PALMOILMAGAZINE, JAKARTA – The Persatuan Organisasi Petani Sawit Indonesia (POPSI) has voiced serious concerns over the government’s plan to centralize exports of strategic commodities through a state-owned enterprise, including crude palm oil (CPO).
According to POPSI, the proposed policy could fundamentally reshape Indonesia’s palm oil trade structure and open the door to monopoly practices, economic rent-seeking, and concentrated control over export channels by certain groups.
Earlier, Indonesian President Prabowo Subianto announced during the presentation of the country’s Macroeconomic Framework (KEM) at the House of Representatives on May 20, 2026, that the government is preparing new regulations for the export governance of strategic natural resources. In the initial phase, palm oil is expected to become one of the sectors whose exports would be handled through a government-appointed state-owned enterprise.
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POPSI Chairman Mansuetus Darto criticized the discussion process surrounding the policy, arguing that oil palm farmers, cooperatives, farmer organizations, and industry players had not been adequately involved despite being central stakeholders in the sector.
“We question why such a major policy is being discussed without involving oil palm farmers. Palm oil is not merely about exports — it concerns the livelihoods of millions of farming families and regional economies across Indonesia,” Darto said in an official statement received by Palmoilmagazine.com on Thursday (21/5/2026).
Compared to Clove Trade Monopoly During the New Order Era
POPSI also warned the government not to repeat Indonesia’s past mistakes in commodity trade governance, particularly the controversial Clove Buffer and Marketing Agency (BPPC) system during the New Order era.
Darto argued that centralized trading systems could distort the market, suppress farmgate prices, and encourage rent-seeking practices.
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“We have experienced bitter lessons when commodity monopolies were implemented in the name of national interest, but ultimately ended up hurting farmers while enriching a small elite group,” he said.
POPSI sees similarities between the proposed palm oil export arrangement and the former clove trade system, including the risk of monopsony in export channels, government control over prices and trade volumes, and potential elite capture in access to trade.
According to the organization, once export access becomes concentrated and the number of effective buyers declines, oil palm farmers’ bargaining power will inevitably weaken. The situation could directly impact fresh fruit bunch (FFB) prices received by farmers.
“In the history of commodity trading, when market access narrows, farmers are always the first to bear the losses,” Darto stressed.
Beyond farmer concerns, POPSI warned that the policy could also disrupt the efficiency of Indonesia’s palm oil companies, many of which already operate direct export networks, hedging systems, and global refinery connections.
Centralizing exports through a single channel could increase logistics costs, raise working capital requirements, and reduce the competitiveness of Indonesian palm oil in international markets, the organization said.
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Risks to Global Market Confidence
POPSI also highlighted the potential impact of the policy on international perceptions of Indonesia’s palm oil industry.
Amid growing global demands for supply chain transparency and sustainability standards, including compliance with the European Union Deforestation Regulation (EUDR), POPSI believes an overly centralized export system could create negative perceptions about Indonesia’s palm oil governance.
“Strengthening sustainable palm oil cannot be achieved through trade monopolies, but through transparent governance, farmer protection, fair competition, and supply chain transparency,” Darto said.
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POPSI therefore urged the government to conduct an open evaluation of the proposed export governance framework by involving oil palm farmers, cooperatives, businesses, academics, and civil society groups.
The organization also called on the government to ensure that no monopoly practices, economic rent-seeking, or abuse of authority emerge within Indonesia’s palm oil trade system should the policy move forward. (P2)
