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)