InfoSAWIT, JAKARTA – The recent plunge in Fresh Fruit Bunches (FFB) prices across several palm oil-producing regions in Indonesia has sparked growing concern among industry players, prompting the Indonesian Association of Micro, Small and Medium Palm Oil Mills (GAPPKES MIKEMINDO) to urge the government to take immediate mitigation measures and launch a comprehensive investigation.
GAPPKES MIKEMINDO Chairman M. Salim Simangunsong expressed concern over the widespread decline in Smallholders’ FFB prices, which he believes has been fueled by market panic and uncertainty surrounding discussions on a proposed single-gate export mechanism through state-owned enterprises (SOEs).
According to Salim, the policy transition has generated negative market sentiment, influencing purchasing decisions at several palm oil mills and leading to lower FFB buying prices for independent Smallholders.
He warned that Smallholders have become the most vulnerable party in the current market turbulence despite remaining the backbone of Indonesia’s palm oil production.
“We urge the government to conduct mitigation efforts and a thorough investigation into actions taken by palm oil mills that have lowered FFB purchasing prices for Smallholders,” Salim said in a statement received by InfoSAWIT on Tuesday (2/6/2026).
“We suspect these price reductions may be occurring in a structured manner because the decline is happening almost evenly across Indonesia, while global CPO prices remain relatively stable. It appears as though there may be coordinated actions behind the situation,” he added.
GAPPKES MIKEMINDO reported that over the past several days, FFB prices at the Smallholders level had dropped sharply by around Rp800 to Rp1,000 per kilogram.
The association believes the decline may be linked to supply chain disruptions, uncertainty over trading mechanisms, and tender activities disrupted by the export policy debate.
Meanwhile, the government, through the Ministry of Agriculture and the National Food Task Force, has clarified that the proposed export arrangement involving SOEs is intended to improve palm oil trade governance, strengthen tax transparency, and enhance national foreign exchange earnings.
Authorities have also appealed to palm oil mills to readjust field-level FFB purchasing prices to maintain stability and prevent losses among Smallholders.
Despite those assurances, GAPPKES MIKEMINDO argued that recurring disruptions in Indonesia’s palm oil trading system highlight the need for more fundamental reforms, particularly regarding Smallholders’ bargaining power within the processing industry.
As an organization representing micro, small, and medium-scale community-based palm oil mills, known as Pabrik Kelapa Sawit Rakyat (PABKESRA), GAPPKES MIKEMINDO proposed stronger direct connectivity between Smallholders and Indonesia’s downstream palm oil industries.
The initiative, according to the association, would reduce Smallholders’ dependence on large-scale mills while strengthening a more inclusive and community-based palm oil value chain.
“If there is recognition for Smallholders, then there should also be stronger support and recognition for community-based palm oil mills or PABKESRA,” Salim said.
“It is time for Smallholders to be directly involved in downstream palm oil industries without full dependence on large palm oil mills,” he added.
GAPPKES MIKEMINDO further suggested that strengthening PABKESRA could support Indonesia’s national energy agenda, particularly as a supplier of renewable energy feedstock.
The organization believes such a model would improve Smallholders’ bargaining power, create more stable FFB prices, support downstream industrialization, and accelerate national energy self-sufficiency through bioenergy development.
For that reason, the association called on the government to take concrete measures to stabilize FFB prices, protect Smallholders from market volatility, and accelerate reforms toward a fairer, more transparent, and more inclusive palm oil trading system in Indonesia. (T2)
