InfoSAWIT, JAKARTA – Indonesia’s palm oil Smallholders are calling on the government to ensure that new export governance reforms do not place additional pressure on growers, warning that the proposed Danantara Sumberdaya Indonesia (DSI) mechanism and single-window export system could complicate trade flows and weaken farm-gate prices.

The concerns were voiced by the Indonesian Oil Palm Farmers Organization Association (Perkumpulan Organisasi Petani Sawit Indonesia / POPSI) during a media briefing titled “DSI Pressures Palm Oil People’s Prosperity”, where industry representatives stressed that trade reforms must not undermine the interests of Smallholders.

POPSI Chairman Mansuetus Darto said oil palm farmers have long operated under multiple economic pressures, including lengthy supply chains and the impact of Export Duty (Bea Keluar/BK) and Export Levy (Pungutan Ekspor/PE) policies, which directly affect Fresh Fruit Bunch (FFB) prices.

“Oil palm Smallholders have carried heavy burdens for years. Their FFB prices are already reduced by long supply chains and further pressured by export duties and levies. Now DSI emerges with the potential to extend trading chains and place even greater pressure on FFB prices,” Mansuetus said in a statement received by InfoSAWIT on Friday (29/5/2026).

Concerns Over Working Capital and Farmer Payments

POPSI warned that the proposed trading framework could encourage the emergence of additional local traders purchasing crude palm oil (CPO) from independent mills at lower prices, potentially affecting FFB prices received by farmers.

The organization also highlighted comments made by Indonesia’s Finance Minister regarding the possibility that payments to palm oil producers could be made after international transactions are completed, alongside requirements to place export foreign exchange earnings (Devisa Hasil Ekspor/DHE) in state-owned banks for up to one year.

According to POPSI, such mechanisms could place pressure on industry working capital and potentially trigger delays in FFB payments or restrictions on mill procurement from farmers.

Chairman of the National Palm Oil Activists Network (Jaringan Pegiat Sawit Nasional/JPSN) for Central Kalimantan, Kobar Sembiring, said policy shifts in palm oil trade are highly sensitive for rural communities because price movements directly affect household livelihoods.

“Farmers have not fully recovered. Prices remain around Rp2,000–Rp2,500 per kilogram. Even a drop of a few hundred rupiah significantly affects families’ ability to pay for schooling, household expenses, and plantation maintenance,” he said.

Marselinus Andry, Head of Advocacy at the Indonesian Oil Palm Smallholders Union (SPKS), echoed those concerns, arguing that export-related charges have historically reduced prices received by growers.

“Smallholders are always in the weakest position within the supply chain. Whenever additional costs, levies, or trade barriers emerge, farmers are the first to absorb the impact through lower FFB prices,” Marselinus said.

POPSI Calls for Upstream Solutions

Rather than focusing solely on building new trading structures, POPSI urged the government to prioritize upstream reforms that directly strengthen farmer welfare.

The organization called for clearer regulatory certainty regarding palm oil trade mechanisms through December 2026 and requested that DSI be accompanied by a transparent and well-defined palm oil trading roadmap.

According to POPSI, strengthening Indonesia’s palm oil industry should focus on improving Smallholder welfare rather than creating more layers of bureaucracy and transaction costs.

Among the priorities proposed are accelerating the Smallholder Replanting Program (PSR), improving plantation roads and village logistics infrastructure, providing affordable fertilizers and superior seedlings, expanding access to low-cost financing, and strengthening farmer cooperatives.

Supports Digitalization, Rejects Trade Centralization

While critical of centralized trade mechanisms, POPSI said it supports modernization through transparent and integrated digital systems.

The organization proposed the development of a national digital palm oil platform capable of integrating production data, mill operations, refinery activity, CPO inventories, domestic and export transactions, payment flows, and export foreign exchange monitoring in real time.

The system, according to POPSI, should connect customs authorities, BPDP, ports, surveyors, quarantine agencies, relevant ministries, and national logistics systems.

Through integrated digital oversight, POPSI believes the government can strengthen transparency, secure state revenue, and prevent under-invoicing and transfer pricing without creating new monopolistic structures.

“When FFB prices decline, payments are delayed, farmer income falls, and village purchasing power weakens, what is at risk is not only farmer welfare but also the sustainability of economic growth in Indonesia’s palm-producing regions,” POPSI stated. (T2)