B50 palm oil biodiesel worries Indonesian farmers
In Indonesia, Jakarta Globe reported that Indonesian palm oil farmers have warned the government that smallholders are the ones who will bear the brunt of a hasty biodiesel program expansion.
Indonesia recently started blending 50% palm oil-based biodiesel with 50% conventional diesel. The policy, known as B50, is an expansion of the previous B40 program, which has a lower palm oil blend of 40%. The government sees the move as a cure to the national fuel import reliance following soaring fuel prices in the wake of the US-Iran war, according to the report.
However, the oil palm smallholder association POPSI fears that the B50 will only add to existing problems, especially if implemented in a rush.
“We are not against the biodiesel program. What we don’t want is for it to be the palm oil farmers that have to pay the price when prices of fresh fruit bunches decline,” POPSI chair Mansuetus Darto said.
Over the years, Indonesia has been subsidizing this cost-heavy biodiesel program using proceeds from export levies. It is currently set at 12.5% of the palm oil monthly reference price. POPSI is worried that a 12.5% levy threshold for the sake of the B50 mandate would weaken the net CPO price. The purchase price of fresh fruit bunches or FFBs — the key raw material for palm oil mills — follows the levy-deducted CPO price.
The group then proposed a more flexible blending mechanism, which puts a 30% rate or B30 as the minimum threshold, according to the report.
Category: Food & Agriculture
