Ban on cooking oil export 'necessary'

Ban on cooking oil export 'necessary'

JAKARTA (JP): The government's move to ban palm oil exports
was made to stabilize cooking oil prices in the local market,
Minister of Trade and Industry Tunky Ariwibowo said yesterday.

"To guarantee cooking oil supply and prices, all CPO (crude
palm oil) and olein products will be directed toward local
consumption only for the next three months," he said.

The minister said the export ban, which would become effective
Jan. 1, was issued because the previous policy, which required
CPO producers to sell 80 percent of their products in the
domestic market, had failed to stabilize cooking oil prices.

"The measure failed to encourage producers to supply the local
market," he said at a media briefing. Tunky said the CPO supply
in the fourth week of this month was still below the targeted
amount.

He said the domestic supply continued to fall last week as
demand had surged ahead of the Moslem fasting month, which
started today.

The increased demand, which was expected to continue until the
Idul Fitri holiday at the end of the fasting month, caused a
sharp increase in cooking oil prices, he said.

Ministry data shows that the market price of cooking oil had
increased from Rp 2,200 a kilogram at the beginning of this month
to about Rp 3,000 Monday.

Tunky said CPO producers would be allowed to export their
products in April based on the export quota introduced early this
month.

According to the new export quota, CPO and olein producers are
only allowed to export up to 20 percent of output from January
until July.

Those who export their products outside the limit would be
charged a 28 percent to 30 percent surcharge on top of the
existing export tax of 4 percent to 5 percent.

The government estimates that CPO supply will be about 349,050
tons this month, or equivalent to 254,807 tons of olein. About
203,523 tons of the olein will be supplied to the domestic
market.

The remaining 51,284 tons of olein will be placed into the
stock supply, which will be about 170,729 tons at the end of
January, while local consumption is expected to be 267,264 tons
during the month.

Separately, Minister of Agriculture Sjarifudin Baharsjah said
yesterday the export ban was inevitable, as the current system
could not control local prices.

Since the government imposed the export quota, none of the
companies had submitted their export reports, he said.

Even the extra surcharge could not help lower prices
successfully, he said.

"We did not really want to ban exports, but producers and
other related parties could not work together to stabilize the
price of cooking oil," he said.

He said the new measure would help stabilize the local cooking
oil price, although it would affect the price of Indonesia's
olein and CPO products internationally.

Olein prices were mostly quoted at Rp 2,245 to Rp 2,600 a
kilogram in Jakarta yesterday, against Monday's closing of Rp
2,275 to Rp 2,500. (das)