Indonesia plans to scrap domestic sales rule for palm oil exports

Workers load bunches of fresh palm oil fruits to be transported from the collection site to CPO factories in Pekanbaru, Riau province, Indonesia, April 27, 2022. REUTERS/Willy Kurniawan

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JAKARTA, July 22 (Reuters) – Indonesia is considering scrapping a domestic sales requirement for palm oil exports as high vegetable oil stocks have dampened a recovery in palm fruit prices, it said on Friday. the Minister of Trade.

Since the end of the temporary export ban at the end of May, the world’s largest palm oil producer has required companies to sell part of their production in their country before issuing export permits, a policy known as DMO, with the aim of controlling cooking oil prices.

The temporary ban on shipments and the DMO policy, however, led to an increase in palm oil stocks, storage problems and a drop in the price of palm fruits received by farmers.

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Minister Zulkifli Hasan told reporters that previous policies aimed at addressing these issues, including the temporary removal of an export levy and a larger export quota, had failed to reduce stocks quickly.

“I am considering removing the DMO requirements so exports can get out quickly, but I want assurances from our refinery friends,” he told reporters during a visit to a market, according to a recording. voice provided by the ministry.

Indonesian authorities were aware of the expected high demand from India and Pakistan for the upcoming Diwali holiday and would ensure that shoppers had sufficient supplies, Zulkifli said.

Indonesia’s palm oil industry has been pushing for an easing of export restrictions and taxes, arguing that otherwise production could be wasted, especially with the harvest expected to peak in the coming months and with storage at full capacity. Read more

An industry association said this week that Indonesia will need to export 6 million tonnes of palm oil by August if it wants to bring stock levels back to normal.

Southeast Asia’s largest economy has scrapped its export tax on all palm oil products until August 31 and plans to set a benchmark price for crude palm oil every two weeks instead of every month so that the price and the resulting tax are more in line with market conditions.

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Reporting by Fransiska Nangoy, Bernadette Christina Munthe Editing by Ed Davies

Our standards: The Thomson Reuters Trust Principles.

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