Indonesia`s CPO production forecast to rise 4 percent

Kamis, 29 November 2012 | 13:22

The Indonesian Association of Palm Oil Companies (Gapki) predicted the country`s produciton of crude palm oil (CPO) would increase four percent from this year`s estimated production of 25 million tons.The increase is attributable partly to opening of new peat land for oil palm plantations, Gapki executive director Fadhil Hasan said here on Thursday.

Next year, the country`s CPO production is expected to rise to 26 million tons on improved productivity and the opening of new land for oil palm plantation, before the peat land moratorium to be issued by the government, Fadhil said.

He said around 65 percent or 16.9 million tons of the production would be exported.

"Exports of CPO are expected to be flat as the export tax regulation is not yet ideal," he said, adding the government imposes too high export tax , while Malaysia has cut its export tax.

However, Director General of Agro Industry Benny Wahyudi defended the export tax policy saying it has would boost development of downstream palm oil-based industries in the country.

"Export tax is imposed after producers earn good profit," Benny said, adding export tax is imposed when the CPO price is higher than US$750 as against production cost of not more than US$500 per ton.

The policy keeps the farmers` interest protected as the prices of fresh fruit bunches from farmers would not be affected by the export tax, he said.

What is more important is to have a law regulation ruling that part of the export tax revenue is to go to the producing regions, he said.

He said the slapping of the export tax would benefit the country as when India cut its CPO import duty after knowing that Indonesia had imposed export tax.

Previously India imposed an import duty of 45 percent on CPO, but it later cut the import duty to 15-20 percent after the Indonesian government began to slap export tax.

He said the policy has also boosted development of downstream palm oil industry . ***2***