A delegation from the Solvent Extractors' Association of India (SEA) recently met with an Indonesian delegation led by Zulkifli Hasan, Minister of Trade, in New Delhi and advised the country to ensure a stable policy for the export of palm oil.
The recent ban on the export of palm oil from Indonesia, according to the SEA delegation, has caused supply chain issues in India and hampered Indonesian policy decision-making. As a result, Indonesia lost market share to Malaysia, and palm oil as a whole lost market share to soft oils in India.
The Indonesian Trade Minister, who welcomed the feedback, assured that there would be no such supply shortage from Indonesia. The SEA delegation advised and requested the Indonesian Trade Minister to have a stable tax regime on export duty/levy so that there is less uncertainty about what the government will do next.
SEA raised the issue of domestic market obligation (DMO) in Indonesia, claiming that despite the resumption of exports, Indonesia was unable to clear its massive stocks. DMO was blamed for the situation, according to SEA.
The Indonesian Minister, who acknowledged this, stated that the country is attempting to strike a balance between higher FFB (fresh fruit bunches) prices for farmers and lower olein prices for consumers. With the opening of palm oil export. of, FFB prices have recovered.
The Indonesian government wants to ensure that consumers have access to oil in the domestic market through DMO. He stated that Indonesia requires approximately 7-8% of its oil for its domestic market. As a result, the ratio of domestic consumption to exports has risen from 1:7 to 1:20.
Regarding the difference in export tax and levy between refined products and crude palm oil, SEA advised the Indonesian delegation not to favour refined products. India has a lot of refining capacity because it is one of the largest consumers.
Any advantage given to refined products at origin renders refining in India unviable, which is not sustainable in the long run, as this may give an advantage to soft oils where refining capacity can be used and refiners can make some margins. Concerning the Indonesian government's bio-diesel mandate, the SEA delegation stated that it is not good to burn edible oil when some developing and underdeveloped countries are still fighting hunger and poverty.
When asked if Indonesia is reconsidering the B-35/B-40 biodiesel mandate, the Indonesian Trade Minister stated that the country understands the situation. However, it needs to counter biofuel imports in Indonesia and ensure that its farmers get better returns, so the trials have begun. He did not, however, provide a clear picture of whether Indonesia will undoubtedly opt for the B-40.
The meeting discussed a variety of issues, including ways to increase crude palm oil exports from Indonesia to India in order to reduce the burdensome stock in that country. SEA informed the Indonesian Trade Minister that in India, palm oil is still regarded as a poor man's oil and is regarded as unhealthy oil. That is why palm oil is not widely consumed in ordinary households and is primarily consumed outside the home.
The SEA delegation suggested that Indonesia form a palm promotion council in collaboration with SEA, and that they work together to change the negative image of palm oil. It also advised the Indonesian delegation to earmark some funds for the promotion.
