InfoSAWIT, JAKARTA – Strong price controls and market interventions may risk undermining investment in agricultural sectors, including palm oil, according to Julian Conway McGill, Managing Director of Glenauk Economics.

In his presentation analyzing the relationship between policy, prices, and commodity sustainability, Julian compared Indonesia’s palm oil, Argentina’s soybeans, and Ivory Coast’s cocoa.

Despite different contexts, all three commodities share a common issue: stagnant or declining productivity.

“All these commodities are in countries where price controls or policies mean farmers receive only a portion of the final market price,” he said.

In Indonesia, palm oil is subject to export taxes and levies. Argentina has long imposed export taxes on soybeans, while Ivory Coast regulates cocoa prices through domestic price controls.

The impact is similar: reduced incentives for farmers to invest in replanting and productivity improvements.

“This is an iron law of agricultural economics. If farmers do not receive the full price, yields will stagnate or decline,” Julian explained.

He pointed to Indonesia’s palm planting data, which showed a surge in expansion during 2011–2012, followed by a sharp slowdown in recent years.

According to him, this pattern closely follows price signals.

“High prices encourage planting. Greed is a very powerful motivator,” he said. (T2)

Source: InfoSAWIT Magazine January edition 2026