Indonesian Minister Calls Palm Oil Price Drop Anomaly, Suspects Collusion

Indonesia's Minister of Agriculture, Andi Amran Sulaiman, has declared the recent decline in fresh fruit bunch (FFB) prices for palm oil an anomaly. He highlighted that prices should be rising, not falling, given the rupiah's 10% weakening against the US dollar and strong global crude palm oil (CPO) prices. The minister stated that this situation presents an opportunity for increased export earnings.

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This is an anomaly at this time; prices should be rising, not falling. Why? Because the dollar exchange rate differs by 10 percent. Yes, it should rise. There is no reason for it to fall.

Following a meeting with palm oil associations, farmers, exporters, and law enforcement officials from 25 provinces, an agreement was reached to return FFB prices to levels reflecting market conditions. "Today we announce, thank God, that there are no more price drops. Prices must rise to their previous levels. If possible, they should rise even higher," Amran announced in Jakarta on Monday.

The Ministry of Agriculture identified approximately 270 to 300 palm oil companies that have not yet adjusted their FFB purchase prices. These companies will be subject to government scrutiny, with their data to be shared with the police for investigation into the reasons behind the price stagnation. The government expects these companies to increase prices by at least 10% compared to previous levels, considering the current exchange rate of Rp18,000 per US dollar.

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Today we announce, thank God, that there are no more price drops. Prices must rise to their previous levels. If possible, they should rise even higher.

Brig. Gen. Pol. Ade Safri Simanjuntak, head of the National Police's Food Task Force, echoed concerns, noting irregularities in the FFB price drop. He suspects indications of collusion or a "secret conspiracy" among companies to suppress prices while global CPO rates remain stable or increase. The police will collaborate with the Business Competition Supervisory Commission (KPPU) to investigate these alleged cartel activities and take legal action if violations are found.

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So we suspect there are indications of a cartel here or a malicious conspiracy, a secret conspiracy carried out to agree on lowering FFB prices at a time when global CPO prices are not falling or are tending to rise.