As a traditional agricultural country, Indonesia's agricultural output value accounts for about 12% of GDP, and the agricultural workforce accounts for 45% of the total labor force of the country.

In recent years, due to the continuous improvement of the production capacity of the Indonesian fertilizer market, further promoting the development of agriculture, but still failed to change the fact that it relies on imports, many corporate navigators see the vast blue ocean market, this article will take a look at the development of Indonesia's fertilizer industry in the end.

01 Market status

Before we begin, let's take a quick look at the Indonesian agricultural market.

Indonesia is the world's second largest producer of rubber and palm oil, and third largest producer of coffee and cocoa, mainly growing food crops such as rice, corn, soybean and cassava, as well as cash crops such as rubber and oil palm, and the main agricultural areas include Java, Bali, Sulawesi, Sumatra and Kalimantan.

According to the data released by the Indonesian Ministry of Agriculture, the total agricultural output value of Indonesia in 2023 will reach about 453.75 trillion rupiah (about 2.9 billion US dollars), and the trading volume of agricultural products will reach 3.71 billion tons. Total agricultural output is expected to grow further in 2024.

Overall, the strong development momentum of the Indonesian agricultural market is emerging, and the improvement of agricultural technology, the popularization of agricultural machinery and the return of young labor are affecting this development. As one of Indonesia's pillar industries, the continuous improvement of the agricultural economy has accelerated the growth of demand for the fertilizer industry, and the vitality of the fertilizer industry continues to promote the development of agriculture. Regarding the development of Indonesia's fertilizer market, there are the following major development characteristics:

1.Dependence on imports

Although Indonesian agriculture is gradually moving towards the fast track of development, Indonesia's local agrochemical market is still unable to meet the needs of its accelerated development, especially fertilizer. At present, a large number of fertilizer products are dependent on imports from China, Russia and other places.

In 2023, Indonesia's fertilizer imports amounted to $2.03 billion, making it one of the world's largest fertilizer importers. Facing the growing development needs of the agricultural economy, Indonesia's local fertilizer industry is also in urgent need of upgrading and expanding.

2.Nitrogen fertilizer occupies the main market share.

Due to the large population of Indonesia, higher requirements are put forward for its agricultural output, and the market is increasingly paying attention to the safety of agricultural products, the Indonesian government encourages farmers to use fertilizer to improve the yield and quality of agricultural products.

From the perspective of fertilizer types, nitrogen fertilizer occupies the largest share of the Indonesian fertilizer market, of which urea transaction volume is the largest, accounting for 42.9% of the market share, followed by compound fertilizer, the market share of 26.7%.

3.Increasing production capacity

On the whole, Indonesia's chemical industry level is backward, the level of fertilizer industrialization is not high, and the production capacity is relatively low.

However, in recent years, the government has continuously introduced relevant active policies, increased the amount of fertilizer subsidies and subsidy budgets, and further stimulated demand, making Indonesia's local fertilizer production capacity continue to increase, and it is gradually reducing its dependence on product imports.

4.Large growth space

It is a fact that the demand for Indonesian fertilizer industry is large, and it is also true that local technology is backward and the level of industrialization is not high. Under the gradually increasing demand for agricultural development, the future growth space of Indonesian fertilizer industry is absolutely considerable.

Compared with Indonesia, China's technology is more skilled, and for Chinese enterprises, they can take advantage of technology and production to open up a larger market in Indonesia.

02 Key enterprise

From the perspective of market pattern, Indonesia's fertilizer industry is still dominated by local enterprises.

These include PT Pupuk Indonesia Holding Company and its subsidiaries PT Pupuk Kalimantan Timur, PT Pupuk Sriwidjaya Palembang, PT pupuk kujang and PT Pupuk Iskandar Muda et al., the competitive landscape is relatively concentrated. Let's take a look at the key enterprises worth paying attention to in the Indonesian fertilizer industry:

1.PT Pupuk Indonesia Holding Company

As a state-owned enterprise, it is the leader in the Indonesian fertilizer market and currently operates mainly through its subsidiaries across the country. The company not only has a significant presence in the domestic market, but also supports farmers' use of fertilizer through government subsidy programs and increases grain production.

2.Gross Production value of other important companies:

03 Sum up

In general, due to the weakness of Indonesia's overall chemical industry, the development of its fertilizer industry has been slow, and the Indonesian government is also interested in promoting the further development of the industry.

Because the demand for fertilizer for national development is clear and increasing year by year, only the further prosperity and development of the fertilizer industry can form a virtuous circle with agricultural development and bring about the positive flow of economic growth.

After the promotion of government policies, Indonesia's fertilizer industry has been further developed in recent years, as evidenced by the increase in production capacity, but this initiative has not significantly changed the current trend of dependence on imports...

Technological advantages, demand blue ocean, which need to open up new markets for Chinese enterprises, is undoubtedly a huge temptation.

In general, the rapid, healthy and green development of Indonesian agriculture is inseparable from agrochemical products, which require more chemical raw materials to produce, and the stimulation of the chemical industry chain will become more and more obvious, which is bound to drive the rapid development of Indonesia's chemical industry.

However, the current scale of pesticide and fertilizer production capacity in Indonesia cannot meet domestic demand, and it still needs to be supplemented by imports, so the market's high import dependence and internal competition structure also provide more opportunities and challenges for the industry.