Indonesian farmers protest against rising cost of palm oil export ban

Indonesia, the world's top palm oil exporter, on April 28 halted shipments of crude palm oil and some of its derivative products to control soaring prices of domestic cooking oil, rattling global vegetable oil markets.

However, government efforts to make cooking oil, a household staple for many Indonesian dishes, more affordable have failed, undermining the approval rating of President Joko Widodo and prompting the farmers' backlash.

"Malaysian farmers are wearing full smiles, Indonesian farmers suffer," one of the signs held up by protesters read. Malaysia is the second-largest producer of palm oil and will try to fill the market gap opened by Indonesia's export ban. Read full story

Marching next to a truck filled with palm oil fruits, farmers staged a rally outside the offices of the Coordinating Ministry of Economic Affairs, which is leading the government policy.

In a statement, the smallholder farmers' group APKASINDO said since the export ban the price of palm fruit had dropped 70% below a floor price set by regional authorities.

Independent farmers are not protected by the floor price, which is set through an agreement between mills and large-scale cooperatives.

APKASINDO estimates at least 25% of palm oil mills have stopped buying palm fruit from independent farmers since the ban started. This indicates that storage tanks are filling up at mills, said Albertus Wawan, a farmer from West Kalimantan province, by telephone.

The protesters also planned to march to the presidential palace, APKASINDO said. Similar protests were also being held in 22 other provinces, the group said.

Yuslan Thamrin, a farmer attending the Jakarta rally, said celebrations in his area of Aceh province in Sumatra for the end of Ramadan earlier this month were more muted because of the lost income from the export ban.

"With such poor prices, farmers are hesitating to even harvest," he said, adding that mills were also not taking in more fruit because storage at ports was full.

JOKOWI'S APPROVAL DROPS

Another farmer pointed to the dilemma palm oil smallholdersface.

"Harvesting the fruit is not profitable, but leaving it rotting would damage the trees," Bambang Gianto, a farmer in South Sumatra, said by telephone.

Representatives of the farmers had met some government officials to convey their demands, economic ministry official Susiwijono Moegiarso said.

President Widodo imposed the export ban on palm oil after earlier policies failed to control domestic cooking oil prices.

Jokowi, as the president is popularly known, said the need for affordable food trumped revenue concerns and the ban would be lifted only after domestic needs were met.

But a survey this week by pollster Indikator PolitikIndonesia showed his approval rating has fallen to 58.1% in May, the lowest since December 2015, largely tied to the rising cost of cooking oil and knock-on inflationary effects.

Chief Economics Minister Airlangga Hartarto has said the ban would stay in place until bulk cooking oil prices drop to 14,000 rupiah ($0.9563) per litre across Indonesia.