Writers are auditor from BPK Directorate General of Audit Planning, Evaluation and Policy:
Ms. Solly Syahrial is an auditor with 15 years of experience. Her audit experience include forestry audit and state owned company audit, including fertilizer subsidy audit.
Ms. Sasha Gatria Andani is an auditor with 12 years of experience. She has auditing experience, including state owned company audit and fertilizer subsidy audit.
As stated in Law Number 15 of 2006 concerning on Audit Board, BPK has a duty to audit state financial management through financial, performance, and special purposes audits. In addition, Referring to United Nations General Assembly Resolution on December 2022, and INTOSAI Principles 12, BPK, as a member of INTOSAI recognized that public sector auditing has an essential role in promoting the efficiency, accountability, effectiveness, and transparency of public administration while supporting the global response to the COVID-19 crisis and Sustainable Development Goals (SDGs) implementation.
To support SDGs implementation, BPK adopted and carried out an active role through four INTOSAI approaches which are based on INCOSAI XXII. The first approach is auditing the SDGs preparedness. BPK has audited the Government of Indonesia's SDGs preparedness in 2017. The second is auditing SDGs implementation. BPK conducts performance audit on SDGs implementation which is reported in BPK's semester reports. The third is promoting the achievement of the SDGs target 16 and 17 especially in relation to effective, transparent, and accountable institution. BPK continues to encourage the achievement of effective, transparent and accountable institutions, such as auditing government financial reports. And the last is becoming a model organization in terms of transparency and accountability.
Through the INTOSAI four-approaches, BPK has continued its activities to follow up and review through dedicated SDGs audits and embedded SDGs audits that are attached to regular audits. Dedicated audit is an audit on the process and achievement of SDGs targets that are listed within national targets and monitored specifically, while an embedded audit is an audit that is attached to audit that aims to assess programs, activities, and entities that have one or more SDGs targets that are linked to the main program. One of the embedded SDGs audits that is executed every year by BPK is the subsidy audit linked to Goal 2, which is Zero Hunger. Goal 2 of the SDGs aims to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture. The goal has two targets: (2.1) end hunger and ensure access to food for all, and (2.2) eliminate all forms of malnutrition. These targets are the results of sustainable food systems development, improving community nutrition and health services, and community welfare.
Food Security Program to Achieve SDG 2 “Zero Hunger”The priority of the SDGs in the Indonesian development agenda in the 2020-2024 National Medium-Term Development Plan (RPJMN) is reflected in some of the indicators and targets used, such as the prevalence of food insufficiency, population prevalence with moderate or severe food deprivation, value added per labor force in agriculture, and the global food sustainability index. The government has also set targets for rice availability (national production and rice stocks in government and non-government) in 2024 of 46.8 million tons, corn production of 35.3 million tons, and bubble production of 25.5 million tons, as well as the use of certified seeds of 80%. Thus, the big picture of the direction of agricultural policy under RPJMN is to undertake a transformation of agriculture by increasing the productivity of the soil to support food resilience, strengthening added value, and agricultural competitiveness to support the economic growth and well-being of the farmers' families, along with taking into account the sustainability of the agricultural resources. One strategy to maintain the sustainability of agricultural resources as well as the availability of farms and agricultural facilities is to improve the accessibility and monitoring of fertilizer circulation.
Based on indications of funding needs for RPJMN, of the overall Priority Program for improving food availability, access, and quality of consumption, 71.41% was funded for the Priority Project for enhancing grain production. In the Priority Project for increasing grain output, fertilizer subsidies became the most significant project, amounting to 84.80% or 142.5 trillion Rupiah. This indicates that in terms of food supply, government policy is still focused on increasing grain output, and fertilizer subsidy becomes the main instrument in achieving the food production target especially grain. This program inline with Chirwa and Dorward (2013) argument that access to fertilizers can improve the health of the recipient through increased food security and nutrition from increased production, increased income, and increased capacity to finance health care. In addition, the wider impact is on consumer well-being through lower food prices, increased demand for labor, higher wages and incomes, as well as poverty reduction, and ultimately affecting overall economic growth gains measured through GDP (Wiggins dan Brooks, 2012; Hemming et.al, 2018).
