Indonesian Palm Oil Farmers Agree to Improve Governance, Urge Supply Chain Stability

The Indonesian government is set to introduce a streamlined export process for key commodities, including coal, palm oil, and ferroalloys, through a single entity, PT Danantara Sumberdaya Indonesia (DSI). This new policy, effective from June 1, 2026, aims to prevent foreign exchange leakage and enhance the governance of national palm oil trade. The announcement was made during a press conference in Jakarta on May 31, 2026.

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We support the government's spirit to increase foreign exchange. Because we understand that if foreign exchange increases, more development programs can be carried out for the benefit of the community.

The Indonesian Palm Oil Farmers Association (POPSI) has expressed its support for the government's initiative to improve trade governance and boost national foreign exchange earnings. POPSI Chairman Mansuetus Darto stated that farmers understand the importance of increased foreign exchange for national development programs. He affirmed the association's backing for the government's spirit to increase foreign exchange and its efforts to combat practices like under-invoicing that harm state revenue.

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Policies that touch upon the palm oil trade must consider their impact on the entire supply chain. Especially, independent smallholder farmers, who are the main suppliers of national palm oil raw materials.

However, POPSI also issued a caution, urging the government to design any new policies, including the single-door export system, with meticulous care. The primary concern is to ensure that these changes do not disrupt the stability of the palm oil industry's ecosystem, which supports millions of farmers across Indonesia. Darto highlighted that the palm oil industry is a complex and interconnected ecosystem, extending from farmers and mills to refineries, traders, exporters, and international buyers.

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The palm oil industry is not just about plantations and factories, but a very complex and interconnected ecosystem, starting from farmers, palm oil mills, refineries, traders, exporters, to international buyers.

Darto specifically pointed out that policies affecting palm oil trade governance must consider their impact on the entire supply chain, with a particular focus on independent smallholder farmers. These farmers are the main suppliers of raw palm oil, and they are often the first to feel the direct consequences of policy changes, even before larger industry players. This emphasis underscores the need for a holistic approach that safeguards the interests of all stakeholders within the palm oil sector.

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The direct impact of a policy is often not first felt by large industry players, but rather by independent smallholder farmers who are at the upstream sector.