InfoSAWIT, JAKARTA – Indonesia’s Smallholders are raising concerns over the government’s proposed restructuring of palm oil export governance through PT Danantara Sumber Daya Indonesia (DSI), warning that the single export window policy could place additional pressure on growers already struggling with weak bargaining power and volatile markets.

The concerns were voiced by the Indonesian Oil Palm Smallholders Union (Serikat Petani Kelapa Sawit / SPKS), which argues that any reform of the palm oil trade system must protect Smallholders rather than expose them to new risks.

Marselinus Andri, Head of SPKS Advocacy Department, said reforms in palm oil export governance cannot be separated from structural problems that continue to affect growers at the upstream level.

“Smallholders have weak bargaining positions, depend heavily on supply chains, face low productivity, and remain highly vulnerable to market fluctuations. These conditions make farmers the most exposed group whenever national palm oil trade policies change,” Marselinus said in a statement received by InfoSAWIT on Friday (29/5/2026).

According to SPKS, improving palm oil governance should involve comprehensive reforms from upstream to downstream sectors rather than focusing narrowly on export control.

The organization believes the creation of DSI could unintentionally increase Smallholder vulnerability due to extended supply chains and stronger dependence on industrial buyers.

SPKS noted that since President Prabowo announced the single export channel policy through DSI, Fresh Fruit Bunch (FFB) prices in several producing regions have reportedly declined by around Rp1,000 per kilogram on average.

Marselinus said prices have yet to show meaningful recovery, suggesting that policy safeguards and mitigation measures remain inadequate.

“This single export policy through DSI has not been accompanied by sufficient mitigation strategies. The reality is that since the announcement, FFB prices have fallen and have not recovered in many regions. Market reactions are immediately transferred to farmers, while the government still lacks concrete measures to cushion the impact,” he said.

Risks of Monopsony and Weaker Farmer Bargaining Power

SPKS acknowledged the government’s objective of preventing under-invoicing and transfer pricing in palm oil exports but questioned whether centralized trading should become the only policy solution.

The organization argues that export oversight can still be strengthened through digitalization, transaction transparency, and stronger regulation without concentrating trade through a single channel.

Marselinus warned that excessive concentration of CPO purchasing power could create monopsony conditions—where a dominant buyer gains disproportionate influence over price formation.

“The state may strengthen export governance, but it must not create a market structure that further weakens Smallholder bargaining power. Oil palm farmers must not become the primary bearers of policy risks designed at the central level,” he stressed.

SPKS therefore urged the government to ensure that any transition in export governance does not trigger unreasonable declines in FFB prices.

The organization also called for greater transparency during the transition period, including open disclosure of export price references, market absorption data, and factors influencing price corrections at the farm level.

Calls to Review Export Levies and Foreign Exchange Rules

Beyond market supervision, SPKS emphasized the need for meaningful farmer participation in strategic palm oil policies, including downstream industrialization and export governance reform.

The union argued that palm oil trade reforms should not be designed solely to strengthen state revenue or increase trade control, but must also guarantee price protection and economic justice for Smallholders.

SPKS further urged the government to review Export Duty (Bea Keluar/BK), Export Levy (Pungutan Ekspor/PE), and Export Foreign Exchange (DHE) policies to prevent additional pressure on FFB prices and raw material purchases.

“Additional costs and trade burdens are ultimately transmitted to farmers through lower FFB purchasing prices or reduced procurement by mills,” Marselinus explained.

According to SPKS, the success of Indonesia’s palm oil governance should not be measured solely by stronger export control or higher state revenues, but by whether the welfare of millions of Smallholders—the foundation of the national palm oil industry—can be safeguarded. (T2)