Govt Boosts CPO Export Quota After Palm Fruit Prices Fall

5 July 2022 08:10 WIB

TEMPO.CO, Jakarta - Trade Minister Zulkifli Hasan announced that his Ministry on Monday introduced a new increased export quota policy to overcome the problem that has seen domestic palm oil fresh fruit bunches (FFB) diminishing in value. The latest policy will allow companies to export CPO seven times higher than domestic supplies once companies have respected domestic market obligation (DMO).

“We are accelerating this to smoothen it again. Based on our meeting with the Coordinating Minister, the quota is increased from 1:5 to 1:7,” said Minister Hasan at the Trade Ministry headquarters on July 4. 

He argues that the dropping value of palm oil FFBs is due to the fact that palm factory tanks are currently still in supply and have reverted away from buying more products from farmers. Despite the government already urging palm factories to purchase products from farmers at a fixed lower ceiling price, factories tend to hold.

“Now we face the issue where the tanks at factories are still full which made them not purchase more [palm oil FFB],” he added. 

Therefore, the Ministry decided to enlarge the export faucet to empty the FFB supply tanks. Through this new rule, he hopes that factories processing palm oil products will take in more palm fruits from farmers, therefore slowly increasing its value. 

The Chairperson of the Indonesian Palm Oil Farmers Association (Apkasindo) Gulat Manurung recently said the price of FFB continues to dwindle, causing many oil palm farmers to panic as prices of palm FFB have fallen below the lower threshold the government had set. 

RIANI SANUSI PUTRI

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