JAKARTA – The Indonesian Palm Oil Association (GAPKI) has stated that the domestic market obligation (DMO) policy currently imposed by the government is actually no longer needed.
GAPKI Chairman Eddy Martono said that the volume of production of palm oil is now much higher than the volume of consumption, so that the DMO policy is no longer necessary. “The policy is more appropriate if applied during high prices at global market, which is feared to cause supply shortage at local market. Currently, the implementation of the DMO policy causes additional cost at the average of around US$20 per ton,” Eddy told Kontan on Wednesday (24/1).
GAPKI predicted that palm oil production–Crude Palm Oil (CPO) and Palm Kernel Oil (PKO), will reach between 53 – 55 million tons in 2024. But absorption of palm oil or DMO consumption changes according to the government policy.
Based on data from the government, per capita consumption of cooking oil in Indonesian is around 20 kilogram per year. Indonesia needs around 5.4 million kilogram of cooking oil every year, which is produced from the CPO.
“The DMO absorption depends on the volume of palm oil being exported and the proportion required by the government. It can change, depending on the government,” he said.
Evaluation needed
Meanwhile, the Association of Indonesian Oil Palm Smallholders (Apkasindo) stated that the DMO policy and the Domestic Price Obligation (DPO) policy need to be evaluated or revoked. It is because currently the global price of palm oil has dropped significantly compared to that of 2022 when the DMO policy was initially applied.
Apkasindo said that based on its data, the average price of CPO Internasional Rotterdam in 2023 dropped by 25.9% compared to that of 2022.
The average price of CPO Kharisma Pemasaran Bersama Nusantara (KPBN) reported by the KPBN in 2023 dropped by 10.7% compared to the average price at the previous year.
Apkasindo Chairman Gulat ME Manurung said if the policy of DMO and DPO is still applied at current condition then the price of fresh fruit bunches (FFB) from smallholders will not rise.
“It has been proven since 2021 until 2023. Fortunately, there was mandatory program of biodiesel 30 percent (B30) at the end of December 2019, which slightly raised the price of FFB. But then it decreased when the government applied the export ban in April 2022 and revoked it in May 2022. Until now, the FFB price has not recovered yet,” Gulat told Kontan on Wednesday.
Gulat said that the price of Refined, Bleached, Deodorized (RBD) Olein at global market or the bulk cooking oil which is the target of DMO and DPO is now cheaper than the DPO of domestic bulk cooking oil at Rp15,000.
“The policy of DMO and DPO has made the consumers of domestic bulk cooking oil paying cheaper price than it should be. Therefore, it’s now time for the DMO and DPO policy to be evaluated or revoked,” he said. (*)
Source: sawitkita.id
