Palm oil farmers gather to protest Indonesia’s export ban

(Bloomberg) – Hundreds of small farmers in Indonesia, the world’s largest shipper of palm oil, demonstrated against an export ban on the commodity and pressured President Joko Widodo to scrap the policy.

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Farmers said their incomes are suffering because prices for fresh fruit bundles have plummeted amid concerns the country will not have enough storage capacity to hold pent-up supplies. At least 120 farmers attended the rally and up to 250 are expected to come from across the archipelago, said Gulat Manurung, chairman of the Indonesian Oil Palm Farmers Association.

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The export ban, intended to lower the domestic price of cooking oil, has caused “economic difficulties” for some 16 million farmers as low fruit prices can no longer cover costs, Manurung said. Despite the ban, cooking oil is stubbornly above the official guideline of 14,000 rupiah (96 cents) per liter.

Rising food costs have pushed the approval rating for Jokowi, as the president is known, to 58.1%, the lowest in more than six years, according to pollster Indicator’s latest poll in May. Support for Jokowi was well over 60% apart from a dip in July 2021 as the Covid-19 pandemic overwhelmed hospitals and resulted in thousands of deaths every day.

fruit price

Manurung wants the government to give up politics. “We hope that the export ban will be lifted and replaced with another policy that can better control cooking oil prices,” he told Bloomberg News during Tuesday’s rally in Jakarta.

The price of fresh fruit bundles has fallen from 4,000 rupiah to around 1,200 rupiah per kilogram as some mills have stopped buying the bundles from small farmers, while others are buying them at a much lower price, he said.

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

The average local price of bulk cooking oil in Indonesia remained around 17,300 rupiah per liter on May 13. The Commerce Ministry on Tuesday launched a program called “Cooking Oil for the People” to sell cooking oil in bulk at 14,000 rupiah a liter to people on lower incomes.

“Our goal is to have 10,000 outlets across the country, up from the current 1,200 in Sumatra and Java,” Lutfi said in a statement. Benchmark palm oil futures in Kuala Lumpur fell as much as 2.3% on Tuesday on expectations that the ban would be eased, but pared losses by the close.

(Updates on adding prices in the last paragraph.)

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