Learning from the Bitter Experience of 2022: Smallholder Palm Oil Prices Could Crash to Rp500

Jakarta, CNBC Indonesia - Serikat Petani Kelapa Sawit (SPKS) Chairman Sabarudin stated that the current fluctuation in fresh fruit bunch (FFB) prices is reminiscent of events four years ago. When the government halted CPO exports in 2022 to address a cooking oil shortage, smallholder palm oil prices collapsed within hours. In several regions, prices briefly touched Rp500 per kilogram. “Indeed, FFB prices are as the Minister of Agriculture (Amran Sulaiman) said, the price is set at the provincial level through a Minister of Agriculture regulation, then a Governor’s regulation is made. That Governor’s regulation sets the price, but actually, from the start, many companies have not complied with that stipulated price,” Sabarudin said when met at the Ministry of Agriculture office in Jakarta on Monday. The statement emerged amid the polemic of FFB prices experiencing turbulence again in June 2026. Minister of Agriculture Andi Amran Sulaiman even reported approximately 270-300 palm oil companies to law enforcement for allegedly failing to restore FFB prices in accordance with regional provisions. The Ministry of Agriculture considers the recent price decline difficult to explain because global crude palm oil (CPO) prices are high and the rupiah is around Rp18,000 per US dollar. Looking back, June 2022 and June 2026 indeed share a similar thread. Both occurred when the global vegetable oil market was under geopolitical pressure. In 2022, the world was facing the impact of the Russia-Ukraine war, which drove up prices for various food and energy commodities. Four years later, the market is again overshadowed by global uncertainty affecting commodity trade, exchange rates, and export flows. Historical data on FFB price stipulations in various provinces shows that plasma smallholder palm oil prices are currently in the range of Rp3,100-Rp3,800 per kilogram. In June 2022, when Indonesian CPO exports began to reopen after the export ban was lifted, plasma FFB prices in five major palm oil producing provinces were still around Rp2,300-Rp2,800 per kilogram. In Riau, SPKS reported that the price for plasma FFB from the 10-20 year age group in June 2022 was recorded at Rp2,571.31 per kilogram. In the period of 10-16 June 2026, the price reached Rp3,768.52 per kilogram. The difference is Rp1,197 per kilogram, an increase of approximately 46.6%. A similar increase occurred in Central Kalimantan. According to the provincial communications office, in June 2022 the plasma FFB price was at Rp2,317.63 per kilogram. In early June 2026, the provincial government set the price at Rp3,493.43 per kilogram. This represents an additional Rp1,175.8 per kilogram over the last four years, equivalent to an increase of about 50.7%. North Sumatra also experienced a significant improvement. SPKS reported the FFB price for the productive age group in June 2022 was Rp2,556.03 per kilogram. For the period 3-9 June 2026, it rose to Rp3,451.13 per kilogram. The increase reached Rp895.1 per kilogram, or around 35%. In East Kalimantan, the plasma FFB price in June 2022 was recorded at Rp2,818.85 per kilogram. The latest data shows the price for 10-year-old plants reached Rp3,617.10 per kilogram, an increase of around Rp798 per kilogram. West Kalimantan experienced a more limited increase. The FFB price for the 10-20 year age group rose from Rp2,733.68 per kilogram in June 2022 to Rp3,182.65 per kilogram in early June 2026, an increase of around Rp449 per kilogram. A more striking change was seen among independent smallholders. Citing APKASINDO data from July 2022, the price for independent smallholder FFB in Riau was only around Rp1,050 per kilogram. Currently, the Riau Plantation Office records the independent smallholder FFB price at Rp3,674.93 per kilogram. In other words, the price for independent smallholders in that province has more than tripled compared to the 2022 crisis period. These figures explain why the government reacted strongly when FFB prices weakened in recent weeks. With world CPO prices around Rp15,000 per kilogram, an FFB price drop at the farm level approaching Rp3,000 per kilogram is considered out of step with market conditions. The National Police Food Task Force even cited indications of price-fixing collusion currently being investigated jointly with the KPPU. The problem faced by farmers today is no longer the rock-bottom prices of 2022. The main complaint has shifted to trading governance. SPKS assesses that many companies continue to buy FFB below the price set by the regional government. At the same time, most smallholders are not yet part of an official partnership with palm oil mills, so their bargaining position remains weak during market fluctuations. The 2022 experience serves as a reminder that policy changes can directly impact farm-gate prices. The difference is that in 2026, the foundation of national palm oil prices is at a much higher level. The next challenge is not to restore prices from Rp500 to Rp3,000 per kilogram as it was four years ago. The challenge is ensuring that the prices that have been set actually reach the farmers.