State firms obliged to sell CPO to Bulog
State firms obliged to sell CPO to Bulog
JAKARTA (JP): The government has obliged state-owned
plantation companies to sell cooking oil produced from crude palm
oil (CPO) to the State Logistic Agency (Bulog) in a bid to
stabilize domestic prices for the commodity.
A statement issued by the Ministry of Industry and Trade
yesterday revealed the sale was made compulsory under the terms
of a decree which took effect on July 24.
The decree also obliges state sugar producer PT Rajawali
Nusantara Indonesia to sell its entire output to Bulog for
similar reasons.
Cooking oil and sugar purchased by Bulog will be distributed
on the domestic market to stabilize prices. The agency is
prohibited from selling either commodity to large industrial
buyers.
The statement said that any violations of the terms of the
decree would be punished according to the law.
The decree set a floor purchase price of Rp 2,100 per kilogram
for sugar bought by Bulog from farmers and state sugarcane
refineries. The floor price came into effect on July 24 and will
last for an unspecified period of time. Any future reviews of the
level at which it has been set will take domestic and world
market prices into account.
The government recently returned the exclusive right to
distribute cooking oil on the domestic market to Bulog. Before
that PT Dharma Niaga and PT Pantja Niaga were responsible for
ensuring the commodity remained widely available to the general
public during these turbulent times.
The agency will sell cooking oil to traditional market
cooperatives at a maximum price of Rp 4,000 per kilogram,
considerably below the price at which the agency must pay to
plantation companies.
Traders said that cooking oil was selling for between Rp 5,100
and Rp 5,150 per kilogram in Jakarta yesterday.
Funds raised from taxes on crude palm oil and its derivatives
will be used to finance the subsidized price at which cooking oil
will be made available to market cooperatives. CPO is the basic
ingredient in cooking oil. Unlike, private companies state-owned
plantations firms are not allowed to export their CPO products.
Last month the government raised the export tax on CPO to 60
percent to discourage exports and direct more supplies onto the
domestic market.
The sharp drop in the value of the rupiah against the U.S.
dollar has resulted in a situation where Indonesian palm oil
producers can make sizable profits through exporting their
produce.
This has lead to a scarcity of supply on the domestic market
and has pushed prices up sharply. Bulog has been forced into
making bulk purchases of cooking oil to ensure that a steady
supply is available to meet domestic needs. (gis)