Policy on CPO hurts cooking oil producers

Policy on CPO hurts cooking oil producers

JAKARTA (JP): The government's requirement that producers of
crude palm oil (CPO) should supply part of their products to the
National Logistic Agency (Bulog) has forced most small-scale
cooking oil producers in the country to halt operation.

"About 60 percent of cooking oil plants in the country have
delayed production due to shortages of CPO supplies," the
chairman of the Indonesian cooking oil industry association,
Mohd. Nafis Daulay, was yesterday reported by Bisnis Indonesia as
saying.

He explained that CPO producers, in a bid to meet the
government's demand, have suspended their long-term contracts of
supplies for cooking oil producers.

Daulay blamed the obligation to provide Bulog with 75,000 tons
of CPO within three months to help it build up its buffer-stock
as the main cause of the shortages.

The stock procurement is aimed at cutting cooking oil prices
from about Rp 1,550 (70.4 U.S. cents) at present to Rp 1,400 or
the same level as that of last January, before the Moslem fasting
month.

Daulay said that only a few small-scale cooking oil producers
are still operating, including 14 in North Sumatra, eight each in
Jakarta and East Java, and one each in Riau and South Sumatra.

Daulay said that Indonesia's cooking oil plants have a total
production capacity of 5.6 million tons annually.

Daulay urged that the joint marketing agency reactivate their
long-term supply contracts with small-scale cooking oil producers
to help them continue operation.

"Hundreds of employees will be fired should the cooking oil
producers stop their production for a long period of time," said
Daulay. (kod)