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Indonesia Should Assert Control Over CPO Prices, Though Slowly but Surely



Doc. InfoSAWIT/The Chairman of the Palm Oil Mill Division of the Indonesian Palm Oil Professionals Association (P3PI), Posma Sinurat.
Indonesia Should Assert Control Over CPO Prices, Though Slowly but Surely

InfoSAWIT, JAKARTA - The Chairman of the Palm Oil Mill Division of the Indonesian Palm Oil Professionals Association (P3PI), Posma Sinurat, highlighted the importance of Indonesia playing a larger role in determining the price of crude palm oil (CPO). Although Indonesia has been the world's largest palm oil producer since 2006, the global CPO price setting is still dominated by the markets in Malaysia and the Netherlands.

"Why do we always follow the CPO prices in Malaysia and then in the Netherlands? Why are we never the price setters ourselves? What is the disadvantage if we are not the ones determining?" Posma expressed, as quoted by InfoSAWIT in NTV Insight on Tuesday (December 23, 2024).

Posma emphasized that Malaysia has taken strategic steps since the 1980s by establishing a CPO exchange, which has become the foundation for price determination in the global market. Standardization in quality and quantity has been the key to Malaysia's success in building trust in the international market.

Meanwhile, Indonesia, despite having its own standards, is still lagging in building an integrated system. However, Posma appreciates the government's recent prioritization of establishing a domestic CPO exchange.

"Indonesia has learned from experience, albeit late. We understand that this is important to do. Our CPO exchange is already in place, and several transactions have been conducted," Posma stated.

He is optimistic that in the long term, the Indonesian CPO exchange will become the backbone of price sovereignty. Thus, Indonesia will not only be the largest producer but also a key price setter in the global market.

"When this system operates for a longer period, market confidence will increase. This way, we can truly be sovereign in determining CPO prices," he asserted.

Although this initiative is acknowledged to be slow, Posma views it as a good start. "Better late than never," he concluded.

The government's efforts to strengthen Indonesia's role in the global CPO market signal a positive outlook for the future of the palm oil industry. With price sovereignty, Indonesia can enhance its competitiveness and economic benefits for all stakeholders in the palm oil sector. (T2)


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