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Ministry issues detailed policy on palm oil exports
Ban lift ed on Monday but producers yet to fully resume exports due to uncertainty.
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he Trade Ministry on Monday issued a regulation with detailed terms for exporting palm oil in conjunction with the government’s lifting of the three-week export ban on the same day.
Trade Ministry Regulation No. 30/2022, which covers crude palm oil (CPO) and derivative products, requires palm oil producers to sell part of their production output in the domestic market at certain prices, the former dubbed domestic market obligation (DMO) and the latter domestic price obligation (DPO), to be eligible for an export permit.
Producers that do not meet the DMO and DPO requirements may receive a written warning or have their export permit suspended or revoked.
The regulation is effective immediately, with the ministry saying it had briefed companies on the new policy.
“Fulfilling the domestic CPO demand in a sustainable way remains the government’s top priority,” Trade Minister M. Lutfi said in a statement.
Read also: Policy uncertainty hampers resumption of palm oil exports
Palm oil producers have held back from resuming exports of palm oil and palm oil products over regulatory uncertainty in connection with the lifted ban, though President Joko Widodo announced the policy change on May 19.
The ban on palm oil exports had rattled global markets, as Indonesia is the largest palm oil exporter in the world and accounts for 60 percent of the global supply. Palm oil contributes 30 percent of the global edible oil market, which also includes sunflower oil and rapeseed oil.
According to the new regulation, the Trade Ministry’s international trade director general is responsible for determining the domestic palm oil quota for each exporter.
Oke Nurwan, the ministry’s domestic trade director general, said the government would periodically revise the DMO and DPO policy.
Reinstating the DMO is the latest in the government’s rapid-fire policies intended to keep domestic cooking oil prices low amid the surge in global CPO prices. Previous measures included price control mechanisms, export restrictions and cash transfers to lower the price of bulk cooking oils to Rp 14,000 (95 US cents) per liter.
The National Strategic Food Price Information Center (PIHPS) recorded that the price of bulk cooking oils stood at Rp 18,600 as of Tuesday.
Alpian Arahman, chairman of the Indonesian Oil Palm Farmers Association of Struggle (Apkasindo Perjuangan), said that lifting the export ban had increased the price of fresh fruit bunches (FFB) to between Rp 2,300 and 2,400 per kilogram from Rp 1,600 per kg while the ban was in force, though prices remained lower than the usual range of Rp 3,600 to 3,800 per kg.
“Not all FFB are being bought by palm oil factories. Some of them have quotas,” he said during a meeting with the House of Representatives on Tuesday.
Hundreds of smallholder palm oil farmers held protests in Jakarta last week against the export ban, saying the policy had caused FFB prices to tumble and hurt their income.
Read also: Farmers stage protests against palm oil export ban
Indonesian Palm Oil Association (Gapki) chairman Joko Supriyono, said on Tuesday that the country’s palm oil exports had reached 33.6 million tons last year, nearly double the domestic consumption of around 18 million tons.
“In terms of supply, it is not a problem. It is just a matter of managing the supply in terms of distribution,” he added.
