Bulog to buy 29,000 tons of palm olein

JAKARTA (JP): The State Logistics Agency (Bulog) has opened a tender to buy 29,000 metric tons of palm olein from private domestic producers at international market prices, the agency's chairman Beddu Amang said yesterday.

Beddu said the agency would also buy another 60,000 tons of palm olein from state plantation companies this month in a bid stabilize prices of the cooking oil on the domestic market.

"The price of the olein will range between Rp 5,000 (36 U.S. cents) and Rp 5,300 per kilogram," Beddu said after a ceremony for the handover of rice from Thailand.

Bulog was given back its exclusive right to distribute cooking oil on the domestic market last week, replacing the previous distributors, state-owned trading companies PT Dharma Niaga and PT Pantja Niaga.

Beddu said Bulog would sell the olein, the cooking oil made from crude palm oil (CPO) -- to traditional markets through cooperatives at a maximum price of between Rp 3,900 and Rp 4,000 per kilogram.

The price differential between Bulog's purchasing price from the private and state companies and the retail price would be made up by a government subsidy, which would come from export taxes of crude palm oil (CPO) and its derivatives.

Traders said olein was yesterday quoted at 5,300 rupiah/kg and 5,750 in Medan and Jakarta, respectively.

Early this month, the government raised the export tax of CPO to 60 percent from 40 percent to discourage producers from exporting and to cut cooking oil prices at home.

But CPO producers are still preferring to sell their products overseas despite the high export tax because the sharp depreciation of the rupiah against U.S. dollar gives them substantial profits from their exports.

Beddu defended the private CPO producers for preferring to export their products than to supply local markets at lower prices.

"The companies are only doing business, they want to export," he said.

One way of encouraging companies to sell their products here instead of exporting them was "by buying the products at market prices," he said.

"If we only tell them to sell cheaper, they will say yes in front of us, but not behind us," he said.

Beddu said that if the rupiah strengthened to 10,000 against the U.S. dollar there would be no needs to subsidize cooking oil.

Thai rice aid

At yesterday's ceremony, which was attended by Thai Ambassador to Indonesia Somphand Kokilanon, Beddu said Indonesia had received the first phase of a rice grant from Thailand. Five thousand tons arrived in Surabaya two months ago.

He said a delegation comprising himself and State Minister of Food and Horticulture A.M. Saefuddin would visit Thailand next week to negotiate additional bilateral aid.

Indonesia is expecting 100,000 tons of additional rice in loans and 400,000 tons in governemt-to-goverment grant from Thailand, he said.

The government had secured a 50,000-ton grant from Japan and 10,000 tons from Vietnam, he said.

Japan has also pledged to provide 500,000 tons of rice in loans and cash loans to buy 450,000 tons of rice from a third country.

Taiwan is providing 200,000 tons of rice in a 10-year loan to Indonesia.

Beddu said Japan's rice shipment would arrive in September, while other shipments would reach the country by next February at the latest.

Current rice stocks are about 2.4 million tons, he said.

Beddu said domestic procurement of rice was about 140,000 tons currently, but added rice production this year was expected to reach 250,000 tons. (das)