The Impact of the Decline in the Price of Fresh Fruit Bunches on the Economy and Welfare of Palm Oil Farmers in Indonesia

Abstract

The government's policy in April 2022 which prohibited the export of CPO was finally revoked on May 23, 2022.  Even though in the end, the price of palm oil still fluctuated due to the limited CPO exports.  The purpose of this study was to examine the impact of falling TBS prices on the economy and welfare of oil palm farmers in Indonesia.  

The research method used is a qualitative method with library research techniques.  The results and discussion found that the decline in TBS prices greatly affected the level of the economy and the welfare of farmers, especially oil palm farmers who  mainly relied on plantation products.  It is hoped that the government policies that will be implemented will see the reality and how it impacts on the field.

Keywords: Fresh Fruit Bunches, Impact, Welfare, Economy, Oil Palm Farmers

Introduction

Palm oil is one of the contributors to the increasing economic figures of the Indonesian nation. In the agricultural sector, the oil palm plantation part in Indonesia is still the dominating star. Being an oil palm farm is certainly a good hope toimprove the family economy, apalalagi currently downstreaming palm oil  is still being sought to be developed so that it is not limited to CPO or Crude Pal Oil. So, it is hoped that in the future oil palm farmers can feel the benefits if the downstreamoil palm sector is increasingly diverse.

However, there are many obstacles to realizing good wishes for oil palm smallholders in Indonesia. Some of the policies implemented by the government actually harm oil palm farmers to cut profits that should be pocketed by farmers to connect and finance the needs of daily life. 

On April 28, 2022, the Indonesian government steadilyimplemented a policy to ban the export of CPO or crude palm oil products, causing the selling price of palm oil inthe region to decrease drastically.  

Even as a result of this export ban, palm oil farmers have suffered fantastic losses. Chairman of DPP Apkasindo, Gulat ME Manurung expressed his opinion that the ban on CPO exports is very detrimental to oil palm farmers. Wrestling said the total loss reached Rp 11.7 trillion as of the end of April alone. The policy of banning CPO exports that has been inaugurated by the government has caused the price of palm oil to fall by 40% to 70%.

Although in the end the government immediatelyrevoked the policy of banning CPO exports on May 23, 2022 (quoted by Rafika, 2022:19), the sales price of palm oil is still on the verge of being critically on the line. According to Wrestling (CNBC, 2022) in June 2022, the sales price of palm oil / FFB has touched IDR 500.00 – IDR 1,070.00. 

Not only does it have an impact on unstable palm oil prices and continuous declines, palm oil mills also experience losses. Some factories have to implement an open-and-close system to deal with this polemic.