In Indonesia, subsidized fertilizer has been identified as a strategic commodity, and its circulation is monitored. The government gives subsidies to farmers/groups of farmers through State-Owned Companies that produce fertilizer. Subsidized fertilizers are allocated only to eligible parties, which are:
a. farmers who undertake farming activities in the subsectors of food crops, plantations, horticulture, and/or farms with a maximum area of 2 ha per growing season;
b. farmers that undertook farming operations in subsector of food crops on New Growth Area Expansion (PATB); and
c. fish farming with the largest area of farming activity of 1 ha each growing season.
Fertilizer distribution to farmers is carried out by the authorized retailer designated in the territory of their work based on Definitive Plan of Group Requirements of Farmers (RDKK) limited by the allocation of subsidized fertilizer in their territory, with the Highest Retail Price (HET) as set out in the Regulations of the Minister of Agriculture. The method of calculation of the fertilizer subsidy established is the gap between the Fertilizer Sales Price (HPP) of each producer and HET.
RDKK is a plan for subsidized fertilizer that is needed in one year prepared based on farmer or group of farmers deliberations. In the end, the RDKK becomes a tool for ordering subsidized fertilizers to farmer or group of farmer that meet the criteria. RDKK is set manually or through the RDKK information system. Developing RDKK involves multistakeholders with below process:
a. the regency/city government and provincial government as an inputter
The process of preparing the RDKK starts from the regency/city government and provincial government with the help of a technical implementation team involving extension workers, technical officers, heads of official branches, and local village/lurah heads. The district or city government submits the proposed plan for fertilizer subsidy recipients (according to the criteria set) to the provincial government.
b. the provincial government as a compiler
The provincial government compiles the RDKK proposal based on data from district or city governments within its jurisdiction. Then the data is submitted to the Ministry of Agriculture after being validated based on proposed recipient criteria.
c. The Ministry of Agriculture
The Ministry of Agriculture reviewed the RDKK and issued the final data based on proposals that meet the criteria.
Initially, all processes for preparing and proposing RDKK were carried out manually with no assistance from an information system. In 2018, BPK recommended the Ministry of Agriculture establish an information system that integrates farmer data with location and land area information. The purpose of the information system transition is to improve the accuracy of subsidized fertilizer allocation and distribution. Furthermore, BPK proposed that the Ministry of Agriculture incorporate all data under their coordination into the system, taking into account all stakeholders engaged, in order to support the information system's deployment. In response to the audit report, the Ministry of Agriculture has begun to use information systems for subsidized fertilizer planning and budgeting in 2019, which are called e-RDKK.
In order to achieve more accountable and comprehensive fertilizer subsidy planning, BPK has pushed the improvement of this new information system, which involves many stakeholders, as part of encouraging SDGs implementation on Goal 2. The use of information technology during the planning stage is projected to improve planning accuracy as well as the distribution of subsidized fertilizers, resulting in enhanced farm productivity and accessibility of agricultural products.
References:BPK. (2018). Audit report on Management of Fertilizer Subsidy to support Financial Audit Year 2018 on Ministry of Agriculture.
BPK. (2019). Audit report on Management of Fertilizer Subsidy to support Financial Audit Year 2019 on Ministry of Agriculture.
BPK. (2020). Audit report on Management of Fertilizer Subsidy to support Financial Audit Year 2020 on Ministry of Agriculture.
Chirwa, E. W., & Dorward, A. (2013). Agricultural input subsidies: The recent Malawi experience (First edition). Oxford University Press.
Hemming, D. J., Chirwa, E. W., Dorward, A., Ruffhead, H. J., Hill, R., Osborn, J., Langer, L., Harman, L., Asaoka, H., Coffey, C., & Phillips, D. (2018). Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low‐ and lower‐middle‐income countries: A systematic review. Campbell Systematic Reviews, 14(1), 1–153. https://doi.org/10.4073/csr.2018.4.
Wiggins, S. and J. Brooks (2012), "The Use of Input Subsidies in Low-Income Countries", in Brooks, J. (ed.), Agricultural Policies for Poverty Reduction, OECD Publishing, Paris, https://doi.org/10.1787/9789264112902-9-en.