InfoSAWIT, JAKARTA – A higher mandatory biodiesel blend, such as the implementation of B50, is expected to significantly impact the CPO export levy (PE) and the welfare of palm oil farmers. Dr. Widyono Soetjipto, a researcher from the Pranata Pembangunan Research Center at the University of Indonesia (Pranata UI), revealed this in his study on "The Impact of Increased Mandate on Export Levy and FFB Price."
Dr. Widyono explained that increasing the biodiesel blend from B40 to B50 will require a substantial addition of CPO raw material. "The CPO need for B40 is around 14.2 million kiloliters, while for B50 it increases to 18.69 million kiloliters. This means an additional requirement of about 4.49 million kiloliters," he stated at an FGD on Energy Policy Balance in Biodiesel Mandatory Implementation on Friday (17/10/2025).
Simulation results suggest that with the increased biodiesel supply, the export levy would need to rise from 10% to 15.17% to continue funding the biodiesel subsidy. "With that increase, the subsidy burden can be covered, but the consequence is that palm oil export prices will become more expensive," he added.
FFB Prices for Farmers at Risk of Decline
The increase in the export levy is also predicted to directly affect Fresh Fruit Bunch (FFB) prices at the farmer level. In the Pranata UI simulation, every 1% increase in the export levy could depress FFB prices by up to Rp 333.67 per kilogram. Thus, a PE increase from 10% to 15.17% has the potential to lower FFB prices by approximately Rp 1,725 per kilogram.
"The increased export costs will be borne by the exporters, but ultimately, this will put downward pressure on CPO prices in the domestic market. This price decrease directly impacts farmers, especially independent palm oil farmers," he said.
Dr. Widyono emphasized that the policy to increase the biodiesel mandate must be accompanied by careful calculation of the economic impact upstream. He recommended that the government consider a flexible mechanism for PE tariff adjustment along with periodic evaluation of the price impact at the farmer and export markets. (T2)
