JAKARTA – The trade ministry (Kemendag) has set the ratio of export volume of crude palm oil (CPO) and derivative products at 1:6, which is lower than the previous ratio of 1:8.

The Indonesian Palm Oil Association (GAPKI) Secretary General Eddy Martono said that the new ratio policy will cause no significant impact to the export activities of CPO. “It is predicted that the global demand will slightly weaken as the global economy is still slowing down,” Eddy told Kontan.co.id on Tuesday.

Besides, he said that the policy is the right one to anticipate the increase of palm oil domestic consumption and the implementation of Biodiesel 35 percent  (B35) by the end of April 2023. Usually, during the first quarter palm oil production decreases due to cyclic condition and the increase of fertilizer price by around 200%.

“So, I think it’s no problem, but it should be evaluated regularly within short term,” he said.

Eddy noted that if the production did not decrease as predicted, then the government should adjust the policy. “An adjustment is necessary to prevent a buildup of fresh fruit bunches (FFB) in palm oil mills and will not lower the price of FFB from the smallholders,” he said.

The decision to reduce the export ratio is stipulated through the decree of the trade ministry’s foreign trade director general No. 19/DAGLU/KEP/12/2022 on the multiplier ratio as the basis of determining the export portion of CPO and its derivative products. The decree has been effective since 01 January 2023. (*)

Source: KONTAN.CO.ID