RI to boost CPO exports this year
Eva C. Komandjaja, The Jakarta Post, Jakarta
The country's crude palm oil (CPO) production is predicted to reach 10.4 million tons this year, higher than last year's 9.9 million tons.
Indonesian Palm Oil Producers Association (Gapki) chairman Derom Bangun said over the weekend that the increase in CPO production would be the result of the expansion of CPO plantation areas from 1999 to 2000.
The 500,000 extra tons produced this year would allow Indonesia to boost exports of the commodity as local consumption is predicted to remain steady at 3.5 million tons a year.
"The number of industries in the country that use CPO as a raw material, such as in cooking oil, soap and oleo industries, has not increased over the past few years. Therefore, we predict that the (local) consumption rate of CPO will remain unchanged this year," said Derom.
With the additional output, Indonesia can increase exports to countries like China, India, Pakistan, Bangladesh, the Netherlands and new markets such as eastern Europe.
"We hope that we can increase our exports to Ukraine this year because we have reports that they just increased their CPO processing capacity," he said.
Besides Ukraine, Russia is another target country for Indonesia's CPO exports. Last year Indonesia shipped around 42,000 tons as part of a barter deal for Indonesia to obtain Sukhoi jet fighters.
Indonesia is also optimistic that exports to China will increase since China has raised its export quota from 2.4 million tons last year to 2.7 million tons in 2004.
"Over the past few years, China's living standards have improved due to the country's economic progress, and we therefore hope that it will increase its edible oil consumption," said Derom.
Apart from Indonesia, China also imports CPO from Malaysia. Both countries are the biggest CPO producers in the world. As of June last year, Indonesia exported 329,000 tons to China and Malaysia took the rest of the quota.
However, Derom predicted that exports to India would decline slightly this year because India's CPO production was predicted to increase due to good weather.
"India usually imports around 11 million tons of CPO per year, with a local production of approximately 4.5 million tons per year. So it has to import CPO from Indonesia to meet local demand, but this year it seems that India's CPO production will improve," he said.
CPO producers suffered from low prices for several years until the price starting improving late 2002. The CPO price rose to above $500 per ton in December last year, from about $400 at the start of the year.
Derom predicted the CPO price would remain stable at between $510 and $515 per ton this year.
Derom said the government would maintain its policy of applying export tax on CPO this year. The policy has been in place for years as part of the government's efforts to curb CPO exports, maintain the availability of the commodity for local cooking oil producers and thus to keep cooking oil at an affordable level.
According to Derom, CPO producers, who in the past always complained about the export tax policy, have condoned the measure but have demanded the export tax funds be used to subsidize cooking oil in case of a sharp increase. Currently, the government imposes an export tax of $4.80 per ton on CPO, but the industry remains in the dark about the use of the funds by the government.
The price of cooking oil normally soars prior to prime religious holidays, such Idul Fitri, due to higher demand.