JAKARTA, July 2 (Reuters) - Indonesia proposed raising palm
oil export quotas on Friday and is considering increasing
mandatory levels of biodiesel in fuel mixes to prop prices for
farmers at a time when domestic palm oil inventories are high, a
senior minister said on Saturday.
Palm oil inventories ballooned and mills limited purchases
of fresh fruit bunches (FFB) from farmers after Jakarta stopped
exports of crude palm oil and some other derivatives for three
weeks to May 23 in a bid to contain soaring domestic cooking oil
Indonesia replaced the ban with a domestic market obligation
(DMO), requiring companies to supply a portion of their products
to the domestic market through the government's bulk cooking oil
programme, and linked DMO volumes to companies' export permits
and quotas. DMO volumes as of the end of June were around
270,000 tonnes, the government said.
The government will now allow companies that have sold palm
oil domestically to export seven times the amount of their
domestic sales from currently five times, senior minister Luhut
"I asked the Trade Ministry to increase the export
multiplication factor to seven times starting July 1, with the
main objective to increase farmer's FFB prices significantly,"
Luhut said in a statement.
The government allocated 3.4 million tonnes of palm oil
export quotas under a "transition period" after the export ban
and export acceleration programme. However, shipments have been
slow with Indonesian palm oil industry group GAPKI saying
exports had been hampered by issues finding ships.
The secretary general of GAPKI, Eddy Martono, on Saturday
welcomed the export easing, saying a higher export ratio was
better and could "speed up tank drain".
To sop up excess domestic inventory, the government will
also exercise a plan to raise mandatory biodiesel mix levels to
35% or 40%, depending on crude palm oil supply and price, from
30% currently, Luhut said.
(Reporting by Bernadette Christina; Editing by Sandra Maler,
Lincoln Feast and William Mallard)