HET of subsidized fertilizer. (Nov. 23, 2009)..
Agricultural subsidies, including the fertilizer subsidy, have been an important factor determining conditions for rice production leading to production increases up to the level of self sufficiency in the past two years. As one of the important inputs in agricultural production, fertilizer should always be provided to farmers to keep the land fertile and help increase productivity.
The increase of the HPP for unhulled rice might be one of the compensatory mechanisms to deal with a reduction in the fertilizer subsidy but it is not the only measure that government could take. Government has to take more than one step in order to sustain current food security.
One of the alternative possibilities is that government should promote the use of organic fertilizer for production of crops. Organic fertilizer can be produced from local organic resources near farmlands and villages. Nutrient values of organic fertilizer can be substituted for certain combinations of current chemical fertilizers. The organic matter in organic fertilizer can make a major contribution to soil fertility.
In order to boost production of organic fertilizer in many local areas near farmland, the investment, tools and equipment for producing organic fertilizer would have to be provided to farmers groups or farmers' cooperatives.
It should also be possible to develop new support programs such as *fertilizer self sufficient villages' (in Indonesian terminology to be called as Desa Mandiri Pupuk) to support the development of organic agriculture.
In a broader scope, this can be widened to an *agricultural inputs self sufficient village' support program, (in Indonesian terminology this can be called a *Desa Mandiri Sarana Produksi Pertanian') adapting existing programs such as the *energy self sufficient villages' (in Indonesian terminology called as *Desa Mandiri Energi') and the *food self sufficient villages' (in Indonesian terminology called as *Desa Mandiri Pangan') focusing on using local resources for their development.
Current government support for farmers group or farmers cooperation such as social expenditure to buy tools/equipments for producing organic fertilizer (APPO = abbreviated from Indonesian terminology *Alat Pembuatan Pupuk Organik') and social expenditure to build factories for producing organic fertilizers (RPPO = abbreviated from Indonesian terminology *Rumah Pembuatan Pupuk Organik') should also be continuously improved to get the volume needed to support local farming activity.
Farmers groups or cooperatives need to have more training in managing the use of these technologies, so as to avoid poor use of resources, or that projects which are started fall into disuse.
Farmers field schools for integrated crops management (SLPTT) must help redirect farmers' efforts on a step-by-step basis to adopt organic planting technologies especially using local resources near to local farmland, encouraging local organic fertilizer production.
Research and development should also support the development of organic responsive technology including research in plant breeding and plant improvement up to the point of production of organic responsive seeds. Local farmers specializing in multiplication of seeds may also be pushed to help spread the use of organic responsive seeds to farmers.
Finally, the agriculture extension service in provinces or regencies is the front line of promoting agricultural technologies to farmers and should also be involved in promoting organic agriculture based on local resources.
The concepts on how to promote organic agriculture based on local resources might be modified to fit to specific local areas or districts. The important point is that the concepts should be acceptable to local agricultural society. Participatory rural appraisal (PRA) methods can be adopted to find acceptable concepts for the promotion and development of organic agriculture based on local resources.
The scheme that has been proposed here is intended as an alternative to government proposals to increase the HPP for unhulled rice to compensate for the reduction in the fertilizer subsidy. Promoting organic agriculture based on local resources may help mobilize many local agricultural input producers. It may also make local farmers or villagers groups more involved as producers of agricultural inputs that would probably be needed by themselves in their own agricultural activities.
The writer is currently works at the Food Crops Production Division at the Agriculture, Forestry and Estate Crops Service of Purwakarta District, West Java Province, Indonesia; a PhD graduate from the United Graduate School of Agricultural Science of the Tokyo University of Agriculture and Technology, Japan; and a member of the advisory board for the Indonesian Agricultural Sciences Association (IASA).
