- Title: Indonesian palm oil smallholders hit by export ban
- Date: 27th April 2022
- Summary: KAMPAR, RIAU PROVINCE, INDONESIA (APRIL 26, 2022) (REUTERS) (MUTE) DRONE VIDEO OF PALM OIL FACTORY WITHIN PLANTATION DRONE VIDEO OF PALM FRUIT STORAGE BUILDING WITHIN PLANTATION KAMPAR, RIAU PROVINCE, INDONESIA (APRIL 26, 2022) (REUTERS) 30-YEAR-OLD PALM OIL FARMER, AHMAD DAILAMI, LOOKING FOR RIPE PALM FRUIT OLD LEAVES BEING CUT FROM TREE DAILAMI HARVESTING PALM FRUIT PALM
- Embargoed: 11th May 2022 11:59
- Keywords: CPO Indonesia commodity cooking oil economy export ban farmer palm oil
- Location: KAMPAR, JAKARTA AND BOGOR, INDONESIA
- City: KAMPAR, JAKARTA AND BOGOR, INDONESIA
- Country: Indonesia
- Topics: Asia / Pacific,Government/Politics,International Trade,Editors' Choice
- Reuters ID: LVA001421627042022RP1
- Aspect Ratio: 16:9
- Story Text: Indonesia's palm oil smallholders have enjoyed high income over the past year due to a global price surge.
But after concerns over the domestic supply led to President Joko Widodo announcing an export ban of some palm oil products from Thursday (April 28), farmers fear they will bear the brunt of the stoppage.
The world's top palm oil producer said it will ban exports of refined, bleached and deodorised (RBD) palm olein - which is produced by crushing palm fruit before processing to remove impurities - in an effort to lower prices of domestic cooking oil.
The move, announced on Friday (April 22) evening by 'Jokowi,' as the president is known, had already affected prices of fresh palm fruit bunches in Kampar, Riau Province on Indonesia's Sumatra island, local farmers said.
Ahmad Dailami, a 30-year old smallholder, said on Monday (April 25) he could still sell his palm fruit at 3,500 rupiah ($0.24) per kilogram, but prices were halved to 1,500 rupiah ($0.10) by Tuesday (April 26).
Dailami said he was worried prices could fall even further ahead of the Islamic Eid Al-Fitr holiday, which falls in early May.
If fruit prices continue to drop, Dailami fears farmers would be forced to cut their fertiliser use from the typical three or four times a month to once or twice.
A cost-saving drop in fertiliser usage could in turn affect the future output of his plantation.
Global prices of urea, the most commonly-used fertiliser, are up over 100% from a year ago and have risen 30% so far this year after Russia's invasion of Ukraine severed shipments from the Black Sea.
Indonesia's chief economic minister Airlangga Hartarto said the ban would stay in place until prices of bulk cooking oil fall to 14,000 rupiah per litre across the country.
Similar drops in palm fruit prices have also been seen in other parts of the country, said Mansuetus Darto, secretary general of Indonesia's Oil Palm Farmers Union.
He said special attention was needed for farmers with holdings smaller than 25 hectares (0.25 square kilometres), who number around 80,000.
Smallholders account for nearly seven million hectares of Indonesia's total 16.4 million hectares of palm plantations.
High global palm oil prices have allowed farmers to afford increasingly expensive fertiliser and, in some cases, left them enough to buy new SUVs, said Suher, a 57-year-old oil farmer in Kampar.
Now, Suher is worried not only by the prospect of falling prices, but fears that palm oil companies will stop buying from independent farmers.
Chief economic minister Airlangga said in a statement late on Tuesday (April 26) that he hoped palm companies will continue to buy farmers' fruit at a fair price.
The Agriculture Ministry has sent out notes to provincial governments to strengthen monitoring to ensure palm fruit from farmers was bought in accordance to pricing rules.
The regional government can recommend permit removals for those violating the rules, Dedi Junaedi, a senior agriculture ministry said.
Indonesia typically exports about $2.5 billion to $3 billion of palm oil products per month.
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