Image: Reuters Berita 24 English - A senior minister said on Saturday that Indonesia is considering raising the mandated quantities of biod...
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| Image: Reuters |
Berita 24 English - A senior minister said on Saturday that Indonesia is considering raising the mandated quantities of biodiesel in gasoline blends and expanding the export quotas for palm oil to support farmer prices at a time when domestic palm oil inventories are high.
After Jakarta halted exports of crude palm oil and several other derivatives for three weeks to May 23 in an effort to control skyrocketing domestic cooking oil prices, palm oil inventories exploded and mills restricted procurement of fresh fruit bunches (FFB) from farmers.
Through the government's bulk cooking oil programme, Indonesia replaced the ban with a domestic market obligation (DMO), mandating businesses to supply a portion of their products to the domestic market. DMO volumes are correlated with businesses' export permits and quotas. The ministry said that the total June DMO volumes were close to 270,000 tonnes.
According to senior minister Luhut Pandjaitan, the government will now permit businesses that have sold palm oil domestically to export seven times as much as they presently do.
According to a statement from Luhut, "I requested the Trade Ministry to enhance the export multiplication factor to seven times effective July 1 with the main purpose to increase farmer's FFB prices significantly."
After the export embargo and export acceleration programme, the government allotted 3.4 million tonnes of palm oil export quotas for a "transition period." However, shipments have been slow; according to the Indonesian palm oil industry group GAPKI, difficulties in locating ships have slowed exports.
According to crude palm oil availability and pricing, the government would also implement a plan to increase mandated biodiesel blend levels from the present 30 percent to 35 percent or 40 percent in order to absorb excess domestic inventory, Luhut added.
