Indonesian palm oil farmers are calling on the government to reduce the export levy on palm oil exports and derivative products as the price o the commodity in world markets continued to weaken, causing suffering for the farmers.
“Amid the condition of weakening oil prices, SPKS is of the view that in order for the prices do not drop feeling at the farmers’ level, there needs to be a government policy to reduce the (export) levy. Not to scrap it, but to reduce it. Of course, this must be calculated ad it is the farmers down there who need to be saved,” Marselinus Andry, who heads the advocacy department of the Union of Palm Oil Farmers (SPKS) said on Monday (19/11).
In a text message to The Palm Scribe, Andry stressed that the levy is managed by the Law on Plantation and therefore needed to be applied, but the criticism that SPKS had so far concerned the use of the funds of and the organization of the Palm Oil Fund Management Agency (BPDPKS) which according to the organization has yet to fully side with the interests of farmers as the law stipulates.
Andry said that SPKS wanted clarity from the government regarding the falling prices of the commodity.
“We see that indeed, the CPO export levy also has an impact on the price of Fresh Fruit Buch (FFBs) and this should draw the attention of the government, so that an instrument is devised to and that the CPO export ley not significantly impact on the FFB prices,” he said.
Andry further added that the government could also support the domestic biofuel market so that it can help stabilize the price of CPO and FFBs.
“With the present conditions, we are asking that a discretion is taken, to reduce this levy, purely to protect farmers from the continuing downfall in prices,” he said.
The Association of Indonesian Palm Oil Farmers (APKASINDO) also shared the same concern and hoped that while prices were continuously low, the government considers reducing the export levy on CPO and its derivative products, said Rino Afrino, the Deputy Secretary General of the organization.
In a text message sent to The Palm Scribe, Afrino also said that APKASINDO had even already sent a letter to Coordinating Minister for the Economy, Darmin Nasution on the subject last week.
One of the three recommendations in the letter dated November 13, 2018, was that the government temporarily reduces the export levy. The two other recommendations were to improve the FFB trade arrangement in the field, including by implementing tight supervision and firm sanctions, and to settle the legality of the land of farmers who have land within forest areas.
“We propose that the export levy can be reduced temporarily so that export prices can be lowered, export be boosted and the prices of CPO and FFBs can rise too,” said the APKASINDO, a copy of which was sent to The palm Scribe.
The organization said in the letter that a sharp declined in FFB prices had been felt at farmer’s level in the past 12 months and based on reports received from 22 provincial branch offices recently, oil palm farmers and their family were really worried and suffered from the weak prices at farmer’s level, especially for independent farmers. Farmers account for some 40 percent of the total oil palm plantations in the country.
According to APKASINDO, in the field, palm oil mills set their FFB buying prices unilaterally, prices that “do not refer to the actual conditions nor the prevailing regulations.”
The government exacts a $50 export levy for every metric ton of CPO exported. It also set a $40 per ton export levy for palm fatty acid distillates and palm kernel fatty acid distillates while refined, bleached and deodorized palm olein was slapped a $30 per metric ton levy.
The proceeds from the levy go to the BPDPKS and are disbursed for subsidizing replanting efforts by smallholders as well as to promote the development and consumption of biofuels.