According to sawitindonesia.com, the proliferation of unlicensed palm oil mills—442 units operating without plantations—and rampant theft of fresh fruit bunches (TBS) are destabilizing Indonesia’s palm oil supply chain, with reported theft rates reaching 60% at some member plantations.
Rising Theft and Unregulated Infrastructure
The United Nations Development Programme (UNDP) hosted a multistakeholder forum in South Jakarta on 10/9/2026 titled “Strengthening a Transparent, Inclusive, and Sustainable Palm Oil Supply Chain,” where industry leaders raised alarms over surging TBS theft and the emergence of informal infrastructure. Agam Fatchurrochman, Head of Sustainability at the Indonesian Palm Oil Producers Association (GAPKI), stated that organized theft now extends from informal “berondolan” (loose fruit collection) by children to armed gangs resisting law enforcement.
He added:
“Reports from several members indicate theft levels in their plantations have reached 50–60%, ranging from cultural loose-fruit gathering by children to organized theft syndicates that confront authorities.” — Agam Fatchurrochman, Head of Sustainability, GAPKI
This surge coincides with the unchecked growth of non-conventional facilities—including unauthorized loading ramps and so-called “PKS berondolan” (scattered mills)—that allegedly serve as outlets for stolen TBS. The absence of strict oversight across legality, environmental impact management (AMDAL), and metrology has created an unlevel playing field against licensed mills.
Quality, Compliance, and Market Risks
Unregulated processing is directly degrading national crude palm oil (CPO) quality: high free fatty acid (FFA) levels are increasingly common due to delayed or improper handling of TBS. This degradation threatens Indonesia’s compliance with the European Union Deforestation Regulation (EUDR), which enters full force on 30 December 2026.
The EUDR requires full traceability back to the plantation level—a standard undermined when TBS enters the supply chain through unregistered loading ramps or mills lacking legal permits or environmental clearance. With 442 such mills operating nationwide, traceability gaps widen significantly.
Moreover, the fragmented system erodes farmer income: Ratnawati Nurkhoiry, researcher at the Palm Oil Research Center (PPKS), noted that the current supply chain structure—designed to serve 4.7 million hectares of independent smallholders—actually reduces the farmers’ share of final revenue due to excessive intermediaries and delays in payment.
Toward Formalization and Traceability
GAPKI is urging urgent regulatory action to formalize and monitor all downstream palm oil infrastructure—not only to curb theft but also to ensure alignment with international sustainability standards. PPKS researchers emphasize that legal recognition of loading ramps and small-scale mills must be coupled with mandatory digital traceability systems tied to farmer registration and land mapping.
Without such integration, the sector risks reputational damage in global markets and potential trade restrictions under frameworks like the EUDR. The 2026 deadline for full EUDR implementation intensifies the urgency of systemic reform across licensing, monitoring, and smallholder inclusion.
Source: sawitindonesia.com
Compiled from international media by the SCI.AI editorial team.
