RI to boost CPO exports this year

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.