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Indonesian farmers protest against rising cost of palm oil export ban

By Bernadette Christina and Heru Asprihanto

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JAKARTA, May 17 (Reuters) – Hundreds of Indonesian smallholder farmers staged a protest on Tuesday in the capital Jakarta and in other parts of the country, demanding the government end a palm oil export ban that has slashed their incomes.

Indonesia, the world’s top palm oil exporter, on April 28 halted shipments of crude palm oil and some of its derivative products to control soaring prices of domestic cooking oil, rattling global vegetable oil markets.

However, government efforts to make cooking oil, a household staple for many Indonesian dishes, more affordable have failed, undermining the approval rating of President Joko Widodo and prompting the farmers’ backlash.

“Malaysian farmers are wearing full smiles, Indonesian farmers suffer,” one of the signs held up by protesters read, as they marched next to a truck filled with palm oil fruits.

Rival producer Malaysia aims to fill the market gap opened by Indonesia’s export ban.

In a statement, the smallholder farmers’ group APKASINDO said since the export ban the price of palm fruit had dropped 70% below a floor price set by regional authorities.

Independent farmers are not protected by the floor price, which is fixed through an agreement between mills and large-scale cooperatives.

APKASINDO estimates at least 25% of palm oil mills have stopped buying palm fruit from independent farmers since the ban started, indicating storage tanks are filling up at mills.

Similar protests by farmers were also planned in 22 other provinces, APKASINDO said.

Yuslan Thamrin, a farmer attending the Jakarta rally, said celebrations in his area of Aceh province in Sumatra for the end of Ramadan this month were more muted because of the lost income from the export ban.

“With such poor prices, farmers are hesitating to even harvest,” he said, adding that mills were also not taking in more fruit because storage at ports was full.


Another farmer pointed to the dilemma palm oil smallholders face.

“Harvesting the fruit is not profitable, but leaving it rotting would damage the trees,” Bambang Gianto, a farmer in South Sumatra, said by telephone.

Representatives of the protesters met with presidential chief of staff Moeldoko who pledged to convey their demands regarding the ban to the president and said the government would improve governance of palm fruit price rules to ensure farmers get fair prices.

In a statement, he said the export ban was implemented in response to demand for cooking oil “but that doesn’t mean that the president doesn’t protect the interests of oil palm farmers.”

Jokowi, as the president is popularly known, imposed the export ban on palm oil after earlier policies failed to control domestic cooking oil prices, saying that the need for affordable food trumped revenue concerns and the ban would be lifted only after domestic needs were met.

An opinion poll this week showed his approval rating sagged to 58.1% in May, the lowest since December 2015, largely tied to the rising cost of cooking oil.

Yose Rizal Damuri, an executive director at the Center for Strategic and International Studies, said the type of price control policies Indonesia was trying to implement were flawed.

“This is a policy that was taken just to show that the president is doing something,” he said, urging authorities to allow the price to track the market and compensate consumers through other means.

Senior minister Airlangga Hartarto has said the ban would stay in place until bulk cooking oil prices drop to 14,000 rupiah ($0.9563) per litre across Indonesia.

Trade Ministry data showed that as of Friday that bulk cooking oil averaged 17,300 rupiah per litre.

(Additional reporting by Willy Kurniawan, Johan Purnomo, Stanley Widianto; Writing by Fransiska Nangoy; editing by Ed Davies, Christian Schmollinger and Susan Fenton)


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Recriminations fly as Indonesia resumes palm oil exports

By Bernadette Christina and Rajendra Jadhav

JAKARTA, May 20 (Reuters) – Long lines of trucks trying to unload palm fruit formed outside Indonesian processing mills this week, illustrating the growing cost of a palm oil export ban by the world’s biggest producer.

The trucks were stuck for days as storage space for palm oil neared capacity and, with local crop prices slumping by 70%, farmers took to the streets to demand a policy change.

President Joko Widodo has now agreed to lift the export ban, despite a bid to flood the local market with palm oil failing to bring down the price of cooking oil to a government target.

“Ultimately, an increasing realisation that the export ban was starting to hurt palm oil producers without benefiting the end-consumers all that much prompted the reversal,” Wellian Wiranto, an economist at OCBC Bank in Singapore, said in a note.

A palm oil farmer in West Sulawesi told Reuters trucks in his area had been stuck for days as farmers desperate to try to limit losses bypassed agents and offloaded their crop.

“But the mill is prioritising their partners, so the number of non-partner farmers is rising and waiting in a long queue,” said Irfan, who uses one name.

The pain caused to farmers comes after a string of policy changes aimed at containing the soaring price of palm oil, a staple for Indonesian families.

Jokowi, as the president is known, imposed the export ban, saying a need for affordable food trumped revenue concerns.

The president then justified ending the export ban by arguing cooking oil prices were expected to come down in coming weeks.On Friday, his government unsettled markets again by announcing a domestic sales requirement to ensure supply at home.


The cost of the export ban was estimated by the government at $400 million a month in lost state revenue, but there are also questions over longer-term damage in the eyes of Indonesia’s trading partners.

India, the world’s biggest buyer of palm oil, previously bought two thirds of its supplies from Indonesia but has started to buy more from Malaysia and Thailand

“We incurred losses this month as Indonesian shipments couldn’t land because of the ban. We bought from other suppliers at a higher price,” said a Mumbai-based palm oil buyer.

A Bangladesh-based vegetable oil refiner also expressed frustration over Indonesian flip-flops.

“Indonesia was our biggest supplier with a market share of more than 80%. But we will bring down reliance even if Indonesia removes all the restrictions,” said the Dhaka-based refiner.

Pakistan, another big buyer, was also looking to balance out it suppliers, including from the world’s second-biggest producer, Malaysia.

“Pakistan would love to buy more from Malaysia, but they don’t have enough stocks,” said Rasheed JanMohd, chairman of the Pakistan Edible oil Refiners Association.

Malaysia’s Plantation Industries and Commodities Minister Zuraida Kamaruddin said in a May 10 interview that some importing countries had sought to increase supplies of Malaysian palm oil.

Still, Julian McGill, head of South East Asia at LMC International, said importers were unlikely to cut themselves off from Indonesia.

“When Indonesia re-enters the market, as a distress seller of the large stocks that have accumulated during the export ban, they should find plenty of buyers,” he said.(Additonal reporting by Zahra Matarani and Fransiska Nangoy in Jakarta and Mei Mei Chu in Kuala Lumpur; Writing by Ed Davies; Editing by Nick Macfie)


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