Indonesia investigates underpriced palm oil purchases from farmers

Indonesia has launched an investigation into hundreds of palm oil companies suspected of failing to raise prices paid to farmers despite a recovery in the domestic market. The move comes after a sharp price decline triggered by the country’s new export policy, which unsettled the palm oil sector in late May.

According to the Ministry of Agriculture, information on around 270–300 companies has been submitted to the police for further investigation. Authorities have requested a thorough review before any enforcement measures are taken. Most of Indonesia’s approximately 1,900 palm oil companies have already adjusted their purchasing prices upward.

The market disruption followed the introduction of Indonesia’s new export framework, which initially raised concerns about slower shipments and rising stockpiles. As a result, prices of fresh fruit bunches fell from around 3,800 rupiah per kilogram to as low as 1,500 rupiah before recovering to about 3,400 rupiah.

Government officials, industry representatives, and farmer groups have agreed that further declines in palm oil prices should be avoided to protect the livelihoods of an estimated 15 million farmers. Grower organizations have also warned that rising fuel costs and uncertainty over the new pricing system could continue to pressure farm incomes.

The case highlights Indonesia’s increasing intervention in its strategic palm oil sector. Market participants are now watching closely for the outcome of the investigations and for further details on how prices and exports will be managed under the new policy framework.