Deputy Agriculture Minister warns of palm oil mill license revocation for below-market TBS purchases
Deputy Agriculture Minister Sudaryono has stated that the government will immediately revoke the licences of palm oil mills purchasing fresh fruit bunches (TBS) from farmers below the prescribed price to safeguard the welfare of national palm oil farmers.
Speaking at a press conference following the Palm Oil Hilirisation Meeting in Jakarta on Friday, Sudaryono said the government is addressing farmers’ complaints about declining TBS purchase prices across various regions.
“We identified 139 palm oil mills purchasing below the set prices in their respective regions two days ago,” he said.
Following previous announcements and meetings, 16 palm oil mills have adjusted their prices by increasing TBS purchase rates for farmers. However, the government notes many mills still have not complied, prompting further discussions with more stakeholders in the palm oil industry.
The meeting, led by Sudaryono alongside the Agriculture Ministry’s Secretary-General and Director General of Plantations, included the National Food Agency (Bapanas) and state-owned enterprises (SOEs) in the plantation sector. The government also invited the Indonesian Palm Oil Association (Gapki), farmer associations, exporters, and refineries to discuss stabilising TBS prices for farmers.
The government believes the issue of declining TBS prices can be resolved, as global palm oil prices and demand have recently increased. Price volatility is occurring in the middle of the supply chain, with downstream prices and global markets remaining stable without declines in export volumes.
Therefore, the government has urged downstream players such as refineries and exporters to base transactions on prices set through the PT Kharisma Pemasaran Bersama Nusantara (KPBN) auction system and avoid price withdrawal practices.
“There is a price formation mechanism at KPBN based on global CPO prices and other factors. We expect and request that downstream palm oil businesses use KPBN as a reference and avoid withdrawal practices,” he stressed.
The government hopes that large-scale purchases at good prices downstream will have a domino effect, raising TBS purchase prices for farmers.
The Agriculture Ministry has also instructed regional heads to implement Ministerial Regulation No. 13 of 2024 on provincial-level TBS price management. So far, only a few provinces have actively set TBS purchase prices involving local governments, mills, associations, and global palm oil prices.
Therefore, the ministry urges all regional leaders to actively monitor TBS purchase prices and ensure mills buy from farmers in accordance with regulations.
“If there are violations of the ministerial regulation, administrative sanctions and licence revocation will apply, and if there are legal violations, the Agriculture Ministry will collaborate with the Food Task Force,” Sudaryono said.