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Govt to revert to palm oil DMO after lifting export ban
The domestic market obligation (DMO) policy, which was discontinued in March, has been brought back in a bid to stabilize cooking oil prices once the export ban is lifted.
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Commodity boom: A plantation company worker loads a truck with newly harvested oil palm fruit bunches in Berkat village in Central Mamuju regency, West Sulawesi, on March 10. (Antara/Basri Marzuki)
T
he government has decided to bring back the domestic market obligation (DMO) policy for palm oil, in the hope of stabilizing domestic cooking oil prices after it lifts an export ban on the commodity.
Coordinating Economic Affairs Minister Airlangga Hartarto said on Friday the government aimed to accumulate 10 million liters of cooking oil through the DMO, a fifth of which would act as reserves. Producers must supply the products at government-set prices, also known as the domestic price obligation (DPO).
The minister did not specify which type of palm oil products would be subject to the new DMO.
“Producers who do not fulfill DMO obligations or do not distribute to the community as mandated by the government will be punished in accordance with the rules,” Airlangga told reporters in an eight-minute video statement.
The announcement came a day after President Joko "Jokowi" Widodo announced plans to lift an export ban on palm oil on May 23, the first step in undoing a three week-long policy that shook global markets.
The export ban was one of the government's many strategies to bring down cooking oil prices to Rp 14,000 (96 US cents) per liter amid surging global crude palm oil (CPO) prices, but prices of the staple food product stayed at between Rp 17,000 and Rp 18,000 in many parts in Indonesia, even after the ban.
Prior to the export ban, the government implemented a DMO and DPO policy for palm oil from January to March. The policies required producers to sell at least 20 percent of their output in the domestic market at less than Rp 9,300 per kilogram for CPO and Rp 10,300 per kg for olein. The policy was scrapped after it failed to address the cooking oil shortage.
