Indonesia unlikely to lift DMO palm oil policy but may increase export quota instead

“There have been parties recommending the lifting of the DMO, but I don’t think the Indonesia government will lift (the policy), though they may raise the ratio from the current 1:9 to 1:13.5 or 1:20,” Gapki’s head of trade and promotion Fadhil Hasan told AgriCensus.

The current DMO policy, which requires palm oil exporters to sell a portion of their palm oil to the domestic market before they can receive a permit to export, was introduced following the lifting of Indonesia’s palm oil export ban in late May, AgriCensus wrote on 23 September.

The DMO – combined with a Domestic Price Obligation (DPO) policy – was introduced to bring down local cooking oil prices and ensure a continual supply for the domestic market.

The export quota denoted the volume that exporters could ship out after fulfilling the DMO, with the current 1:9 ratio increased from the previous 1:7 in August, the report said.

“The government is trying to ensure that the raw materials for cooking oil – crude palm oil and RBD palm olein – remain available and sufficient for the domestic market. It’s not a large volume but the key is keeping it available and affordable,” Hasan was quoted as saying.

Currently, companies selling simple packaged cooking oil at the required domestic price can enjoy a larger export quota compared to companies selling bulk cooking oil, according to the report, and the government is looking to further improve the scheme to balance exports and cooking oil availability and affordability.

Hasan was speaking at the sidelines of the Globoil India industry conference from 21-23 September, where he also presented Gapki’s forecast that Indonesian palm oil production would fall from last year’s 46.9M tonnes to around 45M tonnes this year due to lower productivity and area expansion.