Palm oil farmers rally to protest Indonesia’s export ban

Bunches of harvested palm oil fruit are loaded onto a truck in the Penajam area of East Kalimantan, Borneo, Indonesia, on Wednesday, Nov. 27, 2019. For Jakarta, a city on the island of Java saddled with some of the worst superlatives in the region?Ñmost polluted, most congested, fastest sinking?Ñthe floods were an old story, the third time deluges have killed dozens since 2007. The problems have become so overwhelming that, even before the latest catastrophe, President Joko Widodo had decided to build a new capital 1,200 kilometers away on the island of Borneo.

Hundreds of smallholders in Indonesia, the world’s biggest palm oil shipper, rallied to     protest against a ban on exports of the commodity, piling pressure on President Joko Widodo to scrap the policy.

Farmers said their income is suffering because prices of fresh fruit bunches have plummeted on concern that the country won’t have enough storage capacity to hold the   pent-up supply. At least 120 farmers attended the rally, and as many as 250 from across the archipelago are expected to turn up, said Gulat Manurung, chairman of the Indonesian Oil Palm Farmers Association.

The export ban, designed to cool the domestic price of cooking oil, has caused “economic hardship” for some 16 million farmers as the low fruit prices no longer cover costs, said Manurung. Cooking oil has stayed stubbornly above the official guidance of 14,000 rupiah (96 cents) a liter in spite of the ban.

Soaring food costs have sent the approval rating for Jokowi, as the president is called, sliding to 58.1 percent, the lowest in more than six years, according to pollster Indikator’s latest survey in May. Support for Jokowi had hovered well above 60 percent except for a dip in July 2021 when the Covid-19 pandemic overwhelmed hospitals and led to thousands of deaths each day.

Fruit price

Manurung wants the government to scrap the policy. “We hope the export ban is lifted and replaced by another policy that can better control cooking oil prices,” he told     Bloomberg News during the rally on Tuesday in Jakarta.

The price for fresh fruit bunches has tumbled to about 1,200 rupiah a kilogram from 4,000 rupiah as some mills have stopped purchasing the bunches from smallholders, while others buy them at a much lower price, he said.

“What is important to us is availability and affordability. When prices are stable, then we can talk about export relaxation,” Trade Minister Muhammad Lutfi told reporters on  Tuesday when asked about plans to review the halt.

The average local price of bulk cooking oil in Indonesia remained around 17,300 rupiah a liter as of May 13. The trade ministry on Tuesday launched a program called “Cooking

Oil for The People” to sell bulk cooking oil at 14,000 rupiah per liter to people with lower incomes.

“Our goal is to have 10,000 selling points across the country from 1,200 in Sumatra and Java currently,” Lutfi said in a statement. Benchmark palm oil futures in Kuala Lumpur fell as much as 2.3 percent on Tuesday on expectations that the ban will be relaxed, but pared losses by the close. Bloomberg News

Image credits: Bloomberg

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