Medan, Indonesia – Indonesia, the world’s largest producer of palm oil, has struggled with rising prices and low stocks of cooking oil amid soaring global prices for the raw ingredient.
Citing the need to control price spikes, exacerbated by the war in Ukraine, disappointing harvests and the COVID-19 pandemic, Indonesian President Joko “Jokowi” Widodo announced in April a ban on palm oil exports and palm oil products.
But far from calming the domestic market, Indonesian farmers who spoke to Al Jazeera said the ban had driven down palm fruit prices and jeopardized their livelihoods. Below are responses from six farmers who spoke about their experiences with the ban. Their remarks have been lightly edited for brevity and clarity.
Mansuetus Darto, Head of the Indonesian Palm Oil Growers Union, West Java:
The effect of the export ban on small farmers has been enormous as many of them have no other sources of income. So many farmers have struggled, especially over the past two years. They had hoped that things would start to improve after the pandemic, but if there are local or global political issues, that will affect them as well. Everyone has struggled since 2020 when the pandemic started and now there is a new problem.
The problem is that Jokowi was facing a problem in the country, especially in the run up to the Eid al-Fitr holiday, when food prices usually increase every year. As cooking oil prices had been rising for months, he thought the best thing to do would be to enact the ban. But the export ban is not going to act as a permanent solution to stabilize prices, and we immediately saw problems after the ban, such as illegal exports due to corruption within the industry.
The irony for farmers is that they now have to sell bunches of fresh fruit at low prices and then buy cooking oil at high prices. We need more refineries in Indonesia and we need to end the monopoly of palm oil companies in Indonesia.
Valens Andi, Head of Farmers’ Hope Oil Palm Plantation Cooperative, West Kalimantan:
It’s getting harder and harder for farmers with all these price changes. Some feel as though 50% of their livelihoods have been lost as the prices of fresh fruit bunches have been reduced and, at the same time, the prices of fertilizers and pesticides have increased by more than 100%.
Oil palm growers use chemical fertilizers and the ingredients are imported from abroad and blended here. Fertilizer suppliers have told us that it is becoming more and more difficult to obtain the raw materials, which is why the prices of chemical fertilizers have increased.
We hope that the prices of fresh fruit bunches will stabilize and become uniform according to the minimum wage of each province. We need to make sure everyone gets a decent price.
Iwan Himawan, two-hectare palm oil farmer, East Kalimantan:
I have two hectares of land and I produce a ton to a ton and a half of palm fruits with each harvest, which takes place every 20 days.
We have really felt the effects of the export ban. When Jokowi gave his speech on April 22 announcing the ban, the price immediately plummeted. That was before the ban even took effect on April 28, and after that things got even worse.
Here in East Kalimantan we used to get 3,000 Indonesian rupiah ($0.21) per kilo for our fresh fruit bunches, but now the price has dropped to 1,700 rupiah ($0.12) per kilo is therefore a very big difference.
East Kalimantan governor issued letter saying factories should not lower prices [that they buy] palm oil fruits [at] more, but many of them just ignored it because they buy through middlemen.
Yusro Fadly, two-hectare palm oil farmer, Riau:
I used to sell my fruits at 3,900 rupees ($0.27) per kilo, but now the price has dropped to 1,800 rupees ($0.12) per kilo if you sell to wholesalers. The official price set by the government for fresh fruit bunches is 2,947 rupees ($0.20) per kilo.
Factories buying the fresh fruit bunches have yet to set limits on how much they will buy, but there are long queues outside factories as farmers fear prices will drop more and want to sell their fruits as soon as possible.
We can no longer properly take care of our plantations because the price of fertilizers has increased by 300% and the government has not provided any explanation as to the reasons for this increase.
Previously, it cost 300,000 rupees ($20.51) for 50 kilograms of fertilizer, but now it costs more than one million rupees ($68). Where can you find a small palm oil producer who can tend to his fields if the price of palm fruit goes down but the price of fertilizer goes up?
Vincentius Haryono, farmer of four hectares of oil palms, Jambi:
Before the ban, we were selling our palm fruits at 3,600-3,800 rupees ($0.25-$0.26) per kilogram. Now the price has come down to 2,210 rupees ($0.15) per kilogram.
I want to talk about the psychological effect of the ban on small farmers. We are so disappointed and of course we blame the government for making this decision and not thinking of us, the farmers on the ground. Why did the government do this to us? We feel that we have been victims of the export ban. A one-week export ban should have been enough for domestic supply to stabilize again.
Small farmers do not want to accept what happened. Farmers have been forced to accept lower and lower prices for our palm fruits and, in addition to the increase in the price of fertilizers, the price of pesticides has also doubled. We are now losing money and making no profit.
Public palm oil companies can ensure the national cooking oil supply or at least about 70% of the supply. The government should focus on the latter first to sort out the domestic supply and not touch the private sector. Let’s sell our palm fruits and let companies export crude palm oil and other palm oil products if they wish.
Albertus Wawan, five hectare palm oil cultivator, West Kalimantan:
The government must find a solution for smallholder oil palms. They must immediately rescind the export ban or, if they don’t, they must find another solution. At first, when the ban was first announced, it did not include crude palm oil, but factories started lowering their prices anyway.
The challenge on the ground is all the operational costs that we have. The price of pesticides and fertilizers is no longer commensurate with the profits we make. We used to earn around 4,000 rupees ($0.27) per kilogram for our fresh fruit bunches in West Kalimantan, as we are in quite a remote area, and now the price has dropped to around 2,000 rupees ( $0.14). We don’t want to make a big deal out of the price of oil palm fruit, we just want it to be fair.
There are 270 million people in Indonesia and 16 million small palm oil producers who have been victims of this ban. Don’t let the ban be shock therapy for the market while damaging our livelihoods. Our hope is that the price will rise again, but there is a limit to farmers’ patience and they will not want to harvest anymore and it will cause social problems if the ban lasts much longer. How are people supposed to pay for their daily needs? How are they going to send their children to school? How are they going to shop?