The Palm Oil Farmers Union (SPKS) is hailing the government’s decision to drop an export levy for the commodity but said that the fund gathered from the levy was heavily in favor of benefiting the biodiesel industry, and not the smallholders.
In a press release issued on Thursday (6/12), SPKS said that it “appreciated” the government decision to temporarily slash the export levy from $50 per ton to nil as long as prices remain below $570 per ton.
“However, on the other hand, the portion of the distribution and use of the fund from the levy on palm oil farmers are not commensurate with the contribution of the palm oil farmers and the impact it has on them. The allocation for biodiesel subsidies are much bigger compared to the allocation for replanting and for improving the plantation human resources,” the union said.
It added that only three percent of the fund gathered from the levy has gone to farmers so far while the biofuel subsidies took the rest.
SPKS Secretary General Mansuetus Darto said in the release that so far, the disbursement of the fund for farmers by the Palm Oil Plantation Fund Management Agency (BPD-PKS) has been slow because of “mismanagement” by the agency which comes under the finance ministry. The agency, SPKS continued, did not understand the problems of palm oil and accorded much more attention to the biodiesel industry instead.
It also said that the levy, when restored should rather be set at only $10 per ton, and should be managed by an agency that came under the agriculture ministry, not the finance ministry.
Darto said that besides of the levy, many other factors contributed to the pressure on the prices of palm oil fresh fruit bunches (FFBs), citing overproduction, the prices of other vegetable oils and then management of the purchase of the FFBs from farmers by third parties which is currently not under proper supervision.
Darto also said that the palm oil for the biodiesel program should be purchased from legally recognized farmers and not allowed to be grown by the biodiesel producers themselves.
“We are also calling on the Present to immediately make sure that the sources for the B20 product is obtained from people’s plantation. Farmers have always only become the onlookers mid the boom in the domestic biodiesel industry and it should be that it is people’s plantation that must be prioritized,” he said.
Such a move, he said would enable farmers to earn some added value to their products that so far are only sold to intermediaries at “very low prices.”
SPKS head of advocacy, Marselinus Andry said that the temporary scrapping of the export levy did not mean that the government no longer had any responsibility regarding the palm oil industry and its farmers. The government needed to come out with a solution to develop the domestic market so that it does not have to solely depend on the Biodiesel program. Almost 80 percent of the national palm oil output is exported.
“The government must develop the downstream sector and the end products of the Indonesian palm oil industry, be that in the food industry, and the ones for customary goods, cosmetics, and health,” Andry said.
He also said that improvements in the management of BPD PKS should become a priority in order to support an increase in productivity for the smallholders’ plantations.
Smallholders currently account for about 40 percent of the country’s palm oil plantations but their productivity is far below that of plantations managed by large corporations. The government is currently on a drive to raise their productivity, including through a replanting program that would use better quality seedlings capable of higher productivity.