Indonesia's oil palm sector is facing significant turmoil following the government's recent announcement of new export rules, which has led to a sharp decline in crop prices and widespread uncertainty among farmers and market participants [1]. Farmers, such as Dayatri from Bengkulu province, are struggling as the price of urea fertilizer surged from 400,000 rupiah ($22) to 700,000 rupiah per 50-kilogram sack in late April, while the selling price of oil palm fruit has plummeted, making it difficult for them to cover basic expenses [1].
The new export policy, introduced under President Prabowo, has caused production to fall and sparked volatility in the market, with both smallholders and large producers expressing concern over the sustainability of their operations [1]. Market analysts report that the sector is experiencing instability due to these policy-driven disruptions, leading traders and buyers to adopt a wait-and-see approach [1]. Technical charts indicate that support levels for local crude palm oil are breaking, with no clear resistance in sight, contributing to a bearish market sentiment [1].
The government has not yet provided detailed guidance on the new export policy, leaving the industry in limbo and exacerbating the uncertainty [1]. Until more clarity emerges, prices are expected to remain under pressure, and further declines are possible, especially if input costs such as fertilizer continue to rise [1].
CONCLUSION
The Indonesian oil palm industry is under significant stress due to new export rules and rising input costs, resulting in falling prices and market instability. Without clear government guidance, both farmers and market participants anticipate continued volatility and potential further declines in prices.