Govt bans exports of CPO products

JAKARTA (JP): The government moved further to stabilize cooking oil prices by prohibiting the export of all commodities derived from crude palm oil (CPO), including those not consumed locally, starting yesterday.

The move, which was criticized sharply by palm oil producers as a capricious policy, was disclosed by Director General of Domestic Trade Ilchaedi Elyas to CPO producers at a meeting in Medan yesterday afternoon.

"We fully understand and support the government's effort to stabilize the price of cooking oil as a basic foodstuff, but that should not mean a license for the government to harass us with inconsistent policies," a CPO producer in Medan told The Jakarta Post.

The producer, who also attended the meeting with Elyas, but who asked for anonymity, recalled that the latest measure was the third ruling imposed by the government on CPO trade over the past two months.

"We find it quite strange that the government does not ban the export of coconut oil, which is widely consumed as a cooking oil," the businessman said.

Coconut oil is manufactured largely by the Salim Group which is also a major producer of CPO.

Last November, the Ministry of Industry and Trade imposed an export quota on CPO, refined bleached deodorized palm oil, crude olein and refined bleached deodorized olein amounting to 20 percent of total production.

But less than three weeks later, the government suddenly decided to prohibit the export of all four CPO products starting Jan. 1, claiming the previous measure failed to stabilize cooking oil prices.

M. Nafis Daulay, chairman of the Association of Indonesian Cooking Oil Producers, said at the meeting with Elyas that the latest measure would severely hurt domestic producers.

The latest ruling prohibits the export of all commodities derived from CPO, including fatty acids, stearin and palm kernel oil, which are not consumed locally.

"We don't understand why palm kernel oil, stearin and fatty acids, which are not used for making cooking oil, are also banned from exports," Daulay complained in Medan after the meeting.

Coconut oil remained free for exporting, Daulay added.

He said the blanket ban on the export of all CPO-based commodities might disturb cooking oil production because mills would be flooded by stearin, the byproduct of CPO refining into cooking oil (olein).

"Our storage tanks may soon be overflowing with stearin from our olein-refining process and that may force us to stop olein production," Daulay said. (vin)