(Bloomberg) -- Hundreds of smallholders in Indonesia, the world’s biggest palm oil exporter, rallied in protest of an export ban on the commodity, adding pressure on President Joko Widodo to end his protectionist policy.
Farmers said their income suffered because the price of the palm’s fresh fruit bunches they sold plummeted on concern the country won’t have enough storage capacity to hold the additional supply. At least 120 farmers attended the rally on Tuesday. As many as 250 from Sumatra, Kalimantan, Sulawesi and Papua are expected to turn up, according to Gulat Manurung, chairman of the Indonesian Oil Palm Farmers Association.
Indonesia’s Surprise Palm Oil Ban Risks Overflowing of Storage
The export ban aimed at cooling prices of cooking oil has caused “economic hardship” for some 16 million farmers as the low fruit prices are no longer able to cover the costs, said Manurung. Despite the policy that has been in place for three weeks, cooking oil prices have persistently stayed above the official guidance of 14,000 rupiah (96 cents) a liter.
Soaring food prices have caused the approval rating for Jokowi, as the president is called, to fall to the lowest in more than six years at 58.1%, according to pollster Indikator’s latest survey in May. Support for Jokowi had hovered well above 60% except for a dip in July 2021 when Covid-19 pandemic overwhelmed hospitals and led to thousands of deaths each day.
“We hope the export ban is lifted and replaced by another policy that can better control cooking oil prices,” Manurung told Bloomberg during the rally in Jakarta.
The price for fresh fruit bunches has tumbled to about 1,200 rupiah a kilogram from 4,000 rupiah as some mills stopped purchasing the raw material from smallholders, while others bought it at a much lower price, he said.
Affordability
“What is important to us is availability and affordability, when prices are stable then we can talk about export relaxation,” Lutfi said when asked about the plan to review the ban.
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 income.
“Our goal is to have 10,000 selling points across the country from 1,200 in Sumatra and Java currently,” Trade Minister Muhammad Lutfi said in the statement.
©2022 Bloomberg L.P.
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