SEA asks the Indonesian govt to provide a stable policy for the export of palm oil.
A team from the Solvent Extractors’ Association of India (SEA) recently met with an Indonesian delegation led by Zulkifli Hasan, Minister of Trade, in New Delhi and recommended the government provide a stable policy for the export of palm oil.
The recent embargo on the export of palm oil from Indonesia, according to the SEA delegation, has produced supply chain challenges in India and hampered Indonesian policy decision-making. As a result, Indonesia lost market share to Malaysia, and palm oil as a whole lost market share to soft oils in India.
The Indonesian Trade Minister, who welcomed the feedback, assured us that there would be no such supply shortage from Indonesia. The SEA delegation urged and requested the Indonesian Trade Minister to have a stable tax framework on export duty/levy so that there is less uncertainty about what the government will do next.
Obligation to the domestic market
SEA raised the issue of domestic market obligation (DMO) in Indonesia, claiming that despite the resumption of exports, Indonesia was unable to discharge its massive stocks. DMO was blamed for the crisis, according to SEA.
The Indonesian Minister, who acknowledged this, stated that the country is attempting to find a compromise between higher FFB (fresh fruit bunches) prices for farmers and reduced olein prices for consumers. With the start of palm oil exports, FFB prices have recovered.
The Indonesian government intends to ensure that customers have access to oil in the domestic market through DMO. He stated that Indonesia requires roughly 7-8% of its oil for its home market. As a result, the ratio of domestic consumption to exports has risen from 1:7 to 1:20.
Benefits of refined oil
Regarding the differential in export tax and charge between refined products and crude palm oil, SEA advised the Indonesian delegation not to favor refined products. India has a lot of refining capacity because it is one of the top customers.
Any advantage given to refined goods at origin renders refining in India unviable, which is not sustainable in the long run, as this may give an advantage to soft oils where refining capacity may be used and refiners can make some margins.
Concerning the Indonesian government’s bio-diesel mandate, the SEA delegation stated that it is not good to burn edible oil when certain poor and underprivileged countries are still fighting hunger and poverty.
When asked if Indonesia is reconsidering the B-35/B-40 biodiesel requirement, the Indonesian Trade Minister stated that the country recognizes the situation.
However, it needs to counter biofuel imports in Indonesia and ensure that its farmers get higher returns, thus the trials have begun. He did not, however, provide a clear image of whether Indonesia will undoubtedly go for the B-40.
The summit reviewed a variety of problems, including methods to increase crude palm oil exports from Indonesia to India in order to reduce the burdensome stock in that nation.
Developing a Brand
SEA informed the Indonesian Trade Minister that in India, palm oil is still regarded as a poor man’s oil and is regarded as unhealthy oil. That is why palm oil is not frequently eaten in ordinary households and is mostly consumed outside the home.
The SEA delegation suggested that Indonesia develop a palm promotion council in collaboration with the SEA and that they work together to alter the negative image of palm oil. It also advised the Indonesian delegation to set aside some monies for promotion.
SEA and Other members delegation
The SEA delegation team was headed by Atul Chaturvedi, President of the SEA. Other members in the delegation were BV Mehta, Executive Director of SEA; Sanjeev Asthana, Chief Executive Officer (CEO) of Patanjali Foods Ltd; Ajay Jhunjhunwala, President-elect of SEA for 2022-23; Angshu Mallick, Managing Director (MD) and CEO of Adani Wilmar Ltd; Vijay Data, MD of Vijay Solvex Ltd; Aashish Acharya, Vice-President (International Trade), Patanjali Foods Ltd; Sandeep Bajoria, CEO of Sunvin Group; Saumin Sheth, COO of Adani Wilmar Ltd; Vidya Bhushan, Head (Edible Oils), Bunge India Pvt Ltd; KTV Kannan, MD of KTV Health Food Pvt Ltd; and Suresh Motwani, General Manager (Oilseeds), Solidaridad Network India Pvt Ltd.