InfoSAWIT, JAKARTA – The government's plan to increase the biodiesel blend ratio from B40 to B50 has drawn rejection from the farming community. The Perkumpulan Organisasi Petani Sawit Indonesia (POPSI) expressed concern and rejection of the policy, which is seen as potentially disrupting the supply of raw materials for the food industry, weakening the financial position of the Badan Pengelola Dana Perkebunan (BPDP), and suppressing the welfare of smallholder palm oil farmers.
POPSI Chairman Mansuetus Darto warned that increasing the biodiesel blend up to B50 would drain the consumption of crude palm oil (CPO) for the energy sector. Consequently, the supply for the food industry, including cooking oil, would decrease.
“If palm oil consumption for biodiesel continues to rise, the supply for the cooking oil and food industry will automatically diminish. This will pressure industry players and the public because cooking oil prices could rise again. The government needs to be careful and not only focus on the energy side,” said Mansuetus Darto in an official statement received by InfoSAWIT, Tuesday 28/10/2025).
Subsidy Burden Increases, Farmers Marginalized
POPSI also highlighted the burden of biodiesel subsidies that have been channeled through BPDP. According to them, increasing the biodiesel blend would make the subsidy needs even greater, while the portion of funds for farmer programs would become smaller.
“Currently, almost 90 percent of BPDP funds are used for biodiesel subsidies, while programs for farmers are only about eight percent. If subsidies continue to increase, farmers' fate will be even more marginalized,” emphasized Mansuetus.
Important programs such as smallholder palm oil rejuvenation (PSR), capacity building for human resources, and provision of infrastructure and equipment for plantations are feared to have even less funding if allocations are sucked into energy subsidies.
Risks to Exports and State Revenue
Similar sentiments were expressed by Alpian Arahman, Chairman of APKASINDO Struggle and a POPSI member. He stated that the B50 policy could suppress CPO exports, as export levies are the main source of BPDP funds.
“If domestic market absorbs more CPO, exports will definitely decrease. Moreover, BPDP funds for biodiesel subsidies come from export levies. This is contradictory—subsidy needs increase, but the source of funds decreases,” explained Alpian.
If the government raises export levies to cover the subsidy deficit, the impact would be directly felt by farmers. Based on POPSI calculations, every increase in export levies by US$50 per ton of CPO can reduce the price of Fresh Fruit Bunches (TBS) for farmers by around Rp45 per kilogram.
“If levies are raised again, farmers will suffer the most,” said Alpian.
POPSI urges the government to review the priority of BPDP fund usage so that it is more favorable to smallholder palm oil farmers. Currently, most funds are used to support the energy industry, while the real needs of farmers such as superior seeds, fertilizers, infrastructure, and rejuvenation are not optimally fulfilled.
“BPDP funds must return to their original purpose, namely the welfare of smallholder palm oil farmers. Farmers must be the main subject, not just spectators of the biodiesel policy,” concluded Mansuetus Darto. (T2)
