Farmers expect palm bunches prices to be maintained

This article has been translated by PwC Indonesia as part of our Plantation News Highlights service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily - Petani ingin harga tandan sawit terjaga

27 September 2023

Jakarta - Farmers want the price of oil palm fresh fruit bunches (FFB) to be maintained. After the implementation of the mandatory 30% biodiesel (B30) programme, the price of FFB for farmers rose to Rp1,800-2,550 per kilogram (kg), higher than Rp700-1,200 per kg in the previous year. Therefore, the biodiesel case should not be allowed to drag on so that the biofuel programme will not be disrupted in the future. 

The Indonesian Oil Palm Farmers Association (Apkasindo) asked the government not to let the biodiesel case drag on so that the case will not affect the future of the national biodiesel programme and oil palm farmers will not become victims. “If there is a note on biodiesel, we agree that the Attorney General’s Office as a law enforcement agency should carry out its duties. If there is something wrong, it should be resolved immediately to avoid multiple interpretations. People will ask whether [biodiesel] will be continued. But do not drag it on because this is not good for us oil palm farmers,” said the Head of Apkasindo Gulat ME Manurung recently. 

Apkasindo reminded that the biodiesel programme is the government’s mandate for energy independence and facilitates domestic absorption of palm oil. This has been proven over the last four years, during which the price of FFB for farmers increased following the movements in world palm oil prices. Apkasindo data shows that the price of FFB for farmers after the implementation of mandatory B30 increased to Rp1,800-2,550 per kg, higher than the price in the previous year at only Rp700-1,200 per kg. 

According to Gulat, all parties need to be careful in responding to the biodiesel case because there will be a domino effect on oil palm farmers. It is possible that agencies related to the biodiesel programme implementation, such as the Finance Ministry, the Coordinating Ministry for Economic Affairs, Pertamina, the Oil Palm Plantation Fund Management Agency (BPDPKS), and the Agriculture Ministry, will evaluate the biodiesel programme if there are legal issues, and it could even be stopped. “On the other hand, if the biodiesel programme is stopped, there will be 13.5 million tonnes of palm oil per year that will not be absorbed,” explained Gulat. 

He gave an example how the price of palm oil was immediately corrected following the news about the biodiesel case. The tender price for palm oil at Kharisma Pemasaran Bersama Nusantara (KPBN) fell from Rp11,300 per kg and briefly reached Rp9,800 per kg. “The plummeting price of palm oil will be connected to 17 million farmers. The issue of the palm oil [industry] that is not in a good condition will affect the entire [palm oil] industry in Indonesia,” he explained. 

Apkasindo noted that the price of independent smallholder FFB plummeted from Rp3,300 per kg to below Rp1,500 per kg following the the ban on the export of cooking oil and its raw materials, including palm oil, on 28 April 2022. The price started to rise to Rp2,200 per kg when the government reopened export on 24 May 2022. Afterwards, the prices continued to fluctuate below Rp2,500 per kg and have never recovered to the level before the export ban. According to Gulat, the government needs to appreciate the national palm oil industry. The Indonesian economy was able to recover quickly after the Covid-19 pandemic because it was supported by the palm oil industry. “The world is afraid of a shortage of palm oil supply, but domestically, this green gold has not yet become an icon,” said Gulat.