Distribution of Subsidized Fertilizers Controlled by Syndicates

KOMPAS/ABDULLAH FIKRI ASHRI

Workers transport subsidized fertilizer at the Kujang Fertilizer Warehouse in Karawang Regency, West Java, Wednesday (4/10/2017).

A Kompas investigation has found that syndicates are illegally controlling the distribution of subsidized fertilizers in a number of regions. Fertilizer producers, distributors, official kiosks, and unscrupulous officers are believed to be involved in the illicit trade in subsidized fertilizers.

BANDUNG, KOMPAS — Sales of subsidized fertilizers in a number of regions in the country are under the control of syndicates that involve illegal distributors and traders who have reportedly received their fertilizer supply in bulk from authorized dealers and distributors. Farmers are also being forced to buy subsidized fertilizers above the government’s reference price.

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An investigation conducted by Kompas daily from December 2021 to January 2022 traced the illegal distribution of subsidized fertilizers. The results of the investigation indicated that a number of syndicates were involved in the illicit sales of subsidized fertilizers above the reference price as set by the government.

In fact, Trade Minister Regulation No. 15/2013 mandates that subsidized fertilizers are to be distributed through an official distributor appointed by state-owned fertilizer producer PT Pupuk Indonesia. Sales of subsidized fertilizers to farmers should be carried out by kiosks that have been designated as official distributors.

Every year, the government determines the allocation of subsidized fertilizers for each region.

Farmers who are eligible for subsidized fertilizers must be registered in the Definitive Plan for Group Needs (RDKK). The RDKK is prepared by farmers’ groups and agricultural extension workers (PPLs) and approved by the Agriculture Ministry. Every year, the government determines the allocation of subsidized fertilizers for each region. The fertilizers allocated to an area cannot be distributed to other areas.

However, in a number of regions, subsidized fertilizers are controlled by illegal traders who get their fertilizer supply through unofficial channels. From there, subsidized fertilizers are smuggled between regions. Farmers buy the fertilizers from these illegal traders at a price that is higher than the government’s reference price. Through this unofficial distribution channel, anyone can buy subsidized fertilizers, including plantation owners.

RIAN SEPTIANDI

Subsidized Urea fertilizer made by PT Pupuk Indonesia.

In Cibeureum village of Kertasari dstrict, Bandung regency, West Java, a fertilizer trader named Wido controlled hundreds of 50-kilogram sacks of subsidized fertilizers. According to data from PT Pupuk Indonesia, Wido is not registered as an official distributor or as an owner of a kiosk appointed to sell subsidized fertilizers.

"If you need fertilizer, you can buy it here. It's up to you where you deliver it. I’m in charge here. But you should show me your ID card," Wido told an undercover Kompas journalist disguised as a buyer on Friday (21/1/2022).

Wido has warehouses, a shop, a truck, and marketing staff. He is suspected of not only illegally selling subsidized fertilizers to Bandung and surrounding areas, but also to other regions like Indramayu.

In the footage, a police officer asks the driver about the origin of the fertilizer in his truck.

A PPL in Indramayu once reported the illegal distribution of subsidized fertilizers to the police. However, the police asked him not to follow up on the report. The PPL said that subsidized fertilizers in Indramayu were obtained from Wido. He gained information about Wido’s alleged involvement in illicit fertilizer sales from video footage of a conversation between a fertilizer truck driver and police. In the footage, a police officer asks the driver about the origin of the fertilizer in his truck. The driver reveals that the subsidized fertilizer belongs to Wido.

Meanwhile, residents in Lelea subdistrict, Indramayu, have witnessed subsidized fertilizers being unloaded at an unofficial fertilizer kiosk. The subsidized fertilizer was stored in the private house of a person initialed A who is a foreign national.

"This is illegal, not from our channel," said Syahrul, accounting manager at PT Mega Utama Sakti (MUS), the official distributor of subsidized fertilizers in Indramayu. PT MUS reported the incident to the Indramayu Police. "I also reported it to the local police station," he said.

However, the Indramayu Police said they had not received the report. "We have no information at all," said criminal investigation head Adj. Comr. Luthfi Olot Gigantara.

‘Joki’

In East Java, the distribution of illegal subsidized fertilizers also involves interdistrict syndicates. Subsidized fertilizers in Tuban were being distributed through small and large sales agents, known as joki (“jockeys”), who are suspected of receiving their fertilizer supply from Madura.

The subsidized fertilizers were being sold illicitly without fulfilling the redemption requirement as stipulated in Agriculture Minister Regulation No. 49/2020 on the allocation and 2021 reference price of subsidized fertilizers.

Kompas worked with local farmers in Trantang village of Kerek district, Tuban, to trace the activities of fertilizer joki. From the information farmers provided, the illegal subsidized fertilizers were being sold for between Rp 180,000 and Rp 200,000 per 50 kg sack. In fact, the reference prices for urea, nitrogen, phosphorus and potassium, locally known as NPK, are Rp 112,500 and Rp 120,000 per 50 kg sack, respectively. The subsidized fertilizers were being sold illicitly without fulfilling the redemption requirement as stipulated in Agriculture Minister Regulation No. 49/2020 on the allocation and 2021 reference price of subsidized fertilizers.

Neffi Mudholifati, who owns official fertilizer distributor PT KSU Jaya Bersama in Kerek subdistrict, acknowledged the illicit practice. “The perpetrators in the field are not people from official kiosks. I have reported them [to the police],” said Neffi.

Tuban Police chief Adj. Sr. Comr. Darman, did not respond when Kompas tried to confirm reports about the illegal sale of subsidized fertilizers in his jurisdiction. Darman only asked, "What's the problem, Mas?" via short text message when asked about supervision of subsidized fertilizer distribution, and did not respond to further questions.

According to information from local residents, the illicitly traded fertilizers were delivered to Tuban in a truck with license plate that began with M, the regional code for Madura. It was believed that the subsidized fertilizer came from Madura, and that it was also circulating in Nganjuk.

KOMPAS/DEFRI WERDIONO

A farmer in the Kepanjen West Ring Road area, Malang Regency, East Java, Thursday (18/3/2021), is cultivating rice plants that are still a few weeks old.

Last week, the Nganjuk Police unveiled a stockpile of 114 tons of subsidized fertilizer. L (38), a resident of Nganjuk, allegedly bought the fertilizer from H (23) in Kediri, a middleman who represents a large fertilizer trader initialed N (36) in Malang. The fertilizer warehouse is on the East Java-Central Java border.

"Because the location of the stockpile is in another [jurisdiction], we will work with the East Java Police or the National Police," said criminal investigation head Adj. Comr. I Gusti Agung Ananta of the Nganjuk Police.

PT Pupuk Indonesia vice president for marketing Gatoet Gembiro acknowledged that all parties in sales and distribution channels could be involved in the illegal distribution of subsidized fertilizers. (DVD/IRE/FAI/RAM/NDY)

(This article was translated by Hendarsyah Tarmizi).