JAKARTA - Geopolitical turmoil in the Middle East region which resulted in the closure of the Strait of Hormuz by Iran also shook global supply chains, including fertilizer commodities.
This condition has prompted a spike in the price of urea fertilizer in the international market to double.
President Director of PT Pupuk Indonesia (Persero) Rahmad Pribadi revealed that around 30 percent of the world's fertilizer trade does cross the Strait of Hormuz with a volume of 4 million tons per month.
The amount consists of 1.5 million tons of urea, and 1.5 million tons of sulfur, as well as 1 million tons of other fertilizers including methanol.
"The conflict in the Strait of Hormuz not only closes the energy route, but also closes the fertilizer route," said Rahmad in a joint hearing with Commission XI of the Indonesian House of Representatives, Thursday, April 2.
The impact, continued Rahmad, global urea prices jumped from the range of 400 US dollars per ton to around 800 US dollars per ton.
Even though there has been a spike in prices in the international market, Rahmad ensured that this condition does not have a significant impact on Indonesia.
Furthermore, Rahmad explained, this condition is based on the sufficient national urea production capacity, which reaches 8.8 million tons.
"So even though there is a surge in urea prices, before the war it was 400 US dollars and now it has reached 800 US dollars or doubled, we can assure, God willing, that Indonesia is safe, because the urea is produced domestically," he said.
Not only that, Rahmad also said that Indonesia has the potential to become a mainstay of global food ecosystem stability in the midst of world market uncertainty.
"Indonesia can become a stabilizer or even a savior of the world's food ecosystem. If intuitive, usually Indonesia is vulnerable if there is world turmoil, especially regarding fertilizers, but again I emphasize, specifically regarding fertilizers we have no disruption, especially the adequacy of urea fertilizer which is indeed affected by Hormuz," he explained.
In addition, Rahmad said that for other types of fertilizers such as phosphates and potash, the impact felt was not on global production disruptions. However, it is in the form of a potential increase in logistics costs due to geopolitical conditions.
Rahmad also ensured that this condition would not encourage an increase in the Highest Retail Price (HET) of fertilizers in the country.
He said, the government had even lowered the HET fertilizer by 20 percent to support farmers' productivity.
"Insyaallah fertilizer will be safe, HET has dropped 20 percent, there is no plan to increase again, which means HET will remain. And the need for urea fertilizer for both subsidized and non-subsidized in Indonesia can we assure can be well managed," he said.
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