Biodiesel Subsidies Enrich Large Corporations at the Elimination of Smallholders

Palm Oil Magazine
Testing the Mandatory B40 Palm Oil Biodiesel Program. Photo by: Special

PALMOILMAGAZINE, JAKARTA – Achmad Surambo, the Director of Sawit Watch, has disclosed that substantial subsidies have been channeled into the biodiesel industry from B20 to B35. This subsidy program has undeniably boosted profits for major players in the palm oil sector between 2019 and 2021.

Companies like Wilmar raked in approximately Rp 22.56 trillion, Musim Mas earned around Rp 11.34 trillion, Royal Golden Eagle pocketed about Rp 6.41 trillion, Sinar Mas profited to the tune of Rp 5.53 trillion, Permata Hijau accumulated Rp 5.52 trillion, Darmex Agro secured Rp 5.4 trillion, Louis Dreyfus garnered Rp 2.9 trillion, Sungai Budi recorded earnings of Rp 2.56 trillion, Best Industry banked Rp 2 trillion, and First Resources acquired Rp 1.9 trillion.

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The Attorney General’s office is currently probing allegations of corruption within the palm oil fund managed by the Palm Oil Plantation Fund Management Agency (PFMA) from 2015 to 2022. Despite an ongoing investigation, no final decisions regarding suspects have been reached by the Attorney General’s office.

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Achmad Surambo also said, total palm oil fund in crude palm oil (CPO) levy in 2019 -2021 reached Rp 70,99 trillion. In the same priod, subsidy to palm oil corporates which got integration with PFMA in biodiesel production reached Rp 68 trillion.

“Wilmar is the biggest biodiesel subsidy receiper. It reached three times more than the export levy that PFMA gathered. The difference between export levy and biodiesel subsidy delivered surplus for Wilmar that reached Rp 14,8 trillion,” he said, as in the official statement to Palmoilmagazine.com, Monday (25/9/2023).

The irony is that the surplus for big corporates, such as, Wilmar, is not the same with fund allocation for smallholders’ needs. In 2015 – 2019, smallholders got Rp 2,7 trillion to smallholders replanting program; Rp 140,6 billion to develop human resources. If the numbers are multiplied, they did not reach 10% of Rp 47,28 trillion that PFMA gathered in the period.

As the output, Andi Muttaqien, Executive Director of Satya Bumi, emphasized that the investigator team (of the Attorney) should really investigate the goals why PFMA was established in the first place by comparing the reality to what happened in 2015 to 2022. “The fund that PFMA gathered should be given back as the previous mandates, such as, to fund the upstream sectors (replanting, developing human resource, research and development, developing smallholders’ plantation productivity, enable them to get better economy, and be part of commercial ecosystem in the long term,” Andi said.

In the context of Farmer’s Day that is commemorated on every 24 September, he reminded that the smallholders’ sovereignty would have something to do with palm oil industrial development, contribution to economic development nationally. “That is why the fund should be the subsidy for smallholders, not for the corporates to enjoy. Export levy from the companies should not be (fully) returned to them,” Andi said. (T2)

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