Govt to continue protecting oil palm development

Antara News, Sunday, October 3, 2010 14:19 WIB | Economic & Business

Jakarta (ANTARA News) - The government will continue to protect sustainable oil palm plantations and crude palm oil (CPO) industry and support steps to increase exports and to develop various CPO down stream industrial programs, a vice minister said.

In a press statement made available to ANTARA here on Sunday, Vice Trade Minister Mahendra Siregar said that the government would continue to protect the sustainability of oil palm plantations and COP industry, including its down stream industry.

He said that the government would also keep watching the obedience of palm oil companies in following regulations in Indonesia.

Mahendra said that the government would take more position to protect palm oil industry (so that it would develop in a sustainable way) rather than to react to the attacks by international non-governmental organization (NGO) against a number of CPO companies in Indonesia.

In line with that, the government through Trade Minister Mari Elka Pangestu appreciated last weekend 12 cooking oil producers which had taken part in a cheap cooking oil program sold in bulk, the "Minyakita" program.

The government has introduced the `Minyakita` program in an effort to provide cheap cooking oil for financially weak people, by inviting national cooking oil producers to take part. The "Minyakita" program was launched on January 28, 2009.

Minyakita was also launched as part of the efforts to keep the hygiene of cooking oil sold in bulk so that it would be safe for consumption. It is also intended to help keep price stability and encourage the development of packaging industry at home.

In the meantime, executive director of Sinas Mas, G Sulistiyanto said that as one of the recipient firms of the Minyakita awards, Sinar Mas had until 2009 channeled 27.1 million liters of cheap cooking oil in various cities as part of the implementation of its corporate social responsibility (CSR).

Govt launches subsidized ‘Minyak Kita’ cooking oil

The Jakarta Post, Jakarta | Wed, 01/28/2009 12:15 PM

The government launched Minyak Kita, its own brand of subsidized packaged cooking oil, on Wednesday to stabilize the price of the essential commodity.

Trade Minister Mari E. Pangestu officially launched the program at Duren Sawit, East Jakarta and said that the cheap cooking oil would be sold for Rp 6,000 a liter (about 55 US cents), as compared to the existing market price of between Rp 8,000 and Rp 9,000.

"This packed oil is expected to stabilize cooking oil prices on the domestic market, improve hygiene and boost the domestic packaging industry to serve the public at large, not only those shopping in the modern retail stores,” Mari said, according to state news service Antara.

Minyak Kita is produced by the country’s 24 cooking oil manufacturers as part of their corporate social responsibility programs.

The government has allocated Rp 800 billion to subsidize Minyak Kita through the abolition of the added value tax.

Mari said that Minyak Kita was targeted specifically at the 18.2 million poor families in the country.

Jakarta to subsidize cooking oil

Thu, 02/28/2008 11:29 AM , The Jakarta Post

JAKARTA: The city administration will distribute 3.6 million liters of subsidized cooking oil to meet public demand over the next six months, an official said Wednesday.

"The program is expected to help the poor facing recent increases in the cost of cooking oil following the global rise in crude palm oil prices," the head of domestic trade at the provincial industry and trade agency, Supeno, said as quoted by Tempointeraktif.com.

Supeno said cooking oil would be subsidized by Rp 2,500 making it substantially cheaper than market prices of between Rp 10,800 and Rp 11,000 a liter.

He said distribution would be organized each week, beginning in March, at 12 traditional markets across the city.

Consumers protest commodity price rise

The Jakarta Post, Jakarta

Housewives have protested the soaring prices of basic commodities which have left traditional markets and shopping centers empty, nationwide.

Nurin Agustion, a 35-year-old mother of two young children in Pundak Payung, Semarang, said she could only afford 15 kilograms of rice where previously she could get 20. She said she has bought more local fish than meat or chicken and has reduced her usage of cooking oil because of the soaring prices of commodities including meat, palm oil, fruit and vegetables.

"I can not increase my daily budget because my husband's monthly income has not been raised. I have to manage our monthly budget carefully so that we can survive this difficult situation," she told The Jakarta Post.

Traditional markets and shopping centers, including department stores and malls in urban areas in Central Java, have substantially quietened since the 2006 earthquake which shook the province and Yogyakarta.

"Following the quake many rice-belt areas in the two provinces could not meet their rice production targets," National Logistics Agency (Bulog) local office chief Indiarto said.

"This condition has been worsened by the soaring price of soybeans, the raw materials for tempeh and tofu, two primary foods in Java," he said.

