Market Trends of Indonesia Agrochemicals Industry
Fertilizer is the Significant Segment by Type
Indonesia is a nation troubled by the significant slowing down of productivity gains of most food crops due to most farmers operating less than a one-half hectare. Adding to that, the agriculture segment is facing threats from many factors like changes in climatic conditions, reducing soil fertility, an increase in the number of plant diseases, and others resulting in low yields. To increase the product, the government of Indonesia is trying to improve the usage of agrochemicals including fertilizer. For instance, according to the Food and Agriculture Organization (FAO), in 2020, the average yield of vegetables was 104.67 thousand per hectare, slightly increasing to 109.02 thousand per hectare in 2022. Thus, to enhance productivity, fertilizers have become essential to protect the crop against adversities.
The government has successfully boosted the adoption of mechanized agricultural technology, invested in infrastructure, provided subsidies, and expanded the total area of farmland, all of which have led to a heightened use of agrochemicals. For instance, in 2024, the government allocated an additional Rp 14 trillion (USD 890 million) to fertilizer subsidies, aiming to benefit a larger number of farmers. Moreover, while the government seeks to bolster agricultural production for enhanced food self-sufficiency and improved yields, it still relies on imports of staple foods like rice and soybeans to meet the demands of its growing population. Hence, there is a greater need to use fertilizer to boost productivity as, currently, agriculture is still largely small-scale in the country.
Besides, cereals like 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. According to the FAO database, the production of rice has increased from 54.4 million metric tons in 2020 to 54.7 million metric tons in 2022. With rice being one of the major staple foods in the country and the goal to achieve self-sufficiency, production is anticipated to increase, which drives the demand for ammonium sulfate fertilizers during the forecast period.
Cereals Segment Dominates the Market
Cereals are a staple food and an important source of nutrients in the country. Cereal products are an important source of energy, carbohydrates, protein, and fiber, as well as containing a range of micronutrients such as vitamin E, some of the B vitamins, magnesium, and zinc.
These crops suffer seriously due to the infestation caused by various insect pests. Moreover, factors such as aberrant weather, changing cropping patterns, and global warming have led to the problems of emerging insect pests that are causing low yields for the crops. Hence, the use of insecticides and herbicides is high in the grains and cereals in the country which increases the production of cereals. According to the FAOSTAT, in 2021, Indonesia's cereals production was 71.4 million metric tons which increased by 78.3 million metric tons in 2022.
Moreover, to meet the growing demand from consumers, and the need for Indonesian farmers to enhance rice productivity and to meet food self-sufficiency, Indonesia's rice farming system has been pushed 3 times to plant rice in a year with the full use of crop protection chemicals. In the province of Java, brown planthopper is a major rice pest and vector of viruses among Javanese rice farms, leading to the higher use of crop protection chemicals in the province.
The main focus of the agricultural sector in Indonesia is to increase the productivity and food security in the country by increasing the production of cereals and this can be achieved by using agrochemicals that protect the crops from pests thereby increasing the yield.
