PALMOILMAGAZINE, JAKARTA – The Indonesian Oil Palm Farmers Organization (POPSI) has expressed serious concern over the sharp decline in fresh fruit bunch (FFB) prices following the emergence of a proposed new palm oil export governance scheme under Danantara Sumber Daya Indonesia (DSI).
The farmers’ organization believes the lack of clarity surrounding the government’s policy direction has started to trigger market panic and is directly affecting palm oil prices at the smallholder level.
POPSI Chairman Mansuetus Darto said many industry players are currently holding back transactions while waiting for certainty regarding the implementation mechanism of the proposed policy. The uncertainty, he noted, has slowed trading activities throughout the supply chain, from traders and refineries to exporters and downstream buyers.
“The most affected parties are not under-invoicing players, but oil palm farmers whose selling prices have been severely pressured by an unstable market,” Darto said in a statement received by Palmoilmagazine.com on Sunday (24/5/2026).
According to POPSI, the impact of market uncertainty is already becoming visible on the ground. Several collectors and transport operators have reportedly begun reducing purchases of oil palm fruit due to concerns over the direction of the new export governance scheme.
“Collectors and middlemen are no longer willing to mobilize trucks to pick up farmers’ fruit from plantations. The fruit is left uncollected, rots in place, and eventually loses all value,” he explained.
POPSI data showed that crude palm oil (CPO) tender prices dropped sharply from around Rp15,300 per kilogram to Rp12,150 per kilogram within only a few days. The decline immediately pressured FFB prices across Indonesia’s key palm oil-producing provinces.
In South Sumatra, FFB prices fell from Rp3,577 to Rp2,722 per kilogram. Central Kalimantan saw prices decline from Rp3,483 to Rp3,163 per kilogram, while prices in Riau dropped from Rp3,397 to Rp3,070 per kilogram. Similar declines were also recorded in Jambi, where prices slipped from Rp3,266 to Rp2,944 per kilogram, and in North Sumatra from Rp3,299 to Rp2,899 per kilogram.
POPSI argued that the root problem is not solely related to export mechanisms, but rather the lack of regulatory clarity and uncertainty surrounding policy implementation. Businesses, the organization said, still have no clear guidance regarding trading schemes, pricing mechanisms, payment systems, or the allocation of business risks under the proposed framework.
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Under such uncertain conditions, Darto warned that companies may eventually limit raw material purchases to their own internal groups to reduce market risks. This could significantly hurt independent palm oil mills that do not own refinery facilities or export networks.
“If independent mills start reducing purchases or even halt operations because market risks become too high, farmers will eventually be unable to harvest their crops and FFB prices will come under even greater pressure,” he said.
POPSI also stressed that global palm oil trade operates through highly complex mechanisms that cannot simply be reduced to export administration issues or allegations of under-invoicing. International trade pricing, it noted, is influenced by multiple factors, including FOB and CIF arrangements, shipping risks, product quality, free fatty acid (FFA) content, and claims from international buyers.
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In addition, Indonesia’s palm oil export ecosystem has been built over decades through extensive logistics networks, storage tanks, ports, tanker fleets, international trading hubs, and global trade financing systems. According to POPSI, international buyers purchase Indonesian palm oil not only because of product availability, but also due to long-established delivery reliability, trade reputation, and risk management systems.
For that reason, POPSI urged the government to focus on strengthening transparency and administrative oversight without disrupting existing market mechanisms.
The organization believes the role of Danantara Sumber Daya Indonesia (DSI) should primarily focus on recording, documentation, export monitoring, data transparency, and administrative supervision, while trading and price formation should remain market-driven and competitive.
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“If the state intervenes too deeply in trading mechanisms and price formation, the risk of market distortion and domestic price pressure will increase, and farmers will once again become the most disadvantaged group,” Darto emphasized.
POPSI also warned about the potential emergence of new rent-seeking practices if market access and trading quotas become overly concentrated. According to the organization, an overly closed market structure could create privileged groups that gain special access due to political connections.
In addition to calling for an evaluation of the DSI policy implementation, POPSI urged the government to reassess the burden of Export Duties (BK) and Export Levies (PE), which it said have already heavily burdened both the palm oil industry and smallholders.
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In its statement, POPSI called on the government to cancel the implementation of the policy, involve all palm oil stakeholders in drafting the regulations, maintain competitive market mechanisms, and ensure the protection of smallholders’ FFB prices remains the top priority.
“Palm oil is the backbone of the economy for millions of Indonesian families. Export governance policies must be implemented carefully to avoid creating market panic and damaging the stability of Indonesia’s palm oil industry,” Darto concluded. (P2)
