Governance Evaluation of Fertilizer Subsidies to Enhance Agricultural Productivity and Farmers’ Welfare

Abstract

Fertilizer subsidies in Indonesia have long served as a strategic instrument to reduce farmers’ production costs, enhance productivity, and strengthen national food security. However, field realities reveal persistent problems such as mistargeted distribution, maladministration, delays in delivery, and a heavy fiscal burden. The gap between policy objectives and implementation outcomes constitutes the main research gap. The urgency of this study is evident given that fertilizer subsidies absorb a significant portion of the national budget, yet their impact on productivity and farmers’ welfare remains limited, while social and environmental risks continue to rise. The purpose of this study is to evaluate the effectiveness of the fertilizer subsidy scheme, with a focus on governance aspects as the most pressing issues. The methodology used is mixed methods, encompassing literature review, secondary data analysis, focus group discussions (FGDs), as well as the fishbone diagram approach and USG theory to determine problem priorities, and the Dunn framework for formulating policy recommendations. The findings show that weak governance exacerbates the fiscal burden and reduces policy efficiency, particularly in relation to distribution, data accuracy, and monitoring. Policy recommendations are directed toward reforming the subsidy scheme into a targeted subsidy based on valid socio-economic data, cross-ministerial digital integration, and incentives for the use of organic fertilizers. This transformation is essential to ensure a fair, efficient, and sustainable fertilizer subsidy system.