Palm oil farmers in distress as single-channel export policy blamed for sharp drop in FFB prices

Government plans to implement a single-channel palm oil export policy under Danantara Sumberdaya Indonesia (DSI) have sparked concerns among farmers. In recent days, the Indonesian Palm Oil Farmers Union (SPKS) and the Indonesian Palm Oil Farmers Organisation Association (POPSI) reported a sharp decline in fresh fruit bunch (FFB) prices in key producing regions, now hovering around Rp1,500 per kilogram.

SPKS Chairman Sabarudin attributed the sudden price drop to market reactions to the single-channel export proposal, warning it could lead to monopsonistic practices that weaken farmers’ bargaining power. ‘The situation worsened as several companies halted purchases and temporarily stopped sales,’ he stated.

Sabarudin added that the policy risks impoverishing palm oil farmers by enabling monopsony, which could suppress FFB prices at the farm level. The impact not only erodes farmer incomes but also threatens the sustainability of smallholder farms. Many farmers are now considering reducing or ceasing fertiliser use due to fears of continued price declines and unprofitable production costs.

‘Approximately 40% of the nation’s palm oil supply comes from smallholder farms, which heavily rely on stable prices,’ Sabarudin noted. ‘Farmers are traumatised by the 2015 crisis when FFB prices fell below Rp1,000 per kilogram. Many uprooted palms and switched to other crops as they could no longer sustain their livelihoods,’ he added.