Jakarta. The Agriculture Ministry has identified 139 palm oil mills suspected of purchasing fresh fruit bunches (FFB) from farmers below government-set regional benchmark prices, prompting authorities to warn of possible license revocations for violators.

Deputy Agriculture Minister Sudaryono said the findings had prompted the government to tighten oversight of crude palm oil supply chains and stabilize prices received by smallholders.

The ministry on Friday convened a meeting with palm oil industry stakeholders, including refinery companies, exporters, farmer associations, and state-owned plantation firms, at the Agriculture Ministry’s office in South Jakarta.

“As we previously conveyed, two days ago we identified 139 palm oil mills purchasing below the prices set in their respective regions,” Sudaryono told reporters in Jakarta on Friday.

Indonesia, the world’s largest palm oil producer, regulates FFB reference prices through provincial authorities to protect farmers from sharp price fluctuations and unfair purchasing practices by mills.

Sudaryono said some companies had begun adjusting their buying prices following earlier government meetings and public warnings. According to the ministry, 16 mills have raised their purchasing prices to comply with regional benchmarks.

“After the announcement and the meeting held two days ago, 16 mills adjusted by increasing their purchasing prices. However, many have still not complied with the prices we have set,” he said.

The government plans to continue discussions with industry players to ensure mills across palm-producing regions comply with pricing rules.

Sudaryono said authorities would strengthen supervision and take firm action against companies found violating the regulations, including the possibility of revoking operating permits.

The recent decline in FFB prices followed market concerns triggered by the government’s new one-gate export policy for natural resources, which also covers palm oil commodities.

Sudaryono said the drop in prices was largely driven by psychological market reactions, including uncertainty and limited understanding among businesses regarding the new export rules managed by state-owned trading company Danantara Sumberdaya Indonesia (DSI).

“The bottleneck behind this situation is the lack of understanding regarding the new one-gate export policy by DSI,” he said.

According to the ministry, the decline in FFB prices varied across regions, ranging from Rp 50 per kilogram to as much as Rp 1,200 per kilogram. Fresh fruit bunch prices at the farmer level currently vary between Rp 2,700 and Rp 3,200 per kilogram.

Meanwhile, Qayuum Amri, deputy chairman of the Indonesian Palm Oil Farmers Association, or Apkasindo, welcomed the government’s intervention, saying it had already helped improve prices at the farmer level.

“We appreciate the quick response from the deputy agriculture minister. The results are already visible, although the increase is still relatively small at around Rp 50 per kilogram. Still, these meetings have proven effective,” Qayuum said.