Policy export ban CPO and raw materials cooking oil which has been enforced for almost the last two weeks, arguably has not been fruitful.
Look, the price of cooking oil, both traditional markets and modern retail is still priced quite high. After all, even if the price is a bit slanted, it’s more because of the promos held by some business actors.
Not only that, the supply has not flooded the market as usual, especially in bulk cooking oil. This is complained by a number of market traders.
Instead of succeeding in lowering the price of cooking oil, the ban on CPO exports made palm oil entrepreneurs scream. How come? This prohibition threatens to destroy the fresh fruit bunches (FFB) of oil palm.
Not to mention the domino effect caused by the policies of President Jokowi’s government, starting from the halting of palm oil processing, farmers delaying the harvest of palm oil, to palm trees damaged by unharvested FFB.
Executive Director of the Indonesian Palm Oil Association (Gapki) Mukti Sardjono said palm oil processing would stop temporarily if the supply of CPO had exceeded domestic sufficiency.
“If what is already in the storage tank cannot be sold, we cannot automatically process it again, cannot send it from the palm oil mill. If you can’t process it, then you can’t buy FFB,” said Mukti.
Finally, he said that the palm oil FFB processing would stop because the domestic CPO stock was full. This will cause the unprocessed FFB to be damaged within 24 hours.
“Farmers will delay harvesting, if it cannot be absorbed, what is it harvested for and if it is left on the trees it can be toxic, because if the harvest is cleaning the trees, it can damage the trees,” said Mukti.
The Gapki report states that the average domestic CPO stock is around 4 million-5 million tons per month, with some in tanks and some on the way.
70 percent of the Indonesian palm oil market structure is for export. “Two-thirds, right now, we have absorbed two-thirds of all of this domestically,” explained Mukti.
Therefore, he is worried that the domestic supply of CPO exceeds domestic demand, which is much lower than the total exports which reached 70 percent.
“The domestic addition will not be more. For example, in a normal situation, 30 percent is for domestic consumption, then now it’s poured for cooking oil? How many percent does it increase, if it’s up to 50 percent, it’s not possible,” he explained.
In response to this, the Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira assessed that the ban on CPO exports actually caused many crucial impacts. Starting from the falling FFB prices to the emergence of illegal exports which have an impact on the loss of foreign exchange.
According to Bhima, from the beginning the government had been reminded that this policy was in no way a solution and was counterproductive.
“Now the stability of the rupiah exchange rate is starting to be felt because the foreign exchange lost is also quite large,” said Bhima to CNNIndonesia.com, Wednesday (12/5).
This policy is feared to trigger a number of entrepreneurs to export illegally. This illegal export can make the government have to spend a budget for supervision costs.
“So this is a very big loss both in terms of industry, the palm oil ecosystem, and state finances,” he said.
Therefore, the government must immediately lift the ban on CPO exports. Moreover, the current condition of CPO has exceeded the required domestic capacity.
“So this should be revoked immediately, so this week it must be revoked. The sooner, the better the lifting of the ban on CPO exports, because the oversupply cannot be absorbed domestically,” explained Bhima.
According to him, the oversupply of oil palm capacity will be difficult for the private sector, BUMN to BUMD to absorb. This can lead to more serious problems such as falling FFB prices.
“Why not settle the price of cooking oil? Because entrepreneurs who lose are prohibited from exporting, the margin for CPO derivative products, especially cooking oil, is increased to compensate for losses and the rising cost of CPO warehousing,” he explained.
The warehousing costs are then charged to the consumer of cooking oil.
Meanwhile, the Ministry of Trade declined to comment on the insistence of a number of parties to lift the ban.
The Acting Director General of Foreign Trade, Veri Anggrijono, said that he even refused to give a statement. “Later, the Minister will answer yes,” he said recently.
CORE Indonesia Executive Director Mohammad Faisal said the government must immediately revoke the policy of banning CPO exports.
Currently, he said, the price of palm oil has dropped drastically to Rp800 to Rp1,200 per kg for self-help plantations.
“In a matter of months the farmers have really shouted. The price is now IDR 800-IDR 1,200 per kg for a self-supporting plantation, which is far from the price of IDR 3,500. So, it’s only a quarter of the usual price,” said Faisal.
Not only that, if within three months this regulation is not revoked, it is feared that it will have an impact on the dismissal of employees of CPO and cooking oil companies.
“So, this must be immediately responded to, because one effect on cooking oil does not exist. Second, this actually causes problems upstream and damages the business climate and livelihoods of oil palm farmers,” he added.
Furthermore, to anticipate that the harvested palm oil does not rot, Faisal added that the company should immediately process the palm oil, either into cooking oil, biodiesel to oleochemicals. “It’s just that the stock is so large, because the domestic demand is only 30 percent,” he said.
(dzu/one)
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