Gapki upbeat with CPO target

The Jakarta Post, Jakarta

The Indonesian Palm Oil Producers Association (Gapki) is optimistic this year's crude palm oil (CPO) output target of nine million tons and export target of about 5.5 million tons will be met.

"There are no changes in our predictions, and with most of the country's growers and plantation firms achieving their targets we are optimistic," Derom Bangun, chairman of the association, told The Jakarta Post on Sunday.

Derom said the expected increase in this year's CPO output was the result of a bumper harvest from trees planted between 1996 and 1998.

Indonesia, the world's second largest palm oil producer after Malaysia, produced 8.3 million tons of CPO last year and exported some 4.9 million tons.

According to Derom, CPO output in December will only reach 700,000 tons, mainly due to the holidays during the month.

"But this will not influence this year's target because in September, the peak of the harvest, one million tons of CPO was harvested," Derom said.

Derom said the country's CPO output was likely to increase again next year, with palm trees planted in 1999 and later expected to begin production.

"But the increase will not be as great as this year," he said.

He said CPO output growth was limited because many growers had put off expansion plans for their plantations since the economic crisis hit the country in the middle of 1997.

Derom also predicted the price of CPO would remain strong in 2003.

"A reduction in the supply of sunflower oil will increase the demand for CPO, thus keeping its price strong," he said.

He said the price of CPO had been on the rise since April, when it stood at about US$350 per ton.

As of November, CPO prices stood at about $440 per ton. In 1997, the price of CPO was at the $600 level.

He said the increase in CPO prices was also due to the rising demand from large CPO buyers, including India and China. These two countries buy CPO from Indonesia and Malaysia.

The association earlier said Indonesia was expected to export some 1.6 million tons of CPO to India and some 720,000 tons to China this year.

Many worry the increase in CPO prices could prompt local producers to export more of their products, thus creating a scarcity at home that would push up the price of cooking oil, a basic commodity for many Indonesians.