Gapki foresees stable market for cooking oil

Gapki foresees stable market for cooking oil

JAKARTA (JP): Producers of crude palm oil (CPO) have predicted
cooking oil prices will remain stable on the domestic market
despite the increase in demand during the Moslem Idul Fitri
holiday and the government's recent move to decrease the
reference export price for CPO and its derivatives.

First chairman of the Association of Indonesian Palm Oil
Producers (Gapki) Derom Bangun told The Jakarta Post on Tuesday
that the country's cooking oil stock would be enough to meet the
increase in demand around the holiday which falls in the middle
of next month.

The demand for cooking oil in the month in which the Idul
Fitri holiday falls is expected to rise to between 195,000 and
210,000, up between 20 percent and 30 percent on the normal
monthly demand of 160,000.

Derom said effective distribution of cooking oil by the
Indonesian Distribution Cooperative (KDI) had helped to bring
prices back under control. In September, the government appointed
KDI to take over the role formerly played by the State Logistics
Agency (Bulog) in the cooking oil distribution chain.

Cooking oil was selling for between Rp 3,000 (40 US cents) and
Rp 3,150 per kilogram in Jakarta on Tuesday.

"If the price of cooking oil remains stable for the next two
or three weeks, there will be a strong basis for the government
to lower the tax on CPO and its derivatives," Derom said.

The government currently levies taxes of up to 60 percent on
the export of CPO and its derivatives in order to discourage
exports and stabilize domestic prices.

Derom said the high-tax policy had severely affected the
income of people in the business, especially farmers who
cultivate oil palm.

Last Friday, the government lowered the reference export
prices for CPO and its derivatives by between 8 percent and 10
percent for the period ending Jan. 7. The reference price serves
as the base for calculating export tax dues.

The reference export price for CPO was lowered to US$535 per
ton from $595 per ton.

Derom said the decrease in the reference export price would
increase the earnings of palm oil producers.

Under the new reference export price, CPO producers will now
receive $319 per ton in export earnings at the current market
price of $640 per ton, up from $283 per ton under the old
reference price.

He noted that the earnings CPO producers receive from exports
are currently similar to those available on the domestic market.
As such, the decrease in the reference export price would
encourage exports, he said.

"We welcome the new reference export price, but we still hope
the government will reduce the export tax within three to four
weeks if the market remains stable despite the seasonal rise in
demand," Derom said.

"The high-tax policy has tainted the image of our country
overseas," he said.

Meanwhile, industry and trade minister Rahardi Ramelan
reiterated on Tuesday that the government had no immediate plans
to lower the export tax on CPO and its derivatives in the
immediate future.

"As I have repeatedly said, we will not revise the CPO export
tax until after Idul Fitri," Rahardi told a media conference.

He said the cut in the reference export prices for CPO and its
derivatives should give producers a greater incentive to boost
their exports. (jsk/das)