The Tangled Threads of Palm Oil Policy: Many Ministries, One Commodity

In various meetings and official statements, palm oil issues are discussed from multiple angles. Some emphasise exports and state revenues, others promote energy mixes through biodiesel, some highlight land legality and spatial planning, and others focus on certification and sustainability standards. However, this diversity of focuses also indicates that one strategic commodity must follow multiple policy directions simultaneously, which do not always operate within the same framework. These differing focuses become relevant when policies encounter documents, data, and area boundaries that, in several cases, are not always aligned between institutions, whether in terms of definitions, territorial boundaries, or the data bases used. This investigation stems from three main questions. First, whether the government’s palm oil policy directions are truly aligned between fiscal targets, downstreaming, energy, and land governance. Second, why discrepancies still arise between the design of palm oil policies and their implementation in the field. Third, whether changes in palm oil policies impact business certainty, field actors, and domestic market stability. Based on detikX’s examination of policy documents, official statements, and public reporting, the issues that emerge do not point to a single erroneous regulation, but rather to inter-policy coordination: targets that are not always in sync, regulatory timelines that move differently, and operational data that are not fully integrated. In several cases, this condition often generates business uncertainty, triggers domestic market fluctuations, and forms risk perceptions for global buyers. In other words, the problem lies not only in the multitude of rules, but in how these various policies run in parallel without full integration. This situation is inseparable from the differing mandates between sectors regulating palm oil. Each ministry carries out different functions, from forest area protection and spatial planning regulation to industrial and energy development. These priority differences make cross-sectoral policy synchronisation not always run smoothly, as each institution continues to operate within different regulatory frameworks and performance targets. Alarm from the Ombudsman: Integration Not Neat, Risk of Losses Grows In November 2024, the Indonesian Ombudsman captured the palm oil governance problems from upstream to downstream. They conveyed the potential for massive losses due to maladministration. “The total potential value of losses in palm oil industry governance is Rp 279.1 trillion per year,” said Ombudsman RI member Yeka Hendra Fatika to detikcom some time ago. This finding reinforces the indication that palm oil governance issues do not stand alone, but are linked to cross-sectoral policy coordination patterns that are not fully integrated. The Ombudsman’s findings show that palm oil issues do not stop at plantations or factories, but also relate to cross-sectoral coordination design, from land, permitting, to trading arrangements, each under different institutional authorities. On the land aspect, the Ombudsman found overlaps between palm oil plantation land and forest areas covering 3.2 million hectares (ha) with 3,235 legal subjects. The legal subjects consist of 2,172 Palm Oil Companies and 1,063 Cooperatives/Farmer Groups (People’s Palm Oil) with potential state losses of Rp 76.8 trillion. This condition reflects differences in data bases and area determinations between sectors that are not fully synchronised. On the permitting-related administration aspect, there is low achievement in registering cultivation certificates (STDB) and ISPO certification. The potential for maladministration in the permitting-related administration aspect, said Yeka, triggers potential losses due to unachieved optimal fresh fruit bunches (TBS) productivity. This shows that the issues are not only in field implementation, but also in administrative policy coordination involving various agencies. “The potential loss from seed quality aspects for every 3.8 ton TBS production difference per hectare for the area of company palm oil plantations in Indonesia that are not ISPO standard (65% x 10 million hectares) means the potential palm oil plantation loss is Rp 74.1 trillion per year,” he revealed. This finding illustrates that the lack of integrated standards and cross-sectoral supervision also contributes to suboptimal productivity. On the trading aspect, Yeka mentioned findings of problems from upstream in the form of palm oil mill (PKS) permitting to downstream in policies on trading derivative palm oil products and palm oil fund management. According to him, this has significant negative impacts on farmers, business actors, and state revenues. “The potential value of losses due to non-standard maturity levels for 6 million hectares of smallholder plantations with production of 12.8 tons per hectare at Rp 3,000 per kg TBS is Rp 11.5 trillion per year to date,” he stated. This chain of issues shows that palm oil governance problems do not stand in a single policy chain, but are spread across various parallel authorities. In his statement, the Ombudsman also urged strengthening policy command so that integration is clearer. “Policy integration problems can be fixed with a specific institution handling palm oil-related policy matters,” said Yeka. This proposal simultaneously affirms that the root of the problem is not solely in field practices, but in the policy coordination structure that is not yet centralised. The series of statements and policies show one pattern: many agendas moving simultaneously, such as land, data, traceability, downstreaming, energy, and certification. But they are not always present in a single synchronous framework that is easy to follow.