JAKARTA – There is no denying that palm oil has given a very significant contribution to the foreign exchange earnings of Indonesia.
It has proven during the Covid-19 pandemic in 2020 when the exports of palm oil contributed the foreign exchange at US$22.97 billion and enabled the country to maintain its positive trade balance.
During 2019, Indonesia saw its trade balance in negative territory almost every month with a total deficit of US$3.23 billion. “In 2020, the country’s trade balance was in positive territory almost every month, except in January and April, with a total surplus of US$21.27 billion, mainly due to the big contribution of palm oil exports,” the Indonesian Palm Oil Association (Gapki) Chairman Joko Supriyono said during a virtual public discussion on the palm oil 2020 reflection and 2021 prospect in Jakarta recently.
The public discussion, which was moderated by Gapki Communication Director Tofan Mahdi, was also attended by a number of Gapki senior officials and palm oil related associations, which include Aprobi, Apolin, Apkasindo, and BPDP-KS.
Joko noted that the palm oil industry entered the year 2020 with optimism as the price of crude palm oil (CPO) in December 2019 reached US$787 per ton (cif Rotterdam), following a steady increase from US$542 per ton since August 2019 after averaging at US$524 per ton during January – August 2019.
But during January – May 2020 the CPO price dropped to US$526 per ton, due mainly to the following factors: (1) China’s demand started declining as a result of Covid-19 pandemic, (2) Pressures on soybeans in China as a result of the trade war with the US combined with the soybean harvest in Brazil, and (3) The drop of global oil prices to US$27 per barrel (US$147 /ton).
In May 2020, China’s economy recovered from the pandemic and massively increased its imports of oilseeds and vegetable oils to replenish its depleting stocks, sending the prices of vegetable oils up.
“The commitment of President Jokowi as stated in his speech in August 2020 that the government will continue the mandatory biodiesel program had contributed to the increase of palm oil price,” said Joko.
He said that the good price in early 2020 had allowed the oil palm growers to fertilize and revive their plantations, so that with the support of good weather, production of CPO and PKO was expected to increase during January – June 2020 at the average of 3,917 thousand tons, then to 4,680 thousand tons during July – December 2020.
“Along with the production increase, the price of CPO increased from the average US$646 per ton during the first semester 2020 to US$775 per ton during the second semester 2020,” he said.
Joko said that due to the global impact of Covid-19 pandemic, Indonesia’s export volume of palm oil products in 2020 plunged to 34.0 million tons as compared to 37.39 million tons in 2019. The biggest drop was seen to China (-1.96 million tons), to EU (-712.7 thousand tons), to Bangladesh (-323.9 thousand tons), to Middle East (-280.7 thousand tons), and to Africa (-249.2 thousand tons). But export volume to Pakistan increased (+275.7 thousand tons) and to India rose by 111.7 thousand tons.
Despite the export volume drop, Indonesia’s export value in 2020 rose to US$22.97 billion, which was higher than US$20.22 billion in 2019. (*)
Source: Investor Daily
