Edible oil producers agree to lower prices<\/p>\n
JAKARTA (JP): Local producers of crude palm oil (CPO) and
\ncooking oil have agreed to reduce domestic prices of their
\nproducts in exchange for the lifting of the export ban.<\/p>\n
M. Nafis Daulay, an executive of the Forum for CPO and Cooking
\nOil, said Saturday that producers had agreed to cut their ex-
\nfactory price of cooking oil to Rp 2,750 (34 U.S cents) per
\nkilogram in Java.<\/p>\n
Nafis said producers had also agreed to set the ex-factory
\nprice of crude palm oil at Rp 2,680 per kilogram for consumers in
\nJava, Rp 2,640 in Belawan, North Sumatra and Rp 2,630 in Dumai,
\nRiau.<\/p>\n
\"This shows that we, CPO producers and processors, are also
\nconcerned about the situation in Indonesia and committed to
\nguaranteeing a sufficient supply to the local market,\" Nafis told
\nThe Jakarta Post from Medan, North Sumatra.<\/p>\n
He said the new prices would come into effect today.<\/p>\n
\"I hope that this move will proceed smoothly,\" Nafis said,
\nadding that it should not breach the agreement between the
\ngovernment and the International Monetary Fund.<\/p>\n
He said he had urged leading cooking oil distributors in
\nSurabaya, Semarang, Tegal and Jakarta to follow suit by cutting
\ntheir prices to retailers.<\/p>\n
Cooking oil was trading at Rp 3,300 to Rp 3,400 in Jakarta
\nlast week.<\/p>\n
Nafis, also chairman of the Federation of Edible Oil and Fats
\nAssociations, said that four Indonesian leading cooking oil
\nproducers would pioneer the program by cutting their ex-factory
\nprices.<\/p>\n
The four pioneers are those of the Salim Group, Sinar Mas
\nGroup, Musi Mas\/Pina Karya Prima (PKP Jakarta) and Karya
\nPerojonal Nelayan\/Bukit Kapur Reksa (KPN).<\/p>\n
Last December, the government banned the export of CPO, olein
\nand its other derivatives for three months in order to stabilize
\nthe price and ensure the domestic supply of cooking oil.<\/p>\n
However, the ban artificially restricted domestic cooking oil
\nprices and prompted people to hoard the product in anticipation
\nof an inevitable price rise. It consequently resulted in a
\nshortage of supplies.<\/p>\n
Under the new agreement with the IMF, the government promised
\nto lift the export ban on CPO and its derivatives -- such as
\nolein, stearin, and fatty acid -- by April 22 and replace it with
\nan export tax of not more than 40 percent as part of a new
\nagreement with IMF.<\/p>\n
The government said the level of the export tax would be
\nreviewed regularly for possible reduction, based on market prices
\nand the exchange rate, and cut to 10 percent by the end of
\nDecember 1999.<\/p>\n
Nafis said that the new prices would remain effective even
\nafter the export ban was lifted.<\/p>\n
He said such lower prices would not encourage CPO producers to
\nexport their products because the export tax would reduce the gap
\nbetween CPO prices in the world market and those in the domestic
\nmarket.<\/p>\n
\"CPO in the world market currently sells for US$650 per ton.
\nWith an export tax of 40 percent, plus transportation and other
\ncosts, its price will be equal to Rp 3,300 (per kilogram). And
\nwhat's more, the world price will be lower after the export ban
\nis lifted,\" he said.<\/p>\n
Indonesia is the world's second largest CPO producer after
\nMalaysia. The country's total production is projected to reach
\n5.9 million tons this year, only 3.2 million tons of which can be
\nabsorbed by the domestic market. (gis)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/edible-oil-producers-agree-to-lower-prices-1447893297",
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