RI palm oil exports may fall this year

RI palm oil exports may fall this year

KUALA LUMPUR (Agencies): Indonesia's palm oil exports may fall to 3.9 million tons this year from 4.15 million tons last year, hampered by lower yields and a stronger rupiah, an industry official said on Monday.

"I am afraid that we won't be able to reach a target of 4.2 million tons. (Exports) may fall to 3.9 million tons," Derom Bangun, chairman of the Association of Indonesian Palm Oil Producers (Gapki) told Reuters on the sidelines of a palm oil conference.

Bangun said palm oil production in the world's second largest producer after Malaysia had declined in the first half of the year. The appreciating rupiah, quoted at 8,450/8,590 to the dollar at 0652 GMT (01.52 p.m. at Jakarta time) on Monday, was discouraging exports.

Bangun said Indonesia's palm oil production may fall short of the target of 7.2 million tons this year because of security problems and weather problems if the drought causing El Nino phenomenon returns this year.

Indonesia produced around 6.5 million tons of palm oil in 2000.

"Security in some areas is not perfect yet," said Bangun, referring to widespread looting of fresh fruit bunches in plantation areas during the economic crisis.

"Weather experts are talking about El Nino. If that happens, there will be a shortage in production," he said.

Marked by an abnormal warming of waters in the eastern Pacific Ocean, El Nino wreaks devastation in weather patterns around the Pacific Rim and can even affect the number of storms in the Atlantic hurricane season.

"Production in the first half of the year only constitutes between 85 to 95 percent of the estimates. Many firms are oversold," said Bangun.

He said many ships were also waiting at the ports as they could not leave for their destinations because of a shortage in crude palm oil. Bangun gave no further details. Malaysia

Meanwhile, Malaysia planned to lift a 5 percent export duty on selected semi-processed palm oil products from September 1 in a bid to reduce excess stock and attract new markets, a top official said Monday.

The scrapping of the tax was expected to benefit Malaysia's niche markets for the processed products, such as Bangladesh and Pakistan, Primary Industries Minister Lim Keng Yaik was quoted by dpa news agency as saying.

Lim, who is in charge of palm oil issues, said the export duty would be abolished for "Stage 1" and "Stage 2" processed palm oil products, which are crude palm olein; bleached palm oil and palm olein; and refined and neutralized palm oil, palm olein and bleached palm oil.

The duty has been imposed since May 1998. Malaysia exports between 250,000 tons to 300,000 tons of Stage 1 and Stage 2 processed products a year.

"With the abolishment of the 5 percent tax, we hope new users may come in, while traditional users will also benefit from this," Lim told reporters at a palm oil conference in Kuala Lumpur.

Malaysia is the world's biggest exporter and producer of palm oil, accounting for half of the world's supply. Last year, Malaysia produced 10.8 million tons, of which 9 million tons were sold abroad.

Lim also urged oil palm smallholders and plantations to take up the government's 200 million ringgit (US$52.6 million) incentive scheme to destroy 25-year-old oil palm trees and replant new ones to ensure greater yield in future.