The Indonesian government has ended its palm oil export ban effective today, following its shock announcement on 26 April that it would temporarily halt exports of palm oil and its derivatives.
The initial ban had been restricted to refined, bleached and deodorised (RBD) palm olein but was amended the following day to cover crude palm oil (CPO); refined palm oil; refined, bleached and deodorised (RBD) palm olein; palm oil mill effluent (POME) and used cooking oil.
The ban had been introduced as Indonesia struggled to control soaring cooking oil prices against a backdrop of mounting civil unrest.
Speaking at a press conference on 20 May, Indonesian chief economics minister Airlangga Hartarto said that, as well as lifting the ban, the government would reinstate the Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO) scheme to ensure continued supply of domestic cooking oil.
Earlier this year, the government had set a 30% DMO requiring palm oil exporters to retain a portion of their export volumes for supply into the domestic market before any export permits could be approved, AgriCensus wrote on 20 May.
The DMO was revoked on 17 March and replaced with an increase in palm oil export duty.
Hartarto said the government was looking to set a DMO of 10M tonnes of cooking oil, with 8M tonnes for domestic consumption and reserves of 2M tonnes.
“The Ministry of Trade will determine the amount of DMO to be met by producers,” he said.
“Producers who do not fulfil the DMO obligations or do not distribute to the public as determined by the government will be sanctioned according to the specified rules.”
On top of the DMO, the government is also going to reissue the supply and price control arrangements (DPO) to ensure the availability of raw material for cooking oil production, according to the 20 May report.
The DPO for crude palm oil and palm olein was set at 9,300 rupiah/kg (US$0.630) and 10,300 rupiah/kg (US$0.70) respectively in February.
Further details of the policies were expected to be announced before the ban ends, the report said.
In addition to reinstating the DMO and DPO, Hartarto also announced that the state food procurement agency Bulog would set up a buffer stock of cooking oil at 10% of domestic demand.
While the president’s announcement had brought some relief to the market, the added clarification implied that Indonesian supply remained restricted and subject to domestic conditions, AgriCensus wrote.
