In 2026, a policy introduced by the Indonesian government put local palm oil farmers in trouble.
The government requires that palm oil exports must be handled uniformly through the newly established state-owned trading agency Danantara Sumberdaya Indonesia (DSI). As soon as this policy came out, the price of fresh fruit bunches (FFB) in the main producing areas plummeted, and the income of palm oil farmers shrank significantly.
Data from the Indonesian Palm Oil Farmers Union (SPKS) and the Indonesian Palm Oil Farmers Association (POPSI) show that the price of fresh fruit bunches in core production areas such as West Sulawesi, West Kalimantan and North Sumatra has plummeted from about 2,800 Indonesian rupiah/kg (about 0.15 US dollars) to 1,000-1,500 Indonesian rupiah/kg.
Sabarudin, chairman of the Indonesian Palm Oil Farmers Union, said the market has reacted negatively to the government’s single-window export system, with exporters and processing plants reducing or suspending purchases from farmers.
He said in a statement on Monday: “The situation has further deteriorated after many companies suspended acquisitions and stopped sales.”
Sabaruddin urged the government to take immediate action to stabilize the market, warning that farmers were suffering huge economic losses.
He pointed out that the single-window export policy may form a buyer’s monopoly, further lowering the purchase price of fresh fruit bunches.
Moreover, the impact is not limited to a decline in income, but also threatens the long-term survival of small farmer plantations.
Many farmers are considering reducing or even stopping the use of chemical fertilizers because they are worried that prices will not cover their costs.
You know, about 40% of Indonesian palm oil is produced by small farmers, whose livelihoods are highly dependent on stable prices.
He also warned that if the current situation continues, the productivity of small farmer plantations will decline, ultimately affecting Indonesia’s overall palm oil supply.
“The trauma of fresh fruit bunch prices falling below Rp 1,000/kg in 2015 is still there, when a large number of farmers switched to other crops due to losses,” Sabaruddin said.
In addition, this policy is contrary to the government’s goal of expanding the B50 biodiesel plan. B50 requires a large amount of palm oil raw materials, and reduced fertilization and a decrease in the willingness of small farmers to plant will eventually weaken Indonesia’s domestic supply of raw materials and drag down the biodiesel project.
Mansuetus Darto, chairman of the Indonesian Palm Oil Farmers Association, also expressed concerns.
Policy uncertainty has led traders, refineries, exporters and market participants to generally wait and see and suspend trading.
The vague rules have triggered market panic, intensified speculation, and shrinking transactions, directly suppressing crude palm oil (CPO) prices.
Data shows that in just a few days, the CPO bidding price fell from about 15,300 dong/kg to 12,150 dong/kg (about 0.86 → 0.68 US dollars), and the impact was quickly transmitted to farmers in the production areas.
Mansuetus pointed out that the core problem is unclear regulations and lack of enforcement mechanisms. Companies do not know how transactions, payments, pricing, and risk sharing operate under the new system.
In this context, companies may only source from within associated plantations/groups to reduce risks.
He warned that independent oil refineries without their own refining facilities or export channels would be hit hard.
“Ultimately, CPO prices will be further depressed; if factories stop operations to stop losses, farmers will not even be able to harvest,” he said.
He advocated that the government should prioritize improving transparency and governance rather than destroying market mechanisms; the functions of DSI should be limited to export filing, supervision, data transparency and administrative supervision.
He called on the government to completely cancel the export single window plan and protect the livelihoods of millions of palm oil farmers.
“Palm oil is the economic backbone of millions of families in Indonesia. Export management policies must be implemented prudently and must not trigger market panic and shake the foundation of the country’s palm oil industry.” He emphasized.
