PALMOILMAGAZINE, BOGOR – Following the implementation of the 32% import tax policy to the United States announced by President Donald Trump, the Palm Oil Farmers Union (SPKS) is urging the Indonesian Government to take a pro-farmer stance by reducing the Export Tax and Export Levy on palm oil to zero percent. This is due to the fact that the increase in import tax in one of Indonesia’s main export destinations will lead to a decline in the selling price of palm oil farmers’ harvests.
SPKS calls on the Indonesian Government to lower the Export Tax (Bea Keluar/BK) and Export Levy (PE) for Crude Palm Oil (CPO) and its derivatives (funded through the Palm Oil Plantation Fund Management Agency – BPDPKS) to 0 (zero) percent. The presence of BK and PE directly impacts the competitiveness of Indonesia’s palm oil industry and its derivative products in the global market.
“The Indonesian Government should protect the palm oil industry and its derivative products holistically, to ensure they remain globally competitive as the world’s leading vegetable oil,” said SPKS Chairman, Sabarudin, in a statement received by Palmoilmagazine.com on Tuesday (08/04/2025).
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He explained that BK and PE further burden the economic condition of smallholder oil palm plantations, which are already heavily affected by the 32% U.S. import tax imposed by President Donald Trump. Global trade analysts also foresee a coming storm in the world economy due to the high unilateral trade tariffs introduced by Trump.
“Global trade may face a new economic storm as a consequence of the U.S.’s high trade tariffs of up to 32%. This will cause additional market distortions,” said Sabarudin.
As a result, Indonesian palm oil farmers will directly feel the impact, as the selling price of Fresh Fruit Bunches (FFB) will be affected. According to economic principles, any additional costs imposed are usually passed down the value chain to the weakest link. “And the weakest link in the palm oil value chain is the smallholder farmer,” he added.
Therefore, SPKS urges President Prabowo’s administration to reduce BK and PE on CPO and its derivatives to 0%. At the same time, the government must stay alert to the potential economic instability triggered by this new U.S. trade policy.
“Global trade discussions have always centered around tariff and non-tariff barriers. However, the imposition of such a large tariff seems to undermine all the trade negotiations conducted so far,” said Sabarudin.
He noted that the goal of global economic empowerment through the removal of trade and non-trade barriers is now falling apart due to unilateral decisions by President Trump. If not addressed early, this situation will worsen.
Palm oil plantations have already undergone numerous improvements, especially in implementing best and sustainable farming practices. Plantation maintenance has become a key concern for every grower. With the adoption of sustainable principles and criteria, plantation maintenance costs have risen in recent times.
The need to reduce BK and PE to 0% is also urgent, according to Sabarudin. Meanwhile, the government should monitor trade in other goods and services that support palm oil plantations, such as fertilizers and infrastructure, to prevent price hikes.
With early intervention, SPKS hopes to maintain a conducive environment for palm oil plantations, which is crucial for farmers so that their productivity remains high and continues contributing to the nation’s foreign exchange earnings from CPO and derivative product sales.
Farmers Support Food and Energy Security and Sustainable Practices to Access New Markets
A stable palm oil industry also supports President Prabowo’s food and energy security programs by encouraging active farmer participation in supplying CPO feedstock, thus promoting economic self-reliance among communities. “Palm oil farmers can stand on their own feet and work hard to help the government meet domestic food and energy needs,” said Sabarudin.
In various interactive discussions with national palm oil stakeholders, SPKS has advocated for biodiesel feedstock to come from smallholder palm oil farmers. The implementation of the B40 biodiesel mandate in 2025 still presents challenges for farmers.
SPKS has also raised concerns about the Palm Oil Plantation Fund Management Agency (BPDPKS), which manages tens of trillions of rupiah in funds, of which more than 90% is allocated exclusively to biodiesel producers. Meanwhile, smallholder farmers continue to face difficulties accessing these funds.
“We propose that BPDPKS funds be used directly for smallholder farming infrastructure and facilities,” Sabarudin emphasized. “Biodiesel subsidies can be channeled directly through FFB price incentives for farmers supplying the national biodiesel feedstock.”
SPKS estimates that President Donald Trump’s trade tariff policy will distort CPO and derivative product demand, thus lowering FFB prices. Prices are expected to drop by 2–3% or approximately Rp 60–Rp 100 per kg of FFB. Lower selling prices for farmers can be offset by reducing BK and PE to 0%, stabilizing the price of their harvests.
SPKS also highlights the continuous efforts of farmers in adopting best and sustainable farming practices to unlock new market opportunities globally. These efforts should be supported by the government through mandatory implementation of the Indonesia Sustainable Palm Oil (ISPO) certification as a foundation for palm oil sector development.
“SPKS hopes President Prabowo’s government will support smallholder farmers in gaining new strength to penetrate global markets,” Sabarudin emphasized. (P3)
