Assessing the Impact of Reduced Subsidized Fertilizer Usage on Agricultural Productivity in Aceh Province, Indonesia

The agricultural sector is pivotal in Indonesia's economy, significantly contributing to the community's agricultural output. Fertilizer demand in this sector is a critical factor influencing agricultural issues, particularly concerning government policies on subsidized fertilizer distribution. This study aims to analyze the impact of restricting subsidized fertilizer usage on agricultural production in Aceh Province, focusing on how these restrictive policies affect farmers' economic aspects, productivity, and welfare. The research employs a quantitative analysis method utilizing secondary data from scientific publications, journals, books, financial reports from relevant institutions, and other measurable sources. The study uses panel data, combining time series and cross-sectional data, and applies a panel data regression model. The econometric model employs path analysis, with data processing conducted using EViews. Results indicate that limiting Urea fertilizer subsidies does not significantly affect agricultural production. Similarly, the restriction of NPP and Super Phosphate 36 (SP-36) fertilizer subsidies does not significantly impact overall agricultural production. The analysis concludes that Urea fertilizer subsidies have consistently supported agricultural production, although their significance decreases post-subsidy restrictions. NPP fertilizer subsidies, which previously had a significantly negative impact on agricultural production, lost their significance after the restrictions. SP-36 fertilizer subsidies do not show a significant impact in either period. These findings underscore the importance of adjusting fertilizer subsidy policies to optimize agricultural production in Aceh.