Indonesia Fertilizer - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts 2019 - 2029

Indonesia Fertilizer - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts 2019 - 2029

The Indonesia Fertilizer Market size is estimated at USD 4.72 billion in 2024, and is expected to reach USD 5.91 billion by 2029, growing at a CAGR of 4.60% during the forecast period (2024-2029).

The COVID-19 pandemic had the most critical impact on the fertilizer industry in the country. Production went down by 20-30%, and prices increased due to supply constraints. The industry also suffered from severe labor shortages due to repeated lockdowns that affected the production, export, and import business. A large part of the industry was shut down from the end of January 2020, limiting both demand and supply of all relevant inputs, as transport and storage constraints presented mounting challenges across the sector.

Over the long term, Indonesian fertilizer production has been anticipated to expand continuously. In the case of basic and widely available fertilizers such as urea-based fertilizers, production capacities have recently increased significantly in the country. The domestic increase in demand in this regard comes primarily from the plantation industry. Indonesia is the world's third-largest exporter of rubber and cocoa. An increase in export-oriented cultivation of plantation crops led to an increased demand for fertilizers in the commercial crops segment. Indonesia is one of the world's largest importers of fertilizers.

Further, the Ministry of Agriculture of Indonesia (MOA) regulates and monitors standards that affect farmer productivity, such as possessing and using fake fertilizer, bad seed, and dangerous pesticides off the market, in order to eliminate the root cause of decreased land productivity.

The nitrogenous segment is considered the largest segment of the market and accounts for a major share among other segments. Urea is the most-traded nitrogenous fertilizer. There is high demand for exports of urea fertilizers from several countries, such as Vietnam, Singapore, Thailand, and the Philippines, which augments the demand for the production of urea fertilizers in the country.

Therefore, with the increasing food demand and growing population, the country requires much effort to improve food crop productivity. This can be achieved by rising cropping intensity and providing the appropriate fertilizers. Therefore, these factors are anticipated to drive the market and aid in registering positive growth during the forecast period.

Indonesia Fertilizer Market Trends

Increased Arable Land

Indonesia's fertilizer market is observed to have positive growth for an increase in arable land in the country. According to FAO, the arable land in Indonesia has been increasing over the years. In 2017, the total arable land in the country accounted for 52 million hectares, which increased to 57.0 million hectares in 2019. The positive correlation between arable land and fertilizer consumption makes the Indonesian fertilizer market fluctuate according to arable land. Hence, the increase in arable land drives the growth of the fertilizer market.

Improved agricultural development in recent years, along with commercialization, industrialization, and urbanization, has led to significant changes in agricultural production systems. The adoption of modern farming methods has encouraged the use of fertilizers across various agricultural farms in Indonesia. The growing importance of improving crop productivity along with preserving environmental safety has boosted the demand for biofertilizers to a greater extent.

The strongest forces driving the demand for fertilizers include the need for crop intensification (to increase yields per acre) with decreased pressure on the environment to close the yield gap. Therefore, the rise in arable land and the increased demand for quality fertilizers to enhance the domestic production of crops are anticipated to drive the market during the forecast period.

Support from the Government through Subsidies

Nitrogenous fertilizer application is observed to be high in the country. According to the Fertilizer Producer Association, among all the fertilizers, urea contributes to nearly 56% of the country's fertilizer demand. Improved agricultural development in recent years, along with commercialization, industrialization, and urbanization, has led to significant changes in agricultural production systems.

The most dominant fertilizer produced and used in the country is urea, followed by TSP (triple superphosphate), AS (ammonium sulfate), and KCI (potassium chloride). Farmers in Indonesia generally use urea fertilizers for food crops, estate (perennial), and horticulture crops. Urea is the most-traded nitrogenous fertilizer. There is high demand for exports of urea fertilizers from several countries, such as Vietnam, Singapore, Thailand, and the Philippines, which augments the demand for the production of urea fertilizers in the country.

Ammonium sulfate is another widely used fertilizer in the country. Rice fertilizers frequently use ammonium sulfate in flooded fields because nitrogen is present in the ammonium form, and it is the preferred option over using nitrate fertilizers to avoid denitrification losses. This signifies that there is a growing demand for fertilizers in the country, resulting in the growth of the market during the study period.

Indonesia Fertilizer Industry Overview

The Indonesia fertilizer market is highly consolidated, with key players holding a major share in the market. The state-owned enterprises such as PT Pupuk Kalimantan Timur, PT. Pupuk Sriwidjaya Palembang, PT Petrokimia Gresik, PT Pupuk Kujang, Wilmar International Limited, and PT Pupuk Iskandar Muda, which are subsidiaries of PT Pupuk Indonesia Holding Company, dominates the market. Major players in the market are making partnerships their most adopted strategy to consolidate their positions in the market.

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