Ministry Of Agriculture Prepares Formula So That The B50 Program Doesn't Disturb Palm Oil Exports

Illustration (Photo: Doc Antara)

JAKARTA - The Ministry of Agriculture is formulating a strategy to ensure the Biodiesel B50 Program does not hinder exports of crude palm oil (CPO) and its derivative products.

Acting (Plt) Director General of Plantation of the Ministry of Agriculture Heru Tri Widarto said the government is committed to maintaining a balance between meeting domestic needs, especially for biodiesel programs, while maintaining CPO export stability.

"We are conducting an in-depth study to find the right formula. This study includes financial aspects and various other factors. The goal is to determine how much increase in CPO production is needed without disrupting exports," Heru said as quoted by ANTARA, Monday, October 28.

He said the B50 Program is a cross-ministerial collaboration, where the Ministry of Agriculture is responsible for the upstream aspect of production, while the Ministry of Energy and Mineral Resources (ESDM) manages the downstream aspect.

Heru emphasized that CPO exports will remain a priority, considering that CPO is one of Indonesia's leading export commodities that contributes significantly to the country's economy.

The Ministry of Agriculture is optimistic that the potential for an increase in CPO production is still very large.

Currently, the average productivity of palm oil is still at 3 tons per hectare equivalent to CPO.

However, this figure can still be increased to 5-6 tons per hectare through efforts to intensify and rejuvenate oil palm plantations.

Previously, the Indonesian Palm Oil Entrepreneurs Association (Gapki) expressed concern that the government's efforts to increase the biodiesel mix to 50 percent or B50 could reduce CPO exports and their derivatives.

"With only B40, with our current export conditions, it will decrease by around 2 million tons. If we force B50, our exports will decrease by 6 million tons," said Gapki General Chair Eddy Martono in Jakarta, Tuesday, October 22.

The same concern was conveyed by senior economist from the Institute for Development of Economics and Finance (Indef) Fadhil Hasan.

Fadhil said the decline in exports has the potential to trigger an increase in CPO prices in the international market, which will ultimately have an impact on rising cooking oil prices in the country.

The Central Statistics Agency (BPS) reported that CPO exports and their derivatives decreased in September 2024 to 1.49 million tons from 1.97 million tons in the previous month.

Meanwhile, the price of CPO and its derivative products in the global market rose in September 2024, from USD 898.90 per ton to USD 932.05 per ton.

BPS noted that the cumulative export value of CPO and its derivative products reached 1.38 billion US dollars in September 2024.