Menik, A fishmonger at Depok Beach in Yogyakarta, said her sales had dropped by 50 percent over the past few weeks with the lack of buyers following the soaring prices of basic commodities in the province.

"Before the price increases, my sales were around Rp 1 million a day but recently it has dropped to around Rp 500,000. I could earn on the average of Rp 40,000 a day," she told the Post.

Depok fishermen said they had to increase fish prices by 20 percent due to the soaring price of rare fuels, especially kerosene.

They said the prices could be stabilized if the government guaranteed the distribution of fuel to rural areas in the province.

Darmi, another fish trader, said she could understand the quiet fish market on the beach with the increased prices of all commodities which had weakened people's purchasing power.

Sumarti, a rice vendor at Beringhardjo traditional market in Yogyakarta, said the market was crowded for only a few hours in the morning but then became silent in the afternoons.

The price of C-4 rice rose to from Rp 5,300 to Rp 5,600 per liter, while regular cooking oil rose from Rp 9,000 to almost Rp 12,000 a liter.

The price of wheat flour went from Rp 5,500 to Rp 7,000 per kilogram.

"The price hikes have a lot to do with increased cost of transportation and have been triggered by the soaring prices of rice, eggs, chickens and soybeans," Sumarti said.

The Post correspondent in Batam, Riau Islands, reported that the price of consumption commodities had continued to soar in line with price increases in other provinces, despite the island's status as free-trade zone.

Local trade and industry office chief Achmad Hijazi said the prices of basic commodities in the province were similar to other provinces because all consumption commodities were supplied to the island from regions under government supervision and regulation.

"Local authorities are not allowed to import rice or other basic commodities directly from Vietnam, to maintain the price of basic commodities and protect local products," he said, adding that the soaring prices had affected the livelihoods of low-income earners on the island.

Palm oil industry needs to be revamped: Observers

The Jakarta Post, Jakarta

The so-called "partnership" between companies and farmers in the palm oil business needs to be reconsidered because it benefits big corporations, not farmers, say observers.

Nursuhud, a member of the House of Representatives' Commission IX overseeing social welfare, labor and transmigration affairs said the partnerships, established in 1977, were not equitable.

"The companies, as the core, possess the ability to control everything, like deciding how much of which crops will be accepted and also the criteria," he said Friday during a discussion on the welfare of Indonesian palm oil farmers.

"Farmers are always placed in a marginal position. The farmers are never involved in any attempts to reshape the paradigm."

Indonesia has some 7.2 million hectares of oil palm plantations producing some 16 million tons of crude palm oil. Indonesia controls nearly 36 percent of the world's CPO market, second only to Malaysia with 47 percent.

However, observers say there is still no system to integrate farmers into the industry, as equals of companies.

Suprapto, an oil palm farmer in Peser regency, East Kalimantan, who has been involved in the business for more than 20 years, said that during the harvest farmers often experienced losses because factories could not accommodate the entire crop.

"The price is quite good, but the problem is that we cannot sell all of our crops," he said.

Abetnego Tarigan of the group Oil Palm Watch said companies did not have a substantial interest in buying crops from farmers because most have their own plantations.

"They treat the farmers only as buffers to anticipate times when their plantations do not produce enough," he said.

He said the current system allowed companies to monopolize the industry because they controlled everything from transportation to manufacturing.

Director of plantation protection at the Agriculture Ministry, Hendrajat N, said to improve the welfare of palm oil farmers, the government would launch a program in 2008 to revitalize oil palm plantations.

The program will include the replanting of old plantations and the provision of soft loans so farmers can own at least four hectares of land.

"The revitalization program will also require (oil palm) companies to buy up to 20 percent of the company's needs from farmers," he said.

"The program also aims to develop a sustainable, environmentally safe, oil palm industry." (uwi)

Cheap cooking oil for those in need

MATARAM, W. Nusa Tenggara (Jakarta Post): In response to soaring prices of cooking oil, the Mataram Trade and Industry Agency has distributed 6,125 liters of cooking oil to people in need across the regency.

The Agency's supervisory unit head Gusti Ayu Yuliani, said the local administration had provided the fund to subsidize the cooking oil.

For each liter of oil, the administration has paid a subsidy of Rp 2,500.

"The subsidy enables us to sell the oil at the cheaper price of Rp 6,500 per liter into about three thousand households in the region," she said.

The distribution would run until Nov. 12. Only those registered as "poor people" could buy up to two liters of cooking oil.

