Indonesia’s palm oil smallholder union urges the government and PT DSI to assess the impact of a planned export margin fee and establish stronger safeguards for farmer incomes.
PALMOILMAGAZINE, JAKARTA — Indonesia’s Smallholders Palm Oil Farmers Union (SPKS) has raised concerns over the planned introduction of a margin fee in the country’s palm oil export governance through PT Danantara Sumberdaya Indonesia (DSI).
The farmers’ organization has urged the government to ensure that the new policy does not create additional costs that could ultimately reduce the prices of fresh fruit bunches (FFB) received by oil palm smallholders.
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According to SPKS on Tuesday (Sept. 1, 2026), Chairman Sabarudin said improvements to export governance and efforts to increase state revenues were possible, but any new policy must take into account the sustainability of plantation businesses, particularly those operated by smallholders.
He warned that additional costs associated with exports could eventually be passed upstream to producers. If that happens, smallholders could bear the impact through lower FFB prices.
SPKS argued that smallholder income should not become a source of funding for changes to the export governance system. The proposed margin fee, therefore, needs to be carefully assessed to ensure it does not create additional downward pressure on FFB prices at the farm level.
Export Levies Already Weigh on FFB Prices
SPKS also highlighted the export levy currently imposed on palm oil commodities. Sabarudin said the 12.5% export levy had already placed significant pressure on smallholder FFB prices.
“The export levy alone, which currently stands at 12.5%, has already put significant pressure on FFB prices,” Sabarudin said.
Based on data cited by SPKS, the levy could reduce smallholder FFB prices by approximately IDR 1,000–1,500 per kilogram.
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SPKS also estimated that every 1 percentage-point increase in the export levy could potentially reduce smallholder FFB prices by around IDR 300–400 per kilogram.
Against this backdrop, SPKS called on PT DSI to ensure that any margin fee does not reach a level that would further increase pressure on commodity prices at the plantation level.
The organization warned that the higher the costs generated downstream, the greater the risk that those costs would eventually be passed back to smallholders as producers of palm oil raw materials.
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SPKS Questions Benefits of Palm Oil Levies
Beyond the margin fee issue, SPKS has also questioned the extent to which revenue collected through palm oil levies has provided direct benefits to smallholders.
Sabarudin said the amount of revenue collected from the palm oil industry was already substantial, but the benefits received by smallholders had not been commensurate with the scale of the levies imposed on the sector.
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SPKS therefore urged the government not only to focus on increasing state revenues but also to establish mechanisms to protect smallholder incomes.
One proposal is the introduction of a minimum FFB price for smallholders. Such a mechanism could serve as a safeguard when export policies change or global palm oil prices become volatile.
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Calls for a Minimum FFB Price
According to SPKS, a minimum FFB price should be based on a fair and transparent formula that takes into account production costs and the welfare of smallholders.
Such a policy would help prevent smallholders from becoming the first party to absorb the impact of changes in costs or export policies.
“Smallholders should not be left to bear the entire loss alone when prices fall,” Sabarudin said.
SPKS also called for a protection mechanism if FFB prices at the farm level fall below the established minimum.
One option proposed by the organization is a price subsidy funded through a portion of palm oil export levy revenues. Under such a scheme, funds collected from the palm oil sector could be returned to the sector through direct income protection for smallholders.
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DSI Urged to Engage Farmer Organizations
Amid plans to introduce the margin fee, SPKS has also urged PT DSI to open dialogue with palm oil farmer associations and organizations.
SPKS said smallholder representatives should be involved before the policy is fully implemented. Such discussions would allow DSI to better understand conditions faced by farmers on the ground and anticipate the potential impact of the policy on FFB prices.
“We ask DSI not to discuss this only with exporters and companies. Smallholders must also be involved because those of us upstream will directly feel the impact of downstream policies,” Sabarudin stressed.
SPKS warned that excluding smallholders from policy discussions could increase resistance to the implementation of the margin fee.
The organization said it preferred an open dialogue involving all relevant stakeholders, including smallholders as key actors in the upstream sector.
Ultimately, SPKS emphasized that improvements to palm oil export governance must go hand in hand with smallholder protection. Policies designed to increase state revenues and improve export governance should not come at the expense of the incomes of Indonesia’s palm oil smallholders. (P2)
