Palm Oil Policy Rally to Solve the Expensive Palm Cooking Oil

Doc. InfoSAWIT
Palm Oil Policy Rally to Solve the Expensive Palm Cooking Oil

InfoSAWIT, JAKARTA - For almost half year, many discussed the government’s policies to make palm cooking oil cheaper that the people could afford, such as, domestic market obligation (DMO) and domestic price obligation (DPO) by the late of January 2022 to make sure that palm cooking oil supply is enough in this country. Though the government confirmed that the policies would not impact to the smallholders’ fresh fruit bunch (FFB), in fact, the two policies which had not been implemented, cut off their FFB price.

Masyarakat Perkelapasawitan Indonesia (Maksi), one institution for many academy and researchers in palm oil sectors thought, the policies need re-calculation because it is not fair to burden DPO for the smallholders’ FFB that cultivate 40% of palm oil plantations in Indonesia.

In the report of INDEF Policy Brief, “Menakar Efektivitas Kebijakan Subsidi Vs DMO-DPO Minyak Goreng”, published in February 2022, it noted that the policies are not effective because of two major things, they are, not right on target and unready infrastructures.

Not long after that, the government tried to publish new policy by increasing levy to support the fund in Palm Oil Plantation Fund Management Agency to deliver bulk palm cooking oil subsidy.

It was regulated in the Regulation of Minister of Finance (RMF) Number 23 / 2022 about the Substitution of RMF Number 57 /PMK.05/2020 about Tariff in Public Service Obligation Palm Oil Plantation Fund Management Agency in Ministry of Finance which was published on 18 March 2022.

According to the regulation that InfoSAWIT got, the product within HS number 15, such as, crude palm oil, crude palm kernel oil, crude palm olein, crude palm stearin, crude palm kernel olein, crude palm kernel stearin would have progressive citation within the highest levy reaching US$ 375/ton, from it was that reached US$ 175/ton.

The fact is that the policy made more complicated because the cut of CPO price got more expensive that reached 30% more than the CPO price in the world. This impacted to smallholders’ FFB price which keeps being cheaper. After that, by the late of April 2022, there was a policy to ban CPO and its derivative exports which made smallholders’ FFB cheaper again. Many mills claimed, they could not afford smallholders’ FFB for their storage tanks were full and could not be sold abroad.

The government eventually opened CPO exports by implementing DMO and DPO while making sure that palm cooking oil material is fulfilled in this country. By the policy the government confirmed that DMO result reached 10 million tons of palm cooking oil – 8 million tons were the supply and 2 million tons were the stock.

The policy was published together with the substitution of Levy and Out Fee. The government decided the most expensive levy is US$ 200/ton and Out Fee of CPO is US$ 288/ton. How about the implementation? For more details, dear readers could read in  InfoSAWIT, June 2022. (T2)