What Would Happen if Indonesia Really Closed Commercial Palm Oil Mills
The Indonesian Palm Oil Farmers’ Association (Apkasindo) has warned of serious impacts if the proposal to close palm oil mills (PKS) without plantations is truly realised. This policy is seen as potentially devastating millions of independent palm oil farmers across various regions.
Independent palm oil farmers are small-scale growers who manage their land independently, without partnerships with large companies. Apkasindo notes that of the total 6.87 million hectares of smallholder plantations, around 93.2% are managed by independent farmers.
The General Chairman of the Apkasindo Central Executive Board, Gulat ME Manurung, emphasised the significant risks that could arise if commercial palm oil mills are closed.
“Independent or self-reliant farmers—imagine the chaos that would occur if commercial palm oil mills were really closed,” said Gulat in his statement, quoted on Wednesday (29/4/2026).
He explained that in the palm oil industry, there are two main groups of farmers: partnered farmers, both plasma and independent, and fully independent farmers with no ties to companies.
According to him, the existence of palm oil mills without plantations has actually helped maintain the balance of the fresh fruit bunch (TBS) market. Mills of this type make TBS prices at the farmer level more competitive while ensuring supply stability.
Additionally, commercial palm oil mills also help alleviate queues for TBS sales. Conventional mills tend to prioritise fruit from their core plantations and plasma partners, so independent farmers often have to wait longer.
Furthermore, the presence of commercial palm oil mills is seen as encouraging healthier competition in the palm oil trade and preventing market dominance by a few parties.
“There is no monopoly by one or two mills. What is needed now is efforts to ensure all conventional palm oil mills comply with government regulations, especially the provincial determination of TBS prices,” he said.
Gulat even suspects that the issue of closing palm oil mills without plantations is deliberately raised by certain parties who want to control the palm oil trade chain.
On the other hand, he stressed that commercial palm oil mills also contribute to the regional economy through investments, job absorption, and increased money circulation in society.
As a solution, Apkasindo proposes that the government require all palm oil mills to form partnerships with farmers, with a minimum portion of 20% of raw materials coming from farmers’ TBS.
With this scheme, TBS supply is expected to be more assured while ensuring prices follow the determinations of the Plantation Offices in each region.
“The partnership scheme proposed by Apkasindo benefits all parties, both conventional palm oil mills, commercial palm oil mills, independent palm oil farmers, and plasma, namely the certainty of TBS supply,” said Gulat.
As a note, the proposal to close palm oil mills without plantations is currently being discussed up to the central government. On the other hand, there are views that the existence of such mills triggers intense competition in vying for TBS supply in the field.