More than 500 women in Tanjung Karang took advantage of the deal. Regular prices for the oil sit at some Rp 10,000 per liter. --JP

Govt policy on CPO sales ineffective, say analysts

The Jakarta Post, Jakarta

The government's moves to up the export duty on palm oil, and to encourage producers to sell part of their production on the domestic market so as to bring down cooking oil prices are short-sighted and will ultimately prove ineffective, senior economists say.

Faisal Basri, a noted economist at the University of Indonesia, said Friday that such solutions would not only fail to curb surging prices, but could in fact be counterproductive.

He said that fiscal policy would be effective only if the proceeds were used to finance market interventions in order to bring down prices.

"Asking CPO producers to voluntarily set aside part of their production for the domestic market will be ineffective and is not strict enough," he said. "The requirement should be made mandatory, not voluntary," he added.

According to Faisal, it is the government that should play the major role in the price stabilization efforts, rather than the producers.

"The government is acting more like a mediator instead of a stabilizer in handling the price increases."

The price of cooking oil has surged to Rp 9,000 from Rp 6,500 (72 U.S cents) per liter in Jakarta, and as much as Rp 10,000 in some areas outside Java, due to a 30 percent increase in the international price of CPO amid surging demand from China and India. The international price is currently hovering at between US$650 and $772 per metric ton.

As part of the price stabilization program, the government has asked the country's major CPO producers to voluntarily commit to selling part of their production on the domestic market.

In addition, the government has also threatened to increase the export duty on CPO from 1.5 percent at present to 6.5 percent if the price of cooking oil fails to soon return to around Rp 7,500 per kg.

For those who fail to divert the envisaged quantities to the domestic market, the government will even them to pay export duty at the higher rate of 11.5 percent.

Like Faisal Basri, another noted economist, Bustanul Arifin, said that the government's stabilization policy was not only ineffective, but also short-sighted.

"Instead of keeping the revenues from the export duty, the government should use them to subsidize cooking oil for lower-income people, who are badly affected by the soaring prices," he said.

The revenue, he added, could also be used to provide incentives to improve the upstream and downstream sectors of the CPO industry by, for instance, expanding plantations in the upstream sector and developing more products in the downstream sector. "Those could be long-term solutions," he said.

Derom Bangun, chairman of the association of CPO producers (GAPKI), expressed a similar view, saying that the government should contribute more to the scheme by disbursing funds to help low-income people cope with the price increase.

"Actually, the government can use the export duties it has collected in previous months to subsidize cooking oil for low-income people," he said.

Faisal also said that it would be better if the revenues from the export duty were not paid directly into the state coffers, but rather kept in a special account.

"With such a mechanism, it would be easier to use the money for price stabilization purposes," he said.

The government could use a separate bank account managed by the Indonesian CPO committee (Dewan Minyak Sawit Indonesia), whose members were stakeholders in the CPO industry, he suggested.

Govt raises export duty on CPO, derivatives

Jakarta (ANTARA News) - The Indonesian government on Friday announced an increase in export duty on crude palm oil (CPO) and its derivatives after a so-called price stabilization program failed to curb the skyrocketing price of domestic cooking oil.

"The results of our daily discussion and review suggests that we are facing an unstable cooking oil price. Although CPO and cooking oil producers have agreed to stabilize the price of cooking oil within the range of Rp6,500 to Rp6,800 a kg, the price is still well above the figures. That is why, the government has decided to impose a new export duty on various oil palm products starting today," Coordinating Minister for Economic Affairs Boediono said following a limited coordination meeting with Finance Minister Sri Mulyani Indrawati, Industry Minister Fahmi Idris and Agriculture Minister Anton Apriyantono.

Export duty on fresh fruit bunches and kernels is raised to 10 percent from 3 percent, CPO to 6.5 percent from 1.5 percent, and crude olein, refined bleached deodorized palm oil (RBDA OPO) and RBD olein to 6.5 percent from 0.3 percent respectively.

In addition, the government also decided to impose export duty on four types of CPO derivatives that were previously exempted from export duty.

The four CPO derivatives are crude stearin, RBD stearin, palm kernel oil (PKO), and RBD PKO which are now subject to 6.5 percent export duty each.

Boediono said the decision was aimed at safeguarding domestic supplies to produce cooking oil at affordable prices.

"We hope the decision will make the domestic price of cooking oil more stable," he said.

He said the government would regularly review its decision in tandem with fluctuations in global CPO prices.

Meanwhile, Finance Minister Sri Mulyani said the government would review the decision in three to six months` time.

