Mon, 09 May 2011

From: The Jakarta Globe

Indonesian palm oil producers hope the Asean-European Union Business Summit leads to a breakthrough in exports of crude palm oil to Europe, which fell sharply after more stringent environmental regulations were put in place last year.

Derom Bangun, vice chairman of the Indonesian Palm Oil Board (DMSI), told the Jakarta Globe on Sunday that exports to EU countries fell after it instituted carbon footprint and conservation requirements for companies exporting palm oil to its member nations.

Indonesia’s exports to Europe in 2010 were just 15 percent of its 15.6 million tons of overall CPO shipments, down from 20 percent in 2008.

“The toughest difficulties are in exporting biodiesel. Requirements for such products to enter the market remain burdensome,” said Derom, adding that most Indonesian producers could not afford to pay for the greenhouse gases released when removing forests for palm oil cultivation.

Industry Minister M.S. Hidayat said last week that the government had formed a special team to identify various trade barriers that hamper exports of commodities, particularly palm oil, to the EU.

“We hope we can finish the identification of the trade barriers soon and overcome them so that our exports to Europe will not face constraints,” Hidayat said on Thursday.

Once the EU’s trade standards are verified, he continued, industries in Indonesia are expected to adjust their products to ease the country’s exports to Europe.

The government has also asked the EU to adjust its trade standards, with Hidayat claiming that the restrictions posed on Indonesian products were overly demanding.

“They set a relatively high standard. They do not want to accept CPO that is produced from plantations on peat land. I think it is an old issue, but it can be overcome because we do not export CPO produced from plantations on peat land areas,” the minister said.

Other obstacles include verification standards and attempts by environmental groups to bring to light destructive practices by palm oil producers, which the companies have claimed is a smear campaign.

To help prime Europe for future exports, the Agriculture Ministry has launched a “green product” campaign for palm oil. Agriculture Minister Suswono said the campaign took place through seminars and meetings between officials from Indonesia, Spain and France.

The 27-member EU is Indonesia’s second-largest trade partner, with annual bilateral commerce of Rp 253 trillion ($29.6 billion).