InfoSAWIT, JAMBI – A proposed moratorium on new palm oil mills in Jambi has triggered concern among farmer organizations, which warn that limiting processing capacity could increase transportation costs for independent smallholders and weaken their bargaining position when selling fresh fruit bunches (FFB).
The Indonesian Palm Oil Farmers Organization Association (POPSI), together with the Jambi chapter of the National Palm Oil Farmers Network (JPSN), has expressed opposition to the proposed policy, arguing that a blanket moratorium could create new challenges for farmers while also limiting future investment in the province’s palm oil industry.
The organizations responded to Jambi Governor’s Letter No. 1637/DISBUN-3/VII/2026, dated July 27, 2026, requesting data on palm oil mills from eight districts as part of preparations related to the proposed moratorium.
POPSI Chairman Mansuetus Darto said he understood the provincial government’s intention to improve palm oil governance. However, he argued that restricting the construction of new mills would not address the underlying problems faced by smallholders.
The number and location of mills directly affect how far farmers must transport their FFB. Longer distances translate into higher logistics costs and can weaken farmers’ negotiating position with buyers.
Independent farmers in Jambi currently pay around Rp200–300 per kilogram in FFB transportation costs because of relatively long delivery distances, according to Darto.
He warned that restricting additional processing capacity could make the situation even more difficult.
The issue extends beyond transportation. Darto said a mill moratorium could also affect Jambi’s ambition to develop downstream palm oil industries, particularly plans involving an integrated industrial area and the development of Ujung Jabung Port.
Those downstream projects require a reliable supply of CPO from the upstream plantation sector. If investment in new mills is restricted, investors could instead move to neighboring provinces such as Riau, South Sumatra or West Sumatra.
Such a shift could leave Jambi losing potential investment and value-added opportunities, while FFB produced in border areas could continue to flow to mills outside the province.
JPSN Jambi founder Subadri acknowledged the provincial government’s efforts to collect information on mill legality, locations, licensed capacity and actual utilization.
However, he said the data should be used to strengthen oversight, particularly regarding partnership obligations between palm oil mills and surrounding plantations, rather than becoming the basis for a blanket restriction on new mills.
He also urged the government to maintain a healthy and competitive investment climate.
Subadri pointed to another factor that could change Jambi’s palm oil supply outlook in the coming years. The recent decline in FFB production associated with the El Niño phenomenon is considered temporary, while thousands of hectares of smallholder plantations are currently undergoing the People's Palm Oil Replanting Program, or PSR.
The program, supported by the Palm Oil Plantation Fund Management Agency (BPDP), is replacing unproductive palms with certified superior planting material.
As replanted areas return to productive stages, FFB production is expected to increase significantly. If processing capacity remains constrained because of a moratorium, farmers could eventually face a shortage of mill capacity to absorb their harvest.
“If mill capacity is restricted now, the impact will be felt when PSR production increases. Production will rise while processing capacity has already been capped,” Subadri said.
Merangin Regional Legislative Council member Ahmad Fahmi, S.H., M.H., also supported the opposition to the proposed moratorium. He argued that the core problem in the palm oil industry is not necessarily the number of mills, but the quality of partnerships between companies and farmers.
He recommended that the government prioritize supply-chain traceability through better registration of cultivation permits, known as STDB, faster Indonesian Sustainable Palm Oil (ISPO) and Roundtable on Sustainable Palm Oil (RSPO) certification, and broader farmer empowerment.
Better farmer data, he said, could improve access to replanting programs, infrastructure and other support from BPDP, while also opening opportunities to enter export markets where traceability is increasingly important.
As an alternative to a blanket moratorium, POPSI and JPSN proposed requiring every new palm oil mill to demonstrate a clear source of FFB supply and establish legally recognized partnerships with surrounding plantations.
The approach, they argue, would allow the provincial government to strengthen governance without shutting the door to new investment or reducing farmers’ access to nearby processing facilities.
The organizations also called for district governments and palm oil farmers to play a larger role in determining future mill requirements, arguing that decisions made closer to the production areas would better reflect conditions on the ground and support fairer partnerships across Jambi’s palm oil supply chain. (T2)
Source: InfoSAWIT
