Revision of Ministerial Decree Regulates Increase in Subsidized Fertilizer Margin Fees

The Ministry of Agriculture (“Kementan”) is finalizing an increase in the margins for fertilizer distributors and retailers, which will be enforced in October 2025.

Hendry Y. Rahman, Head of Fertilizer Supervision at the Directorate-General (“Directorate-General”) of Agricultural Infrastructure and Facilities (“PSP”) of Kementan, explained that the process of determining the new margin is currently in the final stages of drafting regulations through a Decree of the Minister of Agriculture (“Kepmentan”).

“The revision process is being finalized and will later be regulated as a Kepmentan as a derivative of the existing Regulation of the Minister of Agriculture,” Hendry told Hukumonline.

There are three margin increase options being reviewed by Kementan. The first alternative calculates the margin from the existing conditions plus labor costs, warehouse maintenance, transportation, and warehouse rent, then multiplied by an assumed profit of 10 percent.

The second alternative includes warehouse maintenance, transportation, and warehouse rental costs with a 10 percent profit assumption through distribution efficiency. The third alternative uses the existing margin formula plus a 30 percent increase in operational costs, then multiplied by an assumed profit of 10 percent.