Most affected by the drop in the OAC price

Jakarta, CNBC Indonesia – The price of crude palm oil (CPO) is falling in the international market. According to data from the Malaysian Derivatives Exchange, CPO prices fell by 3.52% to MYR 1,972 / ton at the close of trading on Monday (26/11/2018).

The daily decline in this amount is the first since mid-February of last year. Uncertain conditions in the international market have undoubtedly affected the country.

Smallholder oil palm producers, particularly independent smallholders who are not badociated with any enterprise, are the hardest hit. Indeed, the price of buying fresh fruit clusters (FFB) produced by their gardens has been destroyed for lack of buyers.

Palm oil mill (PKS) stocks are still full due to slowing exports. An oversupply occurs.

Mansuetus Darto, General Chairman of the Palm Oil Producers' Union (SPKS), revealed that the actual price of FFB purchase at the farm level is currently around Rs 1,100 / kg for smallholders (business partners ) and Rs 600 / kg for independent smallholders.

"The field prices today include North Sumatra, Jambi and East Kalimantan," Darto said at the end of the Indonesian palm oil producers' national consultative meeting in Nairobi. Jakarta, Wednesday (11/28/2018). The price is certainly far from the FFB reference price set by the regional government in each province and between Rs 1,200 and 1,400 / kg.

The general director of plantations of the Ministry of Agriculture, Bambang, admitted this. Even according to farmers' reports, there are animal feeds that are even bought at a price of 500 rupees / kg.

"We therefore ask for consistency, in the absence of samples [ekspor], so that the industry can guarantee the purchase of FFB at a price set by the governor of each province, "said Bambang.

For information, the government has decided to focus temporarily on pre-export CPOs of US $ 50 / ton and by-products. This decision should encourage exports to regain their enthusiasm and bring excess supply back to normal conditions. Thus, farmers' FFBs are again absorbed.

Bambang also guaranteed that each local government would impose administrative penalties on industries that would refuse to buy FFB at the provincial reference price.

Photo: Main infographic / destination country of Indonesian palm oil exports from January to August 2018 / Aristya Rahadian Krisabella

The second issue of concern to small independent farmers is the legality of the land. According to Darto, 4 million uncertified acres have been certified out of a total of about 5.5 million hectares, or 70% of all community plantation plantations spread throughout the country. Indonesia.

"Not only a farmer, but almost all independent farmers do not have a land certificate.The problem, it's the high cost of its management, about 3.5 million Rp. farmers take care of land certificates, why buy fertilizer? " Darto.

In fact, the legality of land in the form of a certificate of ownership is an absolute obligation for farmers to obtain ISPO (Indonesia Sustainable Palm Oil) certification. By obtaining ISPO certification, FFBs owned by independent smallholders have more guarantees to be purchased by PKS and transformed into CPOs.

Do not forget that certification of sustainably processed palm products is a prerequisite for the acceptance of CPO RI products in the export market, especially in the European Union. Darto hopes that President Jokowi will be able to intervene with the current drop in commodity prices.

The trick is to ask the Ministry of Agrarian and Spatial Planning (ATR) / State Land Agency (BPN) to distribute free land certificates to independent smallholders.

Photo: Computer Graphics / Palm Oil / Edward Ricardo

(miq / miq)