Food Security & Agriculture

Policy Paper No. 43 -

Beyond Fertilizer and Seed Subsidies:

Rethinking Support to Incentivize Productivity and

Drive Competition in Agricultural Input Markets

Aditya Alta, Indra Setiawan & Azizah Nazzala Fauzi

Agriculture inputs are among the key factors behind agricultural productivity. Many problems, however, still plague policies on agricultural inputs for Indonesian farmers. One is the subsidized fertilizer program, which has turned out to cause a number of problems such as overconsumption of chemical fertilizers, frequent shortages, farmers prioritizing cost factors overland needs, limited choices, and of course the ever-swelling subsidy budget.

 

This paper makes a number of recommendations for increasing agricultural productivity and a fully transitioning to market mechanisms in the agricultural input sector, for more prosperous farmers and a more developed Indonesian agriculture.