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CPO export levy waiver ‘not enough’ to lift farm prices
While the levy exemption might help boost CPO exports in the short term, critics say that the key to stabilizing FFB prices is to involve farmers in determining them.
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Overload: Trucks line up on May 17, 2022 to unload oil palm fresh fruit bunches at a palm oil processing facility belonging to PT Karya Tanah Subur in Padang Sikabu village, West Aceh. (Antara/Syifa Yulinnas)
T
he temporary waiver on export levies for all palm oil products is expected to temporarily boost crude palm oil (CPO) exports and fresh fruit bunch (FFB) prices in Indonesia, but critics of the move say that a strict policy regulating farm gate prices is needed for the long term.
The exemption was announced and came into force on July 15.
Bhima Yudhistira, executive director at the Center of Economics and Law Studies (CELIOS), said that while scrapping export levies for CPO and derivative products was necessary to control supply and demand, the scheme needed to be complemented with proper enforcement of Agriculture Ministry Regulation No. 1/2018 on FFB pricing to ensure fair prices for farmers.
“Policy flexibility is critical in regulating CPO to ensure supply security and [fair] prices at the farm level,” he told The Jakarta Post on Tuesday. “Independent palm oil farmers need to be involved in regulating FFB prices. So far, [regulatory] enforcement remains weak.”
Earlier this month, the government scrapped export levies for all palm oil products until Aug. 31 in an attempt to boost exports and reduce high inventories.
A progressive palm oil export levy is to apply on CPO starting Sept. 1 at a rate of between US$55 and $240 per ton, depending on market prices.
Read also: Indonesia removes palm oil export levy until Aug. 31