Households, traders seek cheaper cooking oil

Oyos Saroso H.N. and Suherdjoko, The Jakarta Post, Lampung, Semarang

Rising cooking oil prices have prompted some businesses and households in Semarang and Lampung to seek cheaper alternatives, or to cut back costs in other areas.

Mahfudi runs a small business in Gunungpati, Semarang, making banana crackers. He makes about 400 bags of crackers a day, which he sells for Rp 1,500 to Rp 1,750 each.

Because cooking oil makes up a large part of his operational expenses, he has been scrambling to cut costs in other areas.

"I use 16 kilograms of cooking oil a day, which I buy directly from an agent at a price of Rp 7,600 per kilogram. I can't cut the use of cooking oil," he said.

The businessman, who employs five people, has come up with another way to cut costs -- by saving on the fuel for his stove. Instead of buying 15-kilogram canisters of kerosene for Rp 36,000, he now buys 50-kg bags of wood chips from a sawmill for Rp 1,500 that he uses to fire his stove.

"At first, I didn't expect that I could save that much money by not buying kerosene. When I first tested it, the wood didn't work very well. Then I made a simple stove that could use the wood. I have been using the wood chips ever since."

Rising cooking oil prices have meant a change of menu for housewife Rika Saraswati in Semarang.

"I am trying to save money by not frying food too much. I usually fry eggs, but now I boil them. I will only fry food if the children really want some fried foods."

In Lampung, several housewives have begun making their own cooking oil using coconut. With just three coconuts, they can produce a liter of cooking oil.

"Although making our own cooking oil means more work, it saves money," said Sudarti, a resident of Suburbatu in Bandarlampung.

"When I'm tired of making my own cooking oil, I don't fry food, I just steam it."

For others, however, there is little they can do about the higher cooking oil prices.

Fried snack seller Setiawan said he usually uses five kilograms of cooking oil a day in running his business in the heart of Semarang city, Central Java. Two months ago, a kilogram of cooking oil cost Rp 5,500, and now it is Rp 7,800.

"I don't know how I can maintain my prices. I use a kerosene stove and I have to make sure the snacks are dry and hot all the time in order not to disappoint my customers," said Setiawan, who sells fried banana, tempeh and tofu from a simple pushcart.

For Setiawan, higher cooking oil prices mean he takes home less money.

"What else can I do? I try to save on the cooking oil but it doesn't make any difference. I still use four to five kilograms of cooking oil."

A fried snack seller in Bandarlampung, Margono, has not worked for the past two months because he was losing money as a result of cooking oil prices.

"When the price of cooking oil rose from Rp 6,800 to Rp 8,000 a liter, I turned to used oil. But when the used oil supply ran out, I stopped my business since I wasn't making enough to cover the costs," said the resident of Kampung Sawah subdistrict.

Before prices rose, he spent Rp 75,000 a day running his business, which generally brought in around Rp 120,000 a day. But with the higher prices he was having to spend Rp 110,000 a day, while still earning the same amount.

"I can't raise the prices of my snacks, even though in addition to the cooking oil the prices of tempeh, tofu and flour have also gone up."

Local trade offices and associations have introduced efforts to bring down cooking oil prices.

In Central Java, the trade and industry office, in collaboration with the Association of Indonesia Vegetable Oil Producers, is selling cooking oil in markets for Rp 6,700 a kilogram.

Around 5,000 liters of the oil is being distributed to each market, and each buyer is limited to 10 kg. Officials hope this initiative will bring down the price of cooking oil to Rp 6,500 a kilogram by the end of the month.

"We have also asked six cooking oil distributors in Semarang to support the move," said trade office executive Edison Ambarura.

In Lampung, the administration has asked five cooking oil factories to back an initiative, set to begin May 21, to sell the oil at Rp 6,750 per kilogram. Cooking oil prices in traditional markets in Bandarlampung are currently hovering between Rp 8,500 and Rp 9,000 a kilogram.

The factories have agreed to provide 1,000 tons of crude palm oil per month, between May and July, to be processed into cooking oil. This is far below the 15,000 tons of CPO per month requested by the administration.

"Based on the agreement, each factory will allocate 200 tons of CPO per month," said the Lampung administration's assistant secretary, Djunaidi Djaya.

Bandarlampung trader Mu'anah, however, is pessimistic the efforts will drive down prices.

"The government needs to watch out for CPO producers and agents. They sell cooking oil at high prices. Frankly, we're confused. The administration is working to bring down prices by selling cooking oil at cheaper prices. But how can prices come down if it's already high from the agents?" asked the 50-year-old trader at Kangkung market.