Palm Oil Smallholders Warn of Export Risks Through State-Owned Enterprises
The Indonesian Palm Oil Smallholders’ Association (POPSI) has criticised the government’s plan to mandate export of strategic commodities through state-owned enterprises (BUMN). According to POPSI Chairman Mansuetus Darto, the policy risks centralising the national palm oil trade and opening space for monopolies, economic rents, and control of export routes by groups close to power.
“We question why a policy this large is being discussed without involving palm oil farmers. Palm oil is not only about exports; it affects the livelihoods of millions of farming families and regional economies across Indonesia,” Darto said in a written statement dated Wednesday, 20 May 2026.
Darto assessed the palm oil export governance draft bears resemblance to the clove trading patterns through the Clove Stabilisation and Marketing Agency (BPPC) during the New Order era. At that time, clove trading was centralised through specific institutions seen as triggering monopolies and harming farmers.
He said the appointment of a single export channel through a BUMN could create a monopsony or market dominance by a few buyers. If private exporters lose direct access to global buyers, trade competition is feared to weaken and farmers’ bargaining power could decline.
“Under such conditions, the price of fresh fruit bunches (FFB) of oil palm is prone to being suppressed,” he said.
In addition, POPSI regards export centralisation as risking increased economic rent practices. Questions over who obtains export quotas, trading facilities, and access to the exporting BUMN are likely to trigger elite capture and abuse of authority if governance is not transparent.
The palm oil farming organisation also reminded that the industry today is far more complex than the commodity trading of the past. Palm oil trading is connected to global markets, international refining networks, hedging systems, and demands for transparency and sustainability such as the EU Deforestation Regulation (EUDR).
“If the export mechanism is too closed or too political, Indonesia risks losing the trust of international buyers and its global competitiveness,” he said.
He continued that the policy’s impact would not only be felt by large companies, but also independent palm oil smallholders. When the number of buyers narrows and export routes are controlled by a single channel, competition for purchasing CPO and FFB will weaken, squeezing farmers’ margins as the first victims.
Previously, President Prabowo Subianto stated that the government would require the export of a number of strategic natural resource commodities through designated state-owned enterprises as sole exporters. The commodities to be exported under this mechanism in the initial phase include crude palm oil, coal, and ferro-alloys.
In his speech at the Parliament’s Plenary on the Macro Economic Framework and the Main Policies of the Fiscal Framework of the RAPBN 2027, Prabowo said the policy aims to strengthen export oversight while curbing under-invoicing, transfer pricing, and the outward flight of export earnings.
“The sale of all our natural resource outputs starts with palm oil, coal, and ferro-alloys; we will require their sale to pass through state-owned enterprises designated by the Government of Indonesia as the sole exporters,” Prabowo said.