Farmers on a slick, slippery slope

The last couple of weeks have been difficult for Sumochtar, a 51-year-old oil palm farmer living in the Nagan Raya regency of Indonesia’s Aceh province. His daily income has slumped so drastically that he could not even afford rice for feeding his wife and three kids.

He has suffered a lot since the Indonesian government imposed a ban on palm oil export in late April, which has caused the prices of oil palm fresh fruit bunches (FFB) dropped by 30% to 50%.

Before the ban, Sumochtar and other farmers in Sumatra, Indonesia’s second largest palm oil producing island after Kalimantan, could earn an average 3,000 Indonesian rupiahs (88 sen) for every kilogramme of FFB.

After the ban was imposed, he could only earn less than half of the sum, ranging from 1,000 to 1,500 rupiahs (30 sen to 45 sen) per kilogramme .

“Many oil palm collectors and palm oil companies currently do not want to stock too much FFB due to the export ban,” Sumochtar said.

Indonesia, the world’s largest palm oil exporter, has recently been struggling with high prices and a shortage of cooking oil, of which palm oil is a key ingredient, whose price soared more than 50% in the local market.

In an attempt to stabilise the domestic prices, the South-East Asian country started on April 28 to ban the export of crude palm oil (CPO) and its derivatives, including cooking oil, refined, bleached and deodorized (RBD) palm oil, and RBD palm olein.

The Indonesian Palm Oil Association warned that the ban would destabilise the FFB prices and trigger a temporary stop in palm oil processing and harvesting.

The association’s Executive Director Mukti Sardjono said many palm oil producers prefer to limit their FFB stocks to avoid oversupply, as the FFB would rot in 24 hours if they are not processed.

Data from the Association of Indonesian Palm Oil Smallholders (Apkasindo) showed that since the export ban took into effect, around 25% of 1,118 palm oil companies in Indonesia has stopped buying FFB, affecting at least 3 million farmers.

On Sunday, oil palm farmers sent an open letter to President Joko Widodo demanding the government lift the export ban as the policy has destroyed their economic conditions.

“We (farmers) do not know why the cooking oil shortage can happen. We also suffer in finding cooking oil. We do not know who caused all of this condition since the beginning, but why do we have to bear the consequences?” the letter said.

Head of the Fiscal Policy Agency at the Finance Ministry, Febrio Kacaribu, has pledged to review the export ban policy, with the people’s purchasing power and the availability of basic commodities being the main considerations.

But the daily needs of the farmers and their families cannot wait for long. Sumochtar said he is thinking of no longer harvesting FFB nor working in palm oil plantations in the near future.

“I have to seek another job or work for other commodity plantations. I cannot afford daily needs for my family if things keep going like this,” he said. — Xinhua