Indonesia's palm oil exports may fall to 3.9 million tonnes in 2001 from4.15 million tonnes last year, hampered by lower yields and a strongerrupiah, an industry official said on Monday."I am afraid that we won't be able to reach a target of 4.2 milliontonnes. (Exports) may fall to 3.9 million tonnes," Derom Bangun, chairmanof the Indonesian Palm Oil Producers Association (Gapki) told Reuters onthe sidelines of a palm oil conference.Bangun said palm oil production for the world's second-largest producerafter Malaysia had declined in the first half of the year. January-Mayexports were estimated at 1.6 million tonnes, down 10 percent from thesame period last year because of lower yields, he said.The appreciating rupiah, quoted at 8,535/8,575 to the dollar at 0816GMT on Monday, was also discouraging exports.Bangun said Indonesia's palm oil production may fall short of thetarget of 7.2 million tonnes this year because of security problems andweather problems if the drought causing El Nino phenomenon returns thisyear.Indonesia produced around 6.5 million tonnes of palm oil in 2000.Consumption is expected to reach 3.7 million tonnes this year."Security in some areas is not perfect yet," said Bangun, referring towidespread looting of fresh fruit bunches in plantation areas during theeconomic crisis."Weather experts are talking about El Nino. If that happens, there willbe a shortage in production," he said.Marked by an abnormal warming of waters in the eastern Pacific Ocean,El Nino wreaks devastation in weather patterns around the Pacific Rim andcan also affect the number of storms in the Atlantic hurricane season."Production in the first half of the year only constitutes between 85to 95 percent of the estimates. Many firms are oversold," said Bangun.He said many ships were also waiting at the ports as they could notleave for their destinations because of a shortage in crude palm oil.

GAPKI SEEKS TAX REMOVALBangun gave no further details, but said Gapki intended to ask thegovernment to reduce or abolish palm oil export taxes because a strongerrupiah had put pressure on local cooking oil prices.Cooking oil was being offered at 4,200 rupiah/kg ($0.49) this weekcompared with 5,000 rupiah/kg ($0.58) in July, he said.Cooking oil is a sensitive commodity in Indonesia, the world's fourthmost populous country, and significant shortages can lead to socialunrest.Jakarta currently imposes a three percent tax on CPO and palm kerneland a one percent tax on refined, bleached and deodorised (RBD) palm oil,RBD palm olein and crude olein.Indonesia levies the tax to control the flow of palm oil exports, whichnormally rises each time the rupiah weakens.

KUALA LUMPUR20 Aug 2001Reuters