The quarantine policy applied by several countries to fight the Coronavirus disease 2019 (Covid-19) has undermined the export of Indonesia’s crude palm oil (CPO). Almost 70 percent of Indonesia’s CPO production is exported to 50 countries.
The Indonesian Palm Oil Association’s (Gapki) Secretary General Kanya Lakshmi Sidarta said on Wednesday that the Covid-19 pandemic has caused a disruption to the CPO export activities as a number of countries have applied the quarantine policies to fight the Covid-19 pandemic, which had undermined the global logistics activities.
“The export activities are hindered by problems of logistics or administration and delay. All pandemics will cause a decrease. But this is only temporary. Until now, we can still survive,” said Kanya in an interview with CNBC Indonesia on Wednesday.
Due to the market uncertainty caused by the Covid-19 pandemic, Palm oil producers have implemented efficiency strategy to ensure their survival. It includes delay of expansion and seeking new sources of absorption at the local market.
The local demand for palm oil products is high enough to meet the needs of food, transportation through the biodiesel mandatory program of B30, and the needs for health protection, such as hand sanitizers, and cosmetics.
“While waiting for the pandemic to end, we seek to keep exporting 70 percent of our CPO production. If that is disrupted, then we have to seek new potential of absorption at local market,” she said.
In addition to that, Gapki has also encouraged the government to give stimulus to the palm oil producers. The stimulus could be in the form of competitive interest rate, attractive tax incentives, and better infrastructure for better and faster logistic flow to the consumers.
“If we are to seriously develop the downstream palm oil industry, then we should be assisted with better infrastructure and logistics,” she said.
Meanwhile, the price of Malaysia’s CPO, which becomes a benchmark, strengthened during intraday trading on Tuesday this week (16/6). The global oil price spike during trading early this week has become a positive sentiment for the CPO price.
On Tuesday (16/6/2020) at 11.06 Western Indonesian Time (WIB), the price of CPO for August 2020 delivery at the Malaysian Derivatives Exchange increased by 1.67 percent to RM2,368 per ton. (*)
Source: CNBC Indonesia
