Indonesian palm oil farmers fret as prices plummet

Gov't urged to take prompt action to stabilize prices or risk fomenting unrest as parliament debates related bill
Indonesian palm oil farmers fret as prices plummet

 

A farmer harvests  fresh palm oil fruit at his plantation in Riau, Sumatra island in this 2018 file photo. (Photo supplied by the Palm Oil Farmers Union)

Fransiskus Andin is one of 5 million palm oil farmers in Indonesia whose lives have been affected by the falling prices of palm fruit at local markets in recent weeks.

The 42-year-old, a Catholic farmer from Suka Jaya of Sintang district in East Kalimantan province, and his friends are now facing economic hardship as the average price of fresh palm fruits has plunged from US$0.15 to just 1 cent per kilogram or lower.

Andin owns a one-hectare plantation that produces a ton of palm oil every two weeks. He used to earn $130 per month but his income has since halved.

"We're really suffering right now," he told ucanews.com.

"What makes things even worse is that the falling prices coincide with the start of the academic year, which means I'm struggling to pay my kids' tuition fees," he said.

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Andin said he had to borrow money from friends to cover the fees for his four children, who are studying at a senior high school and a local university.

His only hope now is that the local government issues a regulation to stabilize prices and take firm action against what is widely viewed as a conspiracy to cause the prices to tank.

Saifulah, a 45-year-old palm oil farmer from Siak in Riau province of Sumatra island, is facing a similar bigger problem as he has a stake in a 3-million-hectare palm plantation, the world's biggest.

Farmers own 60 percent of the plantation, or 1.8 million hectares.

"We have to sell our palm fruit at the lowest possible price because it spoils quickly and then we don't earn anything," he said.

Saifulah, who has 3 hectares, said he used to earn US$360 a month but is lucky these days to see even half that much. That means he can't afford to pay his workers' wages and transportation costs, he said.

The situation is becoming so dire that some of the other farmers have already sold off their lots just to keep their heads above water, he added.

The average price of crude palm oil (CPO) has shed 5.2 percent in the last few months, wrecking the incomes of many local farmers, Saifulah said.

Mansuetus Darto, a Catholic activist and director of the Palm Oil Farmers Union, a group that advocates on behalf of farmers' rights, said prices could keep falling until the end of 2018 due to waning global demand.

He said each of the farmers has at least a one-hectare stake in the big plantation but this is the first time they have seen their selling prices collapse at such scale.

He urged the Agriculture Ministry to intervene and stabilizes prices "to keep the farmers alive."

In his opinion, the government is duty-bound to protect farmers by distributing among them 90 percent of a US$2.1 billion contingency fund collected from palm oil companies to support biofuel projects.

Many farmers are being forced to sell their fresh fruit bunches to brokers at ludicrously cheap prices due to the threat of having warehouses full of rotting fruit, Darto said.

He blamed the nose-diving prices on the nascent China-U.S. trade war that is now affecting Indonesia's economy.

"All we can do is encourage farmers not to lose hope but rather keep on working because is the result of global trade," he said.

"We also advocate that they demand the local government respect their rights by making a regulation to protect them and stabilize prices," he added.

Meanwhile, farmers in restive Papua are also feeling the brunt of the sliding market.

The Indonesian government needs to step in and help out before things spiral out of control, said Sacred Heart Father Ansel Amo, who heads Merauke Archdiocese's Justice, Peace and Integrity of Creation Commission in Papua.

"Farmers here need reassurance [that things are going to be okay]," he told ucanews.com.

Parliament is now debating a bill on palm oil and mulling price- stability measures to protect farmers in times of crisis such as when the market is rattled by extreme volatility, according to reports.

"I hope the government [resolves this issue] quickly and gives priority to farmers rather than just to big companies," Father Amo said.

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