Indonesia extends suspension of palm oil export levies

Indonesia will not be collecting levies from palm oil exports until 1 January 2020 in order to protect farmer incomes, Reuters reported on 24 September.

Government rules stated that levies of US$10-$25/tonne should be collected from palm oil exports when the reference price was above US$570, with higher levies of US$20-US$50/tonne when prices topped US$619, Reuters wrote.

Based on a Trade Ministry estimate, the palm oil reference price was US$574.9/tonne, which meant the government should start imposing levies in October, chief economic minister Darmin Nasution told reporters.

He said the delay was based on direction from the president, reflecting concerns that the levies might cut into farmers’ earnings.

Reuters said Indonesia had not collected levies for palm oil since December 2018 due to low prices.

The levies had been collected to raise funds for domestic biodiesel programme development, as well as palm research and a smallholder replanting scheme.

The least processed palm and palm kernel oils attracted higher levies to encourage companies to refine their oil onshore and create value before shipping them.

The government said it hoped higher demand would support palm oil prices due to next year’s implementation of the country’s B30 biodiesel programme, which would increase the blending of biodiesel in diesel to 30% from the current mandatory 20%.

Nasution said the increase was expected to raise the domestic consumption of CPO by an estimated 3M tonnes.

Indonesia is the world’s largest palm oil producer.