Improving Agricultural Market Performance:
Creation and Development of Market Institutions
142
Classification Institution Description
State-Owned
Economic
Enterprise
PT Pupuk
Indonesia
PT Pupuk Indonesia is a state-owned economic enterprise operating
under the umbrella of the Ministry of State-Owned Enterprises.431 Its
key mandate concerns supervising the manufacturing of subsidized
fertilizers and pesticides. These fertilizers and pesticides function as
subsidized inputs for smallholders but are not provided to plantations
and industrial processors (e.g. other fertilizer producers). PT Pupuk
Indonesia has been formed as holding company in 2010 and became
active in 2012 under its official name PT Pupuk Indonesia (Persero)
while one of its subsidiaries already started fertilizer manufacturing
operations as early as 1959.
PT Pupuk Indonesia operates five fertilizer production subsidiaries,
which are located across Indonesia to ensure all geographies are
covered. Its locations include North Sumatra, South Sumatra, West
Java, East Java, and Kalimantan. Urea is the most important fertilizer
as PT Pupuk Indonesia is the only domestic producer, while it also
manufactures NPK Phonska, Petroganik Organic, Super Phosphate SP-
36, and Ammonium Sulphate ZA. These fertilizers are distributed
through dealers, which, in turn, sell it in small stores to registered
farmers. In addition, it operates five subsidiaries for power and
energy, food industry, logistics (e.g. shipping and trucking), and
trading activities.
R&D activities and extension services are also provide by PT Pupuk
Indonesia. The former concerns the development and testing of new
varieties of fertilizers while the latter concerns educating farmers on
how to use fertilizers (e.g. the right quantity) in collaboration with the
Ministry of Trade and field extension workers (PPLs).
PT Pupuk Indonesia is expected to fulfil the subsidization program for
the five kinds of fertilizers as set by the Government of Indonesia (i.e.
Ministry of Agriculture). It is expected to produce 9 million tonnes of
fertilizers per year, which are sold at below-market prices to
farmers.432 Farmers have to be registered with local agricultural
departments in order to qualify for subsidized fertilizers and
pesticides. Production of fertilizers exceeding the ceiling of 9 million
tonnes is sold commercially at the regular market price to large-scale
plantations and industrial processors at both domestic and
international markets.433
Licensed Public
Warehouse
Company
Commodity
Futures
Trading
Regulatory
Agency
The Indonesian Commodity Futures Trading Regulatory Agency
(COFTRA) operates under the supervision of the Ministry of Trade.434
COFTRA has three core mandates:435
 Implementing Indonesia’s WRS. COFTRA does so through
121 Government-owned warehouses and 44 private-owned
warehoused strategically located across the country.
COFTRA has implemented the WRS for a number of export
commodities, including coffee, rubber, cocoa, and pepper.
COFTRA also functions as assurance in case warehouse
managers are bankrupt or mismanage their warehouse
431 Interview conducted with PT Putuk Indonesia in Jakarta, July 12, 2017
432 Interview conducted with PT Putuk Indonesia in Jakarta, July 12, 2017
433 Ibid
434 International Pepper Community (2016), Indonesian COFTRA / BAPPEBTI to launch Mobile WRS, available at
Accessed June 2017].
435 Interview conducted with Ministry of Trade in Jakarta, July 14, 2017