Industry Information

Muba Plantation Agency Urges Palm Oil Mills to Continue Buying Smallholders’ FFB Amid Market Uncertainty

category:Industry Information Updated:2026-06-04 09:30:01
The appeal was outlined in a circular issued by the Head of the Musi Banyuasin Plantation Agency through Letter No. B-500.8/432/DISBUN/2026 dated May 26, 2026. The directive follows communication from the South Sumatra Provincial Plantation Agency urging precautionary measures to maintain conducive conditions amid ongoing developments in the palm oil market. Local authorities observed market reactions reflected in declining FFB purchasing prices at the Smallholders level, a situation viewed as potentially disruptive to plantation business stability and the distribution of harvested crops. In the letter, the Muba Plantation Agency firmly instructed companies to continue purchasing FFB in accordance with prevailing...
The appeal was outlined in a circular issued by the Head of the Musi Banyuasin Plantation Agency through Letter No. B-500.8/432/DISBUN/2026 dated May 26, 2026. The directive follows communication from the South Sumatra Provincial Plantation Agency urging precautionary measures to maintain conducive conditions amid ongoing developments in the palm oil market. Local authorities observed market reactions reflected in declining FFB purchasing prices at the Smallholders level, a situation viewed as potentially disruptive to plantation business stability and the distribution of harvested crops. In the letter, the Muba Plantation Agency firmly instructed companies to continue purchasing FFB in accordance with prevailing regulations. “Companies must continue purchasing palm oil FFB in accordance with the provisions stipulated under Indonesian Agriculture Minister Regulation No. 13 of 2024 regarding FFB purchases from partnered Smallholders and based on the purchasing price determined by the South Sumatra Provincial Government,” the regulation stated, as reviewed by on Tuesday (2/6/2026). The regional government also warned plantation companies and mills against unilaterally suspending FFB acceptance, emphasizing that such actions could trigger anxiety among Smallholders and nearby communities. “Do not unilaterally halt FFB acceptance in ways that may create unrest among the public and Smallholders,” the document emphasized. The Muba Plantation Agency highlighted the importance of maintaining effective communication between companies, cooperatives, farmer groups, and plasma partners in responding to shifting market conditions and export policy adjustments. At the same time, companies were encouraged to optimize mill operations according to installed capacity to ensure continued absorption of Smallholders’ harvests. Authorities also expressed concern over trading practices that could disadvantage Smallholders. Consequently, companies were urged to avoid policies that may artificially depress prices or restrict FFB purchases without clear technical justification. “Avoid practices that could harm Smallholders, including unreasonable price reductions or restrictions on FFB purchases without clear technical grounds,” the policy noted. Beyond pricing concerns, the agency also urged plantation firms to preserve sound industrial relations and workplace security through persuasive, dialogic, and humane approaches. As part of monitoring efforts, all plantation companies and palm oil mills are required to actively report developments regarding FFB purchasing prices, mill operating conditions, and field constraints to both the Musi Banyuasin Plantation Agency and the Directorate General of Plantations. The reporting requirement has been effective since May 19, 2026. Meanwhile, Smallholders’ associations such as Aspekpir and Apkasindo have been encouraged to educate Smallholders to remain calm and avoid speculative or anarchic actions during the policy transition period. Associations are also expected to formally report any suspected pricing violations committed by palm oil mills. The Muba administration stressed that should any issue emerge with the potential to disrupt regional stability or trigger social conflict, all stakeholders must immediately coordinate with local authorities and related institutions to ensure swift and effective handling. The government expressed hope that collaboration among all stakeholders would help safeguard Indonesia’s palm oil plantation sector, ensuring it remains healthy, equitable, and sustainable amid ongoing national policy adjustments.
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