Minister of Agriculture Regulation (Permentan) No. 13 of 2024 — Purchase of Oil Palm Fresh Fruit Bunches Produced by Partner Smallholders

Minister of Agriculture Regulation (Permentan) No. 13 of 2024, issued by the Ministry of Agriculture (Kementan), governs cooperation agreements and the mechanism for setting the purchase price of oil palm fresh fruit bunches (FFB) produced by partner smallholders. It replaces Permentan No. 01/Permentan/KB.120/1/2018. The regulation matters for the palm oil industry because it sets the rules for how palm oil mills buy fruit from smallholders: written partnerships, how prices are calculated, and sanctions related to FFB quality.

Key points

• Palm oil mills must buy partner smallholders' FFB under a written cooperation agreement covering rights and obligations, plantation conditions, duration (at least one planting cycle for plasma smallholders or 2 years for independent smallholders), fruit acceptance requirements and sanctions.
• Partner smallholders must sell all of their FFB only to their partner mill and may not sell to other parties; in turn, mills may not buy FFB from smallholders who are still bound by an agreement with another mill.
• The FFB purchase price is set by the head of the provincial plantation office on behalf of the governor, based on the "K" Index, CPO and palm kernel (PK) extraction rates, and CPO and PK selling prices, on the proposal of a price-setting team.
• For independent smallholders, CPO and PK extraction rates are adjusted by correction factors: the CPO rate for tenera is corrected to 90% and for dura to 81%, while the PK rate for both tenera and dura is corrected to 110% of the provincial table rates.
• The FFB price-setting team, made up of representatives of the plantation office, mills or palm oil business associations, and grower institutions or smallholder associations, must hold a price-setting meeting at least once every two weeks.
• Mills may reject, or impose a penalty in the form of a weight deduction on, FFB that does not meet the fruit acceptance requirements agreed in the cooperation agreement.

Who it affects

Plantation companies that own palm oil mills, partner smallholders (both plasma and independent), grower institutions, and the provincial and district/city plantation offices involved in setting prices.