Indonesia’s Coconut Market Faces Price Surge Amid Export Demand and Domestic Shortages
The coconut market in Indonesia is grappling with a significant price surge, driven by a scarcity of domestic stock. This crisis has drawn attention from experts and officials, particularly due to the rising demand for coconut exports, especially coconut oil. Amzul Rifin, an agribusiness expert from IPB University, attributes the domestic shortage to increased export activity. Speaking on March 28, 2025, Amzul noted that while the value of coconut oil exports has risen, the volume of these exports has declined, reflecting higher global prices.
“Higher global prices make exports far more profitable than selling coconuts in the domestic market,” Amzul explained. This dynamic underscores the challenges faced by local farmers and the broader coconut supply chain in Indonesia. In 2024, Indonesia produced 2.89 million tons of coconuts, with a staggering 98% coming from smallholder farmers. However, the situation is further complicated by the fact that in 2022, around 67% of coconut exports were in the form of crude or semi-finished coconut oil, limiting the availability of fresh coconuts for local consumption.
To address the crisis, Amzul suggests increasing productivity and expanding coconut planting areas. Yet, he acknowledges a significant hurdle: competition with oil palm, which often proves more lucrative for farmers. “To keep farmers interested in growing coconuts, their income must be increased through fresh coconuts and derivative products,” he emphasized, advocating for strategies that balance the needs of both domestic consumers and international markets.
Local Governments Step In
In the province of Kepri, Governor Ansar Ahmad has taken steps to ensure the availability of santan (coconut milk) amid rising prices and dwindling supplies. The provincial government, through the Department of Industry and Trade (Disperindag) of Kepri, is actively monitoring the situation. Following a coordination meeting at the Kepri Regional Police, Governor Ahmad stated, “We received results regarding this matter, and we are closely watching the supply of santan .”
Governor Ahmad pointed out that the decreasing stock of santan in Kepri is directly linked to increased coconut exports. He has met with the Minister of Trade to request limits on coconut exports to safeguard local supplies. The Minister responded by noting that the exported coconuts belong to farmers, presenting them with a significant economic opportunity. This exchange highlights the delicate balance between supporting local farmers and ensuring domestic needs are met.
Central Government Intervention
To address the santan shortage, the central government has pledged to assist in devising a scheme to meet domestic demands. Governor Ahmad expressed hope that domestic coconut industries could compete effectively, benefiting coconut farmers. “This is the time to make coconut farmers happy,” he emphasized, underscoring the importance of supporting local agriculture.
Despite the challenges, Governor Ahmad assured that the current stock of basic necessities in Kepri remains sufficient and stable. However, he cautioned stakeholders against exploiting high-demand periods to inflate prices. “In market law, when demand rises, prices tend to increase, but we must ensure that this rise does not become an opportunity for traders to take advantage of consumers,” he warned.
Balancing Export and Domestic Needs
The intertwined issues of coconut supply, export demands, and local market needs highlight the complexities facing Indonesia’s agricultural sector. As exports continue to rise, the challenge remains to strike a balance that supports both local farmers and the domestic market. Experts like Amzul Rifin advocate for increased productivity, while government officials like Governor Ansar Ahmad push for measures to stabilize local supplies.
The hope is that a comprehensive approach can be developed to address these pressing issues. By fostering collaboration among stakeholders, Indonesia can navigate the delicate interplay between local needs and the lucrative opportunities presented by international markets.
A Microcosm of Broader Agricultural Challenges
The situation surrounding Indonesia’s coconut market serves as a microcosm of broader agricultural challenges. It underscores the need to carefully balance local demands with the opportunities presented by global trade. As stakeholders work together, the focus remains on ensuring that both farmers and consumers can thrive in an evolving economic landscape.
By addressing these challenges head-on, Indonesia aims to create a sustainable future for its coconut industry—one that benefits farmers, meets domestic needs, and capitalizes on international demand.
