State firms asked to sell CPO at discount prices
State firms asked to sell CPO at discount prices
JAKARTA (JP): Minister of Agriculture Sjarifudin Baharsjah has
ordered all state-owned oil palm plantation firms to sell crude
palm oil (CPO) at discounted prices on the domestic market to
help stabilize cooking oil prices.
The minister said yesterday the state-owned firms would sell
about 100,000 tons of CPO and olein per month, almost 100 percent
of their production.
The instruction, issued Tuesday, states that ministry-
appointed distributors, including the Association of Edible Oil
Industries, is to sell olein at below Rp 3,300 per kilogram.
Olein was priced at about Rp 4,400 per kilogram last week in
Jakarta.
The Ministry of Agriculture overseas several oil palm
plantations which operate under PT Perkebunan Nusantara (PTPN).
The minister said olein prices had already started to fall due
to the ministry's market operation.
Reuters reported yesterday that olein was quoted between Rp
2,750 and Rp 2,800 per kilogram in Jakarta.
"If the price becomes stable and there is enough supply in the
market, there would no more complaints about inflated cooking oil
prices and we would then be able to stop banning exports," he
said after a hearing with the House of Representatives Commission
III for agriculture, forestry, transmigration and food affairs.
He said PTPN produced 109,000 tons of CPO last month, an
amount which could make 70,000 tons of olein.
Olein is a raw material of cooking oil.
He said Indonesia produced 6 million tons of CPO to make 4.8
million tons of olein every year.
Local demand of olein totals about 3.5 million tons every
year.
"Our supply should meet domestic demand. But what is happening
now is an abnormal demand because many consumers are stockpiling
cooking oil because they are scared that supply might dry up. The
situation is getting worse because many producers have withheld
CPO from the market to wait for higher market prices," he said.
He said PTPN currently produces about 1.8 million tons of CPO
a year, about 35 percent of the country's total production.
Sjarifudin asked retailers to be satisfied with a "reasonable"
profit margin, keeping the price of cooking oil affordable in the
market and not burdening consumers.
He said the supply of cooking oil to the domestic market has
been unstable, but with a constant flow of the commodity into the
market prices should eventually fall.
Minister of Industry and Trade Tunky Ariwibowo announced
Tuesday that the government has extended its export ban of any
kind of palm oil, olein and CPO derivatives for an indefinite
time period.
The continued export ban will violate the government's
International Monetary Fund (IMF) agreement last month to stop
palm oil export restrictions and restrictions on other
commodities from March.
The agreement is part of IMF's requirements to provide US$43
billion in bailout funds for the country's ailing economy.
Last December, the government banned the export of CPO, olein
and other CPO derivatives until March to ensure an adequate
domestic supply of cooking oil and to stabilize its price.
The measure failed to stop cooking oil prices from soaring and
food stores have had difficulties keeping cooking oil in stock.
CPO producers are reportedly withholding their products in
anticipation of gaining from sales overseas when the export ban
is lifted.
Many retailers also are reportedly stockpiling cooking oil to
sell when prices go up again after the export ban is lifted.
Sjarifudin said the export ban was necessary, although it
would create losses for palm oil producers, traders and the
government.
Indonesia is the world's second largest producer of CPO after
neighboring Malaysia. (gis)