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The government will likely allow exports of urea fertilizer this year, with domestic producers generating far more than local farmers can use. There have been fears that the excess subsidized commodity may rot in warehouses, causing trillions of rupiah in losses.

Trade Minister Mari Elka Pangestu said last week that producers need only gain approval from the Agriculture Ministry after the trade and state enterprise ministries gave their go-ahead for shipping the surplus abroad.

Mari said the Agriculture Ministry was still reviewing whether there was enough subsidized fertilizer to supply growers until the end of the year. “We will only export after we secure domestic supply,” she said.

The urea fertilizer industry is dominated by state-owned enterprises, and production, sales and subsidized prices for farmers are tightly regulated.

 Due to its vital role in the nation’s food security, producers need state approval before exporting fertilizer.

According to the State Enterprise Ministry, producers’ warehouses are overflowing with more than one million tons of surplus fertilizer.

The biggest players, all of which are state owned, are PT Pupuk Sriwid­jaja, PT Petrokimia Gresik, PT Pupuk Kujang and PT Pupuk Kalimantan Timur.

Muhammad Said Didu, secretary of the State Enterprises Ministry, estimates the fertilizer is selling on the international market for $250 a ton, which means producers face losing as much as $250 million if they can’t move the surplus.

He said losses could reach $336 million if storage costs and quality degradation were taken into account.

Hidayat Nyakman, president director of Pupuk Kalimantan, said it had 600,000 tons in surplus and had received inquiries from Thailand and Vietnam.

He said an export license would ease the situation.

Didu said farmers had bought just 70 percent of the available subsidized fertilizer since plantations’ access was cut off.

Plantations had been illegally purchasing the fertilizer until a crackdown last year.

The subsidized fertilizer is only for small growers — those cultivating about two hectares or less — to encourage them to grow food crops.

Last year, only four million tons of the fertilizer were used by farmers, out of total output of 5.5 million tons.

According to the Food and Agriculture Organization, East Asia is the largest producer and consumer of fertilizer in the world.

Consumption is projected to grow 2.7 percent a year in the next two years, reaching 38.8 percent of global fertilizer consumption, with potential supply expected to reach 32 percent.