02/01/2013 (Tempo Interactive)  - The Secretary General of the Indonesian Palm Oil Association (Gapki), Joko Supriyono, projected that prices of crude palm oil (CPO) will not go up this year. Production is expected to grow, but not as fast as last year.

"This year, the productivity of 8.3 million hectares of oil palm plantations in Indonesia is high. Usually is this year is good the next year production will be down," he told Tempo last weekend.

Joko expects that CPO prices will still survive in the range of US$ 700-US$ 800 per metric ton. After mid-year, there is a chance that prices could go up to US$ 1,000 to US$ 1,100 per metric ton.

Khudori, agriculture observer from the Agricultural Economics Association of Indonesian Politics, said the price and demand for CPO is expected to remain low. The reason is because the crisis in Europe and the United States has not shown signs of recovery, resulting in declining demand and falling prices.

To anticipate the decline of CPO demand, Vice Chairman of Agriculture Committee at the House of Representatives, Firman Soebagyo, asks government to encourage employers to domestically cultivate their own CPO in order to produce derivative products. He regretted the fact that the initiative to expand downstream palm oil industries in the country is still low.

"Beginning 2013, the government must create a domestic processing industry to create added value," he asserted.

Data from the Directorate of Plantation at the Ministry of Agriculture shows that the national CPO production in 2011 reached 22.51 million tons. A total of 16.5 million tons (75 percent) of production is exported to India, China, Pakistan, the Netherlands, and other countries. As of the second quarter of 2012, Indonesia's CPO exports amounted to 9.776 million tons, 48 percent of the global exports share.