Local producers continue to favor exporting CPO

JAKARTA (JP): Many crude palm oil (CPO) producers have not been supporting the government's program to stabilize cooking oil prices in the domestic market.

An official of the government-sponsored Joint Marketing Office (KPB), which handles the marketing of farm products produced by state-owned plantation companies, said that many CPO producers still preferred exporting their produce despite a 40 percent export tax.

"This has hurt the government's program to stabilize cooking oil prices at home," the official, who asked for anonymity, said.

He said KPB had urged producers to sell their produce at home, but that CPO was still being exported in large quantities.

CPO is the main raw material in cooking oil production.

The official named several big producers, including PT Darmex, PD Kemajuan, Inti Boga Sejahtera of the Salim Group, SMART of the Sinar Mas Group, Asean Agro and Hasil Kesatuan, as companies which still preferred to sell their produce overseas.

He said the international price of CPO was currently much higher than domestic prices, a fact that drew many companies to export their produce despite the high export tax.

Last month, Minister of Trade and Industry Rahardi Ramelan ordered KPB to buy all cooking oil from the Association of Indonesian Edible Oil Industries (AIMMI) and sell it directly to market retail cooperatives (Inkoppas) in Jakarta at Rp 3,500 per kilogram.

The cooperatives would then sell cooking oil at city markets for no more than Rp 4,000 per kg. Private producers are allowed to sell directly to retailers at Rp 3,500 per kg.

The measure, effective May 27, replaced a system under which the marketing office and plantation firms had to sell CPO to the State Logistics Agency (Bulog). The agency is notorious for its inefficiency and lack of transparency in its distribution network.

Bulog sold CPO to several appointed refineries to be processed into cooking oil before buying it back as a finished product and distributing it on the domestic market.

KPB data shows that the office supplied 16,267 tons of cooking oil to the domestic market in the May 27 to June 11 period. It sells 300 metric tons to 500 tons of cooking oil per day, which is mostly distributed to Inkoppas, retailers and workers' cooperatives.

The official said that until last week, KPB had only supplied cooking oil to Inkoppas, but that since the cooperatives were incapable of influencing the market price because their distribution capacity was a mere 50 tons a day, it was also selling cooking oil to other retailers.

Inkoppas do not have a sufficiently large cash flow to be able to keep a large volume of cooking oil on hand for a long period of time, he said.

The Cooking Oil Distributors Forum urged private cooking oil producers to sell their produce locally, saying that KPB's efforts to stabilize the cooking oil price would not succeed if it was not supported by private producers.

Forum secretary Karebet said cooking oil prices would go up again if private companies refused to sell their products on the domestic market.

"I fear that cooking oil prices will soar again if private companies don't help, especially because KPB's distribution is not running smoothly," Karebet said.

He said that cooking oil distribution from KPB's stock to Inkoppas and retailers was often delayed for days, causing a scarcity of cooking oil on the market.

But he admitted that KPB had been able to force down cooking oil prices to the Rp 4,000 to Rp 4,400 per kg range from a previous price of Rp 6,000 per kg.

Earlier reports quoted trade sources as saying that using KPB to stabilize cooking oil prices was no use because some KPB officials were allegedly involved in collusive practices with several giant cooking oil producers. (gis)