Jakarta. Indonesia is moving to raise farm-gate palm oil prices after President Prabowo Subianto instructed authorities to align fresh fruit bunch (FFB) prices with gains in global crude palm oil markets.

“The president has instructed us to side with smallholder palm oil farmers,” Agriculture Minister Andi Amran Sulaiman said after a meeting with Prabowo at the Presidential Palace in Jakarta.

The directive follows government findings of what Amran described as an anomaly in domestic palm oil pricing. While global CPO prices and the US dollar have strengthened, prices received by farmers for FFB have declined in several regions.

The minister said the issue affects around 15 million palm oil farmers nationwide, making it a significant concern for rural incomes.

Benchmark palm oil futures were trading at 4,573 ringgit per ton on June 18, little changed from the previous day and up 11.48% from a year ago, even after a modest 0.26% decline over the past month.

To address the situation, the Agriculture Ministry has convened hundreds of palm oil industry players from across the country and requested assistance from the national police to monitor companies that have yet to adjust FFB prices in line with market developments.

Amran said letters had been sent to National Police Chief Listyo Sigit Prabowo and regional law enforcement authorities seeking support in overseeing compliance.

According to the ministry, around 1,900 palm oil mills operate across Indonesia. Authorities initially identified 274 companies that had not adjusted FFB purchase prices despite higher CPO prices. Following government intervention, about 90% of those firms have complied, leaving roughly 100 companies still under scrutiny.

The minister expressed confidence that FFB prices would recover fully within the next week and said longer-term reforms could improve transparency and farmer welfare.

An important element of the government's strategy is a new one-gate export system managed by Danantara Sumberdaya Indonesia, which is expected to streamline exports and reduce inefficiencies in the palm oil supply chain. Amran said the centralized export mechanism could help ensure fairer pricing for farmers while reducing leakages in commodity trading.

Last month, the Agriculture Ministry identified 139 palm oil mills suspected of purchasing FFB from farmers below government-set benchmark prices and warned that violators could face sanctions, including possible license revocations.

Officials have linked the recent decline in FFB prices to market uncertainty surrounding the implementation of the one-gate export policy. According to the ministry, confusion among businesses over the new rules contributed to a drop in farm-gate prices, which fell by between Rp 50 and Rp 1,200 per kilogram in some regions.

FFB prices currently range from Rp 2,700 to Rp 3,200 per kilogram, depending on location.