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Indonesia Should Consider Lowering Palm Export Levy -National Agency
Indonesia Should Consider Lowering Palm Export Levy -National Agency
04/11/2015 (Reuters) - Indonesia's government should consider reducing the levy on crude palm oil exports if prices fall below $450 a tonne, the head of the agency in charge of collecting the new levy said on Wednesday.
In June this year, the world's top producer established the Indonesia Estate Crop Fund Agency to collect a $50 per tonne levy on crude palm oil exports that was introduced a month later.
"If the price goes down further, it is going to be very hard for the industry to bear $50 per tonne," Bayu Krisnamurthi, president director of the agency told Reuters. "I will ask the government to change that if the palm price goes lower."
Benchmark Malaysian palm oil prices currently trade at 2,349 ringgit ($552) a tonne and earlier this year touched a near six-and-a-half year low at 1,863 ringgit ($438).
In addition to smallholders, major palm players in Indonesia that may benefit from a lower levy charge include PT Sinar Mas Agro Resources and Technology, Astra Agro Lestari and Wilmar International Ltd.
With palm demand hurt by slowing economic activity in major buyer China, proceeds from the levy will be used by the agency to help fund Indonesia's biodiesel subsidies that were introduced earlier this year to help cut the country's oil import bill and create new demand for the tropical oil.
The agency has collected more than $200 million so far, said Krisnamurthi, adding that this was likely to swell to a total $700 million for 2016.
In addition to biodiesel subsidies, Indonesia's government raised the minimum bio content in diesel fuel used for transport to 15 percent this year, up from 10 percent previously, and this will rise again in 2016 to 20 percent.
Indonesia's total biodiesel consumption is expected to rise from 1.6 million kilolitres this year to 4 million in 2016, added Krisnamurthi, a former deputy trade and deputy agriculture minister.
Major automakers had already given their blessing to the change in the fuel blend and were ready for the 2016 increase, said Krisnamurthi, whose agency reports to the finance ministry, and is made up of representatives from farmers along with government and industry officials.
Although more than half of the funds raised will be used for domestic biodiesel subsidies, the agency will also support farmers re-planting, education and training, finance research of downstream industries, lobbying and the promotion of palm oil use overseas.
This year, major palm plantations in Indonesia had re-planted 250,000-300,000 hectares, added Krisnamurthi, excluding smallholders. ($1 = 4.2580 ringgit) ($1 = 13,480.0000 rupiah)
In June this year, the world's top producer established the Indonesia Estate Crop Fund Agency to collect a $50 per tonne levy on crude palm oil exports that was introduced a month later.
"If the price goes down further, it is going to be very hard for the industry to bear $50 per tonne," Bayu Krisnamurthi, president director of the agency told Reuters. "I will ask the government to change that if the palm price goes lower."
Benchmark Malaysian palm oil prices currently trade at 2,349 ringgit ($552) a tonne and earlier this year touched a near six-and-a-half year low at 1,863 ringgit ($438).
In addition to smallholders, major palm players in Indonesia that may benefit from a lower levy charge include PT Sinar Mas Agro Resources and Technology, Astra Agro Lestari and Wilmar International Ltd.
With palm demand hurt by slowing economic activity in major buyer China, proceeds from the levy will be used by the agency to help fund Indonesia's biodiesel subsidies that were introduced earlier this year to help cut the country's oil import bill and create new demand for the tropical oil.
The agency has collected more than $200 million so far, said Krisnamurthi, adding that this was likely to swell to a total $700 million for 2016.
In addition to biodiesel subsidies, Indonesia's government raised the minimum bio content in diesel fuel used for transport to 15 percent this year, up from 10 percent previously, and this will rise again in 2016 to 20 percent.
Indonesia's total biodiesel consumption is expected to rise from 1.6 million kilolitres this year to 4 million in 2016, added Krisnamurthi, a former deputy trade and deputy agriculture minister.
Major automakers had already given their blessing to the change in the fuel blend and were ready for the 2016 increase, said Krisnamurthi, whose agency reports to the finance ministry, and is made up of representatives from farmers along with government and industry officials.
Although more than half of the funds raised will be used for domestic biodiesel subsidies, the agency will also support farmers re-planting, education and training, finance research of downstream industries, lobbying and the promotion of palm oil use overseas.
This year, major palm plantations in Indonesia had re-planted 250,000-300,000 hectares, added Krisnamurthi, excluding smallholders. ($1 = 4.2580 ringgit) ($1 = 13,480.0000 rupiah)