Palm Oil Entrepreneur Proposes Smallholder TBS Be Used Only for Biodiesel

Direktur Utama Agro Investama Group Petrus Tjandra has proposed a market classification for oil palm fresh fruit bunches (TBS) based on the final product. “The 43 per cent belonging to smallholders, covering 6.8 million hectares, should be for energy. Large corporations and state-owned enterprises should produce cooking oil and the like,” he said during a discussion in Jakarta on Tuesday, 21 July 2026. Petrus made the proposal because farmers tend to sell unripe fruit to mills, reluctant to sell overly ripe fresh fruit bunches. Mills tend to reject or pay low prices for palm fruit with higher oil content compared to unripe ones. The oil extraction rate for overripe TBS ranges from 28 to 31 per cent. The low price, according to Petrus, is because mills target fresh fruit bunches with low free fatty acid (FFA) content for cooking oil products. He said he once proposed to the Ministry of Agriculture to differentiate oil palm plantations for energy and food products. “So that farmers never again experience rejections of rotten fruit,” he said. Petrus stated that throughout the 110-year history of the palm oil industry in Indonesia, thousands of problems remain unresolved. One of the industry’s issues, he noted, is that smallholders do not own mills to process their own harvests. This situation contrasts with large corporations that own both plantations and mills. As a result, smallholders lack bargaining power, depend on mills, and face relatively low TBS prices. He therefore encouraged smallholder palm oil farmers to own mills so they can process their own harvests.