The Indonesian government plans to launch a program to develop approximately 3 million hectares of new rice fields starting from next year. This may increase domestic fertilizer demand in 2025. The first stage will involve developing approximately 1 million hectares of rice fields in Merauke, West Papua Province. According to a source from Indonesia’s state-owned fertilizer group Pupuk Indonesia, it is expected that this will create about 500,000 tons/year of local demand for urea and compound fertilizers. President Prabowo Subianto supports this plan to expand rice cultivation to strengthen Indonesia’s national food security. The expansion plan also includes increasing the number of harvests from once a year to about 2-3 times a year.
Pupuk Indonesia is building a granular urea factory with an annual output of 1 million tons in Fakfak Regency, West Papua Province. It is expected to be completed in 2028 and aims to meet the potential growth in demand caused by the expansion of rice planting area. The group will also build a granulated urea factory Pusri 3B with an annual output of 400,000 tons in Palembang to replace its old granulated urea device. The factory is expected to start production in 2025.
Pupuk Indonesia is required to continue to produce a large amount of subsidized fertilizers for the domestic industry. Pupuk Indonesia said that the government allocates about 25 trillion Indonesian rupiah (US$1.6 billion) every year to help farmers obtain affordable fertilizers. The government has increased fertilizer subsidies by about 14 trillion rupiah this year to benefit more farmers. Pupuk Indonesia will distribute about 9.55 million tons of subsidized fertilizers in 2024, of which about 4.63 million tons are composed of urea fertilizers, 4.42 million tons are compound fertilizers and 500,000 tons are organic fertilizers. The distribution of subsidized fertilizers in all regions has also increased. West Java will receive 1.21 million tons, Central Java 1.51 million tons, East Java 1.92 million tons, South Sulawesi 798,200 tons, and Lampung 803,700 tons.
Pupuk Indonesia’s current fertilizer production capacity exceeds 14.6 million tons/year. The increase in domestic demand for fertilizers such as urea and compound fertilizers may lead to a reduction in Indonesia’s exports in 2025, as more production will prioritize the domestic market.
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