The Political Economy of Fertilizer Scarcity: Social and Economic Implications for Smallholder Agriculture in Indonesia
The Political Economy of Fertiliser Scarcity: Social and Economic Implications for Smallholder Agriculture in Indonesia — Governance Challenges, Rural Livelihoods, and Policy Reform
Keywords:
Fertiliser Subsidy; Smallholder Farmers; Political Economy; Food Security; IndonesiaAbstract
The scarcity of subsidised fertiliser has emerged as a structural political economy problem that undermines agricultural productivity in Indonesia, particularly for smallholder farmers who rely on timely and affordable access to inputs. Although fertiliser subsidies remain central to government food security strategies, their implementation is constrained by political bargaining, fiscal limitations, and exposure to global market volatility. Empirical findings at the national level, in East Java Province, and in Bojonegoro District reveal persistent challenges in the distribution system, including inaccurate e-RDKK data, delivery delays, supply shortages, corruption, and leakages into black markets. These inefficiencies have generated significant economic impacts, such as rising production costs, declining yields, shrinking profit margins, and food price inflation that undermines household purchasing power. The social impacts are equally severe, encompassing heightened food insecurity, growing tensions within farming communities, declining trust in local leadership, and the erosion of rural solidarity and gotong royong. The novelty of this study lies in its simultaneous examination of both the economic and social dimensions of fertiliser scarcity, providing a broader perspective on long-term sustainability challenges. Addressing these issues requires comprehensive reforms to Indonesia’s fertiliser subsidy policy. Priority actions include strengthening governance through real-time digital monitoring, independent audits, and effective grievance mechanisms; ensuring regular updates to the e-RDKK database to reduce mistargeting and elite capture; and enhancing institutional capacity through cross-ministerial coordination and the establishment of a national fertiliser buffer stock. Furthermore, diversification of inputs through organic fertilisers, compost, and waste-based innovations should be scaled up with research, incentives, and extension services, while policies must also account for regional disparities to ensure equitable access for vulnerable smallholders. Taken together, these measures can transform fertiliser subsidies from short-term buffers into strategic instruments that promote agricultural productivity, economic stability, food security, and rural social cohesion in Indonesia.
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