InfoSAWIT, JAKARTA – The Indonesian Palm Oil Farmers Organization Association (POPSI) has voiced strong opposition to the government’s proposed centralized export governance system for strategic commodities, including crude palm oil (CPO), warning that the policy could create new monopolistic practices within the national palm oil trade.

POPSI believes the proposed policy could fundamentally reshape Indonesia’s palm oil trading structure by concentrating export control under a state-owned enterprise (SOE), potentially opening the door to economic rent-seeking and excessive control over export channels by certain groups.

The concerns emerged after President Prabowo Subianto announced plans for new regulations on strategic natural resource export governance during his presentation of the 2027 Macroeconomic Framework at the House of Representatives on May 20, 2026. Under the proposal, palm oil exports would eventually be handled through a government-appointed SOE.

POPSI Chairman Mansuetus Darto criticized the government for discussing such a major policy without sufficiently involving oil palm farmers, cooperatives, farmer organizations, and industry stakeholders who have long been the backbone of Indonesia’s palm oil sector.

“We question why a policy of this magnitude is being discussed without involving palm oil farmers. Palm oil is not only about exports — it concerns the livelihoods of millions of farming families and regional economies across Indonesia,” Darto said in an official statement received by InfoSAWIT on Thursday (21/5/2026).

Compared to the Clove Trade Monopoly Era

POPSI warned the government not to repeat past mistakes in commodity trade governance, particularly the controversial Clove Marketing and Buffer Agency (BPPC) system during the New Order era.

According to Darto, a centralized one-gate trading mechanism could distort markets, suppress farmgate prices, and fuel rent-seeking practices.

“We have experienced bitter lessons when commodity monopolies were carried out in the name of national interest, but ultimately harmed farmers while enriching a small elite group,” he stressed.

POPSI noted several similarities between the proposed palm oil export system and the former clove trade structure, including the potential for monopsony power, centralized control over prices and export volumes, and the risk of elite capture in trade access distribution.

Smallholders Seen as the Most Vulnerable

According to POPSI, reducing the number of effective buyers in the export chain would automatically weaken farmers’ bargaining positions and potentially impact fresh fruit bunch (FFB) prices at the plantation level.

“In commodity trading history, when market access narrows, the lowest margin players — the farmers — are always the first to suffer,” Darto said.

The organization also warned that export centralization could disrupt the efficiency of Indonesian palm oil companies that currently operate through direct export networks, hedging systems, and global refinery partnerships. Centralized exports, POPSI argued, may increase logistics costs, raise working capital requirements, and reduce Indonesia’s competitiveness in the global palm oil market.

Concerns Over Global Market Confidence

POPSI further highlighted potential risks to international perceptions of Indonesia’s palm oil industry. Amid growing global demands for supply chain transparency and sustainability compliance — including the European Union Deforestation Regulation (EUDR) — an overly centralized export system could create negative perceptions regarding Indonesia’s governance standards.

“Strengthening sustainable palm oil cannot be achieved through trade monopolies, but through transparent governance, farmer protection, fair business competition, and supply chain transparency,” Darto emphasized.

POPSI called on the government to conduct an open review of the proposed export governance system by involving farmers, cooperatives, businesses, academics, and civil society groups. The organization also urged authorities to ensure that no monopoly practices, economic rent-seeking, or abuse of power emerge should the policy move forward. (T2)