JAKARTA – The availability of biodiesel 30 percent (B30) in refueling stations (SPBU) across Indonesia since 01 January 2020 has proven to be able to increase the domestic consumption of crude palm oil (CPO) and maintain the price stability of the palm fresh fruit bunches’ (FFB) bought from growers.

The Indonesian Oil Palm Smallholders Association (Apkasindo) Chairman Gulat M.E Manurung said recently that the implementation of the mandatory program of B30 is a historical milestone in terms of keeping the stability of FFB prices, which had created double effect that  managed to amaze the world. He said that there are five factors that pushed up the price of crude palm oil (CPO) at the global market amid the weakening global economy due to the outbreak of Covid-19 pandemic.

First, the B30 production under the government’s mandatory program of B30 has resulted in the high local absorption of CPO, which reached 7.226 million tons in 2020 and caused the shortage of CPO supply at the global market. As a result, its price was rising.

Second, the world is apparently very dependent on the Indonesian palm oil, despite the fact that many countries produce other vegetable oils besides the palm oil. But apparently, the other vegetable oils could not compete with the palm oil due to its much higher efficiency and versatility. One of the main factors that make the palm oil highly efficient is the fact that it is 9.8 times more economic than other vegetable oils in terms of land use. That means, fulfilling the global need of vegetable oils by increasing the production of other vegetable oils besides the palm oil will certainly lead to much higher rate of deforestation.

Third, the CPO storage in the importing countries were only filled at 30 – 60 percent of their total normal capacity due to the scarcity of CPO at the global market.

Fourth, producers of other vegetable oils besides palm oil in Europe and other regions had to reduce their plantation activities due to the outbreak of Covid-19 pandemic. But based on the survey conducted by Apkasindo in 22 provinces of Indonesia in 2020, activities at the oil palm plantations were proceeding normally without any significant disruption caused by the pandemic.

Fifth, it was revealed that the CPO imported from Indonesia was not only for domestic consumption (as has been previously reported), but also for producing biodiesel, and for resale. “Those five factors had caused the significant increase of palm oil price. But actually, without the Covid-19 pandemic, the CPO price would also rise significantly. The key factor here is the local absorption of Indonesian CPO through the biodiesel mandatory program,” Gulat asserted. (*)

Source: wartaekonomi.co.id