@article{Hedley:172153,
      recid = {172153},
      author = {Hedley, Douglas D. and Tabor, Steven R.},
      title = {Fertilizer in Indonesian Agriculture: the Subsidy Issue},
      journal = {Agricultural Economics: The Journal of the International  Association of Agricultural Economists},
      address = {1989-03},
      number = {968-2016-75165},
      pages = {20},
      year = {1989},
      abstract = {Indonesia began subsidizing fertilizer in 1971 to  encourage its use as a complement to the new,
high-yielding  rice varieties that were becoming available. While  providing considerable assistance
to encouraging farmers to  utilize these new HYV s and the associated package of  inputs, the subsidy
for fertilizer has attracted  considerable attention in the light of the increasing  budget limitations
in Indonesia. The high levels of  fertilizer and HYV use, the rapidly changing  elasticities
and cross elasticities among the major food  crops, and the growing intersectoral linkages in  the
Indonesian economy suggest reasons for re-assessment of  the subsidy for fertilizer. The operation
of the subsidy is  explained, followed by a discussion of changes in the  relevant elasticities for
demand and supply of commodities  and fertilizer. A static welfare analysis of the fertilizer  subsidy
is presented, showing that the economic subsidy is  worth only 42% of the financial subsidy and
that farmers  are receiving only 7% of the financial subsidy. A  simulation of the effects on the food
crop sector of  removing the subsidy follows the welfare analysis. The  paper concludes with an
exploration of the policy issues  stemming from the results.},
      url = {http://ageconsearch.umn.edu/record/172153},
      doi = {https://doi.org/10.22004/ag.econ.172153},
}