Risk Management Implementation for Safeguarding National Food Security and Enhancing Agricultural Productivity through Optimal Absorption of Fertilizer Subsidies in Indonesia

Abstract

Fertilizer subsidies remain a central policy instrument for supporting smallholder farmers and stabilizing food production in developing economies. In Indonesia, however, persistent challenges related to targeting accuracy, distribution inefficiencies, fiscal leakages, and environmental risks have limited the effectiveness of fertilizer subsidy programs. This study develops and applies a comprehensive risk management framework to evaluate how optimal absorption of fertilizer subsidies can safeguard national food security while enhancing agricultural productivity. Using a mixed-methods approach that integrates policy risk mapping, institutional analysis, and econometric assessment of productivity outcomes, this paper identifies key operational, financial, governance, and environmental risks embedded in Indonesia’s fertilizer subsidy system. The findings demonstrate that risk-informed subsidy management characterized by improved beneficiary targeting, digitalized distribution controls, adaptive monitoring, and coordinated institutional governance significantly strengthens yield performance, input-use efficiency, and resilience of national food security. This research contributes to the literature by bridging risk management theory with agricultural subsidy policy, offering actionable insights for policymakers seeking to balance productivity growth, fiscal sustainability, and long-term food system resilience.