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)