Mon, 23 May 2011

Palm Oil Industry Demands More Govt Aid as Prices Rise

From: The Jakarta Globe

Medan. Although it continues to fluctuate, the average price of palm oil this year will remain higher than last year as it moves toward $900 per metric ton, an industry association says.

Derom Bangun, vice chairman of the Indonesian Palm Oil Board (DMSI), said here on Saturday that “the price is calculated on market demand, which remains high.”

The average price of CPO last year was $480 per metric ton.

Derom said Indonesia was expected to produce between 22.5 million and 22.8 million metric tons of palm oil this year, up slightly from last year’s production of 21.3 million metric tons.

As well as high demand, the average price for palm oil this year is projected to be higher than in 2010 due to the selling price of raw palm oil, which is relatively expensive compared to other vegetable oils.

Lower production of soybeans and canola will raise the price of their vegetable oils, Derom said, driving consumers and industries toward palm oil.

“The government must give more stimulus to national palm oil businesses to boost production and exports,” he said, going on to urge the government to remove or minimize export tariffs on palm oil.

He also said the government must reduce costs that burdened palm oil companies to make them more competitive and aid their production.

“The government must be on the front line to fight any environmental issues that remain,” he added.

The treasurer of the North Sumatra chapter of the Association of Indonesia Palm Oil Producers (Gapki), Laksamana Adiyaksa, said the palm oil export price in Rotterdam, the Netherlands, would remain stable at around $1,160 per metric ton next month.

Laksamana said in March that the value of national foreign exchange income from palm oil, particularly in North Sumatra, dropped from February because of declining selling prices.

Although the price in March was down, the value of exports of animal and vegetable oils for the region in the first quarter of 2011 was still higher compared to the same period in 2010.

According to the Central Statistics Agency (BPS), the value of North Sumatra’s exports of fat products and animal and vegetable oils in the first quarter grew 48.39 percent to $842.64 million.

Most exports went to China, India and Europe, particularly the Netherlands.