Private producers slow to supply CPO

JAKARTA (JP): The chief of the National Logistics Agency (Bulog) expressed concern that private sector producers have not been earnest in fulfilling their commitments to allocate crude palm oil (CPO) to a buffer stock.

"We are still waiting for the supply of 10,000 tons of CPO committed by private producers this month," Beddu Amang told a four-day national workshop of the Ministry of Agriculture on Monday night.

Beddu explained that Bulog's buffer stock of CPO, the main raw material for cooking oil production, is currently only 10,000 tons, or half the targeted procurement for this month. It all came from state-owned plantation companies.

Beddu indicated that private CPO firms may be unable to contribute their share of oil due to the present decline in CPO production.

Last month the government announced that all producers, both state-owned and private firms, are required to allocate part of their production to Bulog's buffer stock.

The buffer is expected to shorten the commodity's distribution and marketing line and gradually cut back local cooking oil prices by about Rp 25 (1.12 U.S. cents) per kilo every month until September. They aim to obtain a reasonable price of Rp 1,400 per kilo.

Beddu said the market operation will require 75,000 tons of CPO for Bulog's buffer stock, with equal portions coming from the government and private sectors.

The collection of the stock, he said, will be adjusted with the production cycle of CPO. Bulog has targeted 20,000 tons of CPO this month, 25,000 tons in August and 30,000 tons in September.

He said that future supplies would depend on the amount of the buffer stock used to stabilize prices.

Beddu admitted that there was no legal basis to force private CPO producers to participate in the market operation. Bulog, therefore, can't count on their involvement.

He said that only private CPO producers owning more than 10,000 hectares of palm oil plantation are required to participate.

If market operations fail to stabilize prices, he said, Bulog may opt to import cooking oil, which is currently exempted from duties.

The current price of imported cooking oil can reach Rp 1,700 a kilo. Locally produced oil costs Rp 1,550 a kilo.

Cooking oil is a main foodstuff in Indonesia. About two million tons, or 80 percent, of Indonesian cooking oil is made from palm oil. The remaining 450,000 tons is made from coconuts.

The government presently taxes CPO exports in a bid to avoid price fluctuations.

Beddu admitted, however, that in certain situations the tax couldn't prevent fluctuations. (pwn)