PALMOILMAGAZINE, JAKARTA – Indonesian House of Representatives (DPR RI) member Firman Soebagyo has called on the government to evaluate its newly introduced single-gateway palm oil export policy, warning that inadequate implementation could put downward pressure on fresh fruit bunch (FFB) prices received by smallholders.
The policy, which channels palm oil exports through the state-owned Danantara Sumber Daya Indonesia (DSI), has raised concerns among growers and industry participants regarding its potential impact on supply chains and market efficiency.
Firman, a member of Commission IV overseeing agriculture and food affairs, said he has received numerous complaints from oil palm farmers across the country following the government’s announcement of the centralized export mechanism.
“The government must understand that farmers are the most vulnerable stakeholders when changes occur in commodity trading policies. Any disruption in the export distribution chain is likely to be reflected first in lower FFB prices at the farm level,” Firman said in a written statement.
According to him, several factors may be contributing to the recent pressure on FFB prices.
One concern is the possibility of crude palm oil (CPO) inventories accumulating at processing mills as exporters adapt to the new centralized export system. Such a situation could reduce mills’ capacity to absorb farmers’ harvests, ultimately affecting farm-gate prices.
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Industry players have also expressed concerns about the potential for higher administrative and distribution costs under the new arrangement. Firman noted that additional costs could erode margins for palm oil companies, prompting adjustments to FFB purchase prices.
Another issue is uncertainty surrounding the operational details of the policy. He said some overseas buyers and domestic industry participants are adopting a wait-and-see approach while awaiting greater clarity, resulting in slower trading activity.
“The government’s intention to improve palm oil trade governance is commendable, but it should not create anxiety or financial losses for farmers. The palm oil industry remains a key pillar of the national economy and a source of livelihood for millions of families,” he said.
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DPR Calls for Transition Period and Greater Transparency
Firman, who also serves as Deputy Chairman of the Indonesian Chamber of Commerce and Industry (KADIN), urged the government to implement an adequate transition period before fully enforcing the single-gateway export system.
He suggested maintaining existing export channels temporarily to prevent disruptions to Indonesia’s palm oil supply chain and preserve market stability during the adjustment phase.
The lawmaker also stressed the importance of transparency in DSI’s implementation of the policy, particularly regarding benchmark pricing, service fees, and trading mechanisms.
“The government must ensure that no policy harms farmers. Transparency, business certainty, and smooth distribution should be the primary priorities. Farmers should not become casualties of a policy adjustment process that is not yet fully prepared,” he said.
To help maintain supply-demand balance and support domestic price stability, Firman also encouraged the government to expand domestic palm oil consumption through the biodiesel program while accelerating the development of downstream palm oil industries.
He emphasized that protecting smallholders should remain a central objective in any reform of strategic commodity trading systems.
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“Farmers need certainty. The state must be present to protect them and ensure that FFB prices remain at fair and profitable levels,” Firman concluded. (P2)
