Jakarta. The government has decided to ban only the export of refined, bleached, deodorized, or RBD, palm olein, which is the raw material for cooking oil, starting on Thursday until the domestic cooking oil price fall below $1 per litter, Coordinating Minister for Economic Affairs Airlangga Hartarto said late on Tuesday.
The decision should come as a relief to local producers and farmers alike. That would mean almost three-quarters of their products, including crude palm oil (CPO) and red palm oil (RPO), can still be exported and fetch higher prices in the international market.
"According to the direction of President [Joko "Jokowi" Widodo], there will be a ban on exports until the price of bulk cooking oil is Rp 14,000 [0.97 US cent] per liter in traditional markets, and the mechanism for the ban is arranged simply," Airlangga said in a virtual press conference in Jakarta, on Tuesday.
The ban on exporting RBD palm olein would apply to all manufacturers that produce the commodity.
Airlangga said the ban was in line with the World Trade Organization (WTO) agreement. According to Article XI of the General Agreement on Tariffs and Trade (GATT), WTO member countries can apply temporary export bans or restrictions to prevent or reduce shortages of foodstuffs or other essential products.
According to the Central Statistics Agency (BPS) and the Indonesian Palm Oil Association (Gapki) data, RBD palm olein export reached 12.48 million tons, or 73 percent of the total crude palm oil production last year.
Previously, the government had implemented a policy related to bulk cooking oil, but this policy was deemed not to be compelling enough. Because, in some places, bulk cooking oil was still hovering above Rp 14,000 per liter. Data from National Strategic Food Price Information Center (PIHPS Nasional) shows bulk cooking oil fetch Rp 19,700 per liter on average across Indonesia, unchanged from a month ago.
Airlangga said the Directorate General of Customs and Excise and the National Police, through the Food Task Force, would implement strict supervision in the implementation of this policy, including during the Idul Fitri holiday.
“Evaluation will be carried out continuously on this export ban policy. Any violation will be dealt with strictly following the provisions of the legislation. And if it is deemed necessary, policy adjustments will be made to the existing situation," Airlangga said.
In addition, the government has disbursed the cooking oil price subsidies through the Palm Oil Plantation Fund Management Agency (BPDPKS) and assigned Bulog to distribute bulk cooking oil to the public, especially in the traditional market, he said.
While appreciating the government's latest decision, farmers demanded the government make up for the loss they had to bear in the past few days, following the drop in the price of fresh fruit bunches (FFB) oil palm after president Jokowi's surprise announcement last week.
The Indonesian Farmers Union (SPI) said FFB price fell 50 percent since last Friday. "This price drop is still happening until now, although some areas have started to experience price increases," SPI Chairman Henry Saragih said.
"As a result of the president's speech [last Friday], farmers are suffering, the price of FFB has dropped, that's why we ask the government to take action and order palm oil mills who bought FFB at a meager price yesterday to pay according to the provisions," Henry said.