Agriculture Minister Confronts Palm Oil Executives Over Plummeting Fresh Fruit Bunch Prices
Jakarta, CNBC Indonesia - The Minister of Agriculture, Amran Sulaiman, has levelled a series of sharp questions at palm oil industry players regarding the fact that Fresh Fruit Bunch (FFB) prices for farmers have yet to return to normal, despite the government providing regulatory certainty.
In a meeting attended by industry players, palm oil farmers, the Food Task Force, and the Special Criminal Investigation Directorate (Dirk_krimsus) from 25 provinces across Indonesia, Amran first highlighted the explanation provided by the Chairman of the Indonesian Palm Oil Association (GAPKI), Eddy Martono, regarding the cause of the drop in FFB prices at the farmer level following the announcement of a single-door export policy through PT Danantara Sumberdaya Indonesia (DSI).
When asked about the cause of the price decline, Eddy explained that the situation was influenced by market uncertainty. “It initially dropped, Sir. I have reported this to the Vice Minister. It was actually due to panic and uncertainty,” Eddy said during the coordination meeting at the Ministry of Agriculture office in Jakarta on Monday.
However, that response was met with a harsh reaction from Amran. He argued that the shock caused by policy changes should not result in palm oil prices at the farmer level falling. “So, you were shocked? If you were shocked, why did the prices run down instead of up?” Amran questioned.
Eddy further explained that market players, including buyers from India and the European Union, had not yet received detailed explanations regarding the derivative regulations, which triggered uncertainty. Amran questioned this logic, stating that as a businessman of 20 years, he had experienced similar shocks in the nickel industry but responded by increasing purchase prices rather than lowering them. “Why did your shock lead to a drop? This is distressing 15 million people (palm oil farmers),” Amrant asserted.
Despite GAPKI stating that conditions are now clearer, Amran questioned why FFB prices have not fully recovered. Eddy responded that prices are determined by market mechanisms and that the recovery process is gradual, noting that recent tenders by PTPN in Dumai showed CPO prices at Rp15,025 with no further withdrawals by refineries.
Amran insisted that uncertainty should no longer be a valid excuse now that government regulations are clear. The Vice Minister of Agriculture, Sudaryono, added that the government has provided explanations multiple times and demanded further reasons for the lack of a 100 per cent recovery.
Amran warned that the fate of 15 million farmers is at stake and that he would request investigations into companies whose FFB purchase prices remain low. “If this shock does not stop, I will provide a shock. I will instruct the Special Criminal Investigation Directorate in all provinces to inspect almost 300 companies where prices are still dropping today,” Amran stated.
Amran also confronted Wilmar Director Tenang Sembiring, who suggested that prices failed to form in the market during the period of uncertainty. Amran demanded a specific list of entities involved in this price disruption, asserting his deep knowledge of the palm oil supply chain. While Sembiring noted that trading activities had returned to normal following recent government meetings, representatives from the farming community testified that conditions for farmers remain far from normal. Amran concluded by stating that middlemen (tengkulak) would also be investigated.