InfoSAWIT, PADANG – The West Sumatra provincial government has moved quickly to anticipate potential volatility in palm oil Fresh Fruit Bunch (FFB) prices following the central government’s new Natural Resource Export Governance policy.
Through an urgent letter numbered 521.3/1114/DPTPH/V-2026 dated May 25, 2026, Governor Mahyeldi instructed stakeholders to take preventive measures aimed at preserving FFB price stability and maintaining regional economic conditions.
The directive was addressed to palm oil-producing district governments, plantation companies, palm oil mills, GAPKI West Sumatra, and the Indonesian Palm Oil Smallholders Association (APKASINDO) West Sumatra.
The provincial government said it had observed market reactions in the form of declining FFB purchasing prices at several mills after President Joko Widodo’s May 20 announcement regarding a new Government Regulation on Natural Resource Export Governance.
Officials warned that prolonged price pressure could disrupt both economic and social stability in palm oil-producing areas.
According to the provincial administration, the central government’s policy is fundamentally intended to strengthen downstream development and improve palm oil trade governance while ensuring long-term sustainability for the industry.
To prevent market disruption, the governor instructed district administrations to deploy relevant agencies to closely monitor FFB pricing at plantations and mills.
The monitoring effort is intended to ensure all FFB transactions continue referring to officially established prices, particularly for companies working with farmer cooperatives and organized smallholder institutions.
For independent FFB transactions outside partnership schemes, companies were still required to comply with prevailing ministerial regulations governing FFB purchases.
The provincial government emphasized that pricing violations or manipulative practices could face sanctions within the authorities’ jurisdiction.
“Plantation companies and palm oil mills in West Sumatra are also urged not to impose unilateral FFB price cuts under the pretext of regulatory adjustments, fruit intake restrictions, grading manipulation, or delayed payments to farmers,” the letter stated.
Industry and farmer organizations were also assigned active roles.
GAPKI West Sumatra was instructed to coordinate with member companies and ensure purchases remain fair and compliant with regulations while helping disseminate information about the new export governance framework.
Meanwhile, APKASINDO West Sumatra was encouraged to educate smallholders, discourage excessive reactions and speculative behavior, and report any violations through official channels.
The provincial government stressed that price stability and regional security remain essential foundations for the long-term sustainability of the palm oil sector. (T2)
