CPO production predicted to rise to 6m tons

CPO production predicted to rise to 6m tons

JAKARTA (JP): Indonesia's oil palm plantations are expected to
yield 6 million tons of crude palm oil this year, up from the 4.9
million tons produced last year, an industry executive has said.

The chairman of the Federation of Palm Oil Producers, Derom
Bangun, said on Monday production would likely pick up due to an
improvement in the climate and the first harvests of trees
planted four years ago.

"With the weather getting back to normal and the maturing of
new trees, I'm optimistic our production will reach 6 million
tons this year," Derom told The Jakarta Post via telephone from
Medan.

Last year, the abnormal weather pattern called El Nino which
caused a long drought in certain areas in the country dragged
down local oil palm production.

Meanwhile, a researcher of the Medan-based Center of Oil Palm
Research, Ponten Naibaho, said he expected an increase in oil
palm plantation areas in the country by 100 to 200 hectares this
year, from the current 2.3 million hectares.

Naibaho attributed the expansion of the oil palm plantation to
the return of investor interest in the oil palm sector, following
a recent significant cut in the export tax on palm oil products.

"The export tax cut will stimulate export activities of CPO
and boost productivity in the oil palm sector," Naibaho was
quoted by Antara as saying on Monday.

The government has slashed the export tax on CPO, palm oil
kernels, and crude palm olein to 40 percent each from 60 percent
beginning Monday. It has also lowered the tax of refined bleached
deodorized (RBD) palm oil and RBD palm olein to 32 percent each
from 55 percent.

In the past three years, foreign and local investors lost
interest in expanding their oil palm plantations here because
prices of oil palm fruits had fallen, while prices of fertilizers
and pesticides continued to rise as did the theft of the fruit
from the plantations.

Naibaho said CPO production this year would help stabilize
domestic prices of cooking oil and boost exports.

However, Derom Bangun said the difference of 8 percentage
points between the export taxes of RBD olein and CPO would likely
boost domestic prices of cooking oil.

"People will likely export olein and cooking oil instead of
CPO, causing the price of cooking oil to increase in the local
market," he said.

He said the normal difference between the price of RBD olein
and CPO is Rp 300 (33 U.S. cents), but with the former's 32
percent export tax, the difference would reach Rp 700 to Rp 800.

This would give large margins to processors and boost the
prices of cooking oil, he said.

"Cooking oil prices domestically would increase but, this
time, not because of the export of CPO," he said. (das)