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Smallholders demand benefits from government’s B20 policy
Amid the government’s focus on implementing the 20 percent blended biodiesel (B20) policy, palm oil smallholders have complained of a lack of attention from the government, who the farmers say has thus far concentrated its efforts on the downstream sector
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span>Amid the government’s focus on implementing the 20 percent blended biodiesel (B20) policy, palm oil smallholders have complained of a lack of attention from the government, who the farmers say has thus far concentrated its efforts on the downstream sector.
Palm Oil Smallholders Union (SPKS) chairman Mansuetus Darto said smallholders, who are responsible for 43 percent of Indonesia’s oil palm plantations at 14.3 million hectares, received unfair treatment despite the industry gaining the government’s support through the B20 policy.
“We always talk about the subsidy [for biodiesel] in the downstream sector when actually the upstream sector [smallholders] also needs the subsidy,” Mansuetus said, referring to the incentive scheme for biodiesel taken from the palm oil export levy collected by the Indonesian Oil Palm Estate Fund (BPDP-KS).
Mansuetus explained that the presence of middlemen meant smallholders received a lower price for their output, with an average difference of up to Rp 600 (4 US cents) per kilogram of palm fruit bunches (TBS) compared to the normal price.
He claimed that the situation is currently much worse because of decreasing global crude palm oil (CPO) prices, which has sat at around $400 per ton since last month, compared to better days when the price could reach $700 per ton in 2016 and 2017. Based on a survey by the SPKS, the price of TBS from independent smallholders stands at around Rp 600 per kg, while for plasma smallholders it stands at Rp 900 to Rp 1,000 per kg.
“The normal price should be around Rp 1,300 per kg of TBS, so right now [smallholders] are having difficulties to even get food on the table. Some of them have even halted production because of a lack of finance,” he said.
The union made its statement during a recent event held by local think tank for sustainable development Coaction Indonesia, which publicly released the results of its study on sustainable biodiesel.
Mansueto went on to urge the government to reevaluate the CPO export levy collected by the BPDP-KS, which he proposed to be lowered to $15 per ton, or 70 percent lower than the previous rate at $50 per ton of CPO.
“Other than that, we hope that the government could help smallholders sell palm fruit directly to the industry [as opposed to using middlemen]. I think that could be realized if the BPDP-KS can be divided into two units, one of which will work under the Agriculture Ministry,” he said.
The BPDP-KS is a special unit that pools palm oil export levies that works under the Finance Ministry. The fund has been used for replanting as well as to incentivize the B20 program.
On the same occasion, Coaction Indonesia announced that its study found a lack of government attention on emissions from palm oil production.
“The study found that the emissions from the opening of oil palm plantations in Kalimantan during 1990 to 2010 [without combustion] was estimated to be equivalent of emissions from 322,205,567 cars a year,” Coaction concluded in its study.
Therefore, Coaction Indonesia recommended the government select dedicated plantation areas to calculate productivity improvement and estimate clearly total emissions from the plantation.
Andi Novianto, deputy for energy and environmental affairs at the Office of the Coordinating Economic Minister, told The Jakarta Post that the input of both the SPKS and Coaction will be taken to the ministry.
He, however, acknowledged that the ministry was currently focusing on the downstream sector, especially on the absorption of B20 supply to all sectors, because the successful implementation of the policy would significantly reduce oil imports.
The B20 policy has been in place since 2016, but President Joko “Jokowi” Widodo on Sept. 1 ordered it to be expanded to almost all sectors, including those outside the public service obligation.
The policy is among the government’s efforts to reduce oil imports as the country’s current account deficit has continued to swell after the rupiah slid to 15,000 per US dollar in September.
