4/10/05 Chennai , (Business Line) - Indonesia's palm oil exports to Indiaincreased by over 30 per cent during January-May this year, while itsshipments to other nations rose 46.5 per cent.

"Exports of palm products from Indonesia has been growing significantly inproportion to rise in production," said Mr Derom Bangun, Chairman,Indonesian Palm Oil Producers' Association. He was in Mumbai recently inconnection with the global edible oil conference.

Indonesia exported 8.66 million tonnes (mt) of palm group of oils lastyear, nearly double from 4.90 mt in 2001. Shipments to India in 2004totalled 2.76 mt, up from 1.64 mt in 2000.

Mr Bangun said the rise in palm oil production in Indonesia, thesecond-largest producer in the world, could be attributed to increase inyield, mature area and oil extraction rates. Production this year islikely to touch 13.6 mt and it could rise to 14.7 mt next year.

With exports rising, Indonesia is also facing a few trade issues.

The two major issues are betacarotene content and short shipment. "We areworking to solve these issues," he said.

In the global market, Indonesia palm oil is cheaper by $7.5-10 a tonne,but the problem is high content of food fatty acid (close to five percent) in it. Still, countries such as Pakistan and Bangladesh prefer itover Malaysian palm oil. "Maybe, we could prefer Malaysian palm oil if itis $2 a tonne higher but not more," a Pakistan shipper said.

Mr Bangun told Business Line that exports to India could be higher thisyear. However, he expressed concern over higher Customs duty for palmgroup of oils when compared to soyabean oil.

India levies 45 per cent import duty on crude soyabean oil, whereas forcrude palm oil it is 65 per cent and 75 per cent for refined oils.

"The landed price of palm oil in India is higher because of this duty. Themarket for this is becoming thin," he said.

Stating that Indonesia was not solely depending on India for palm oilexports, Mr Bangun said it had found market in Pakistan, Bangladesh, WestAsia, Europe, China and the US.

Asked if there were any prospects of counter trade of palm oil with India,Mr Bangun said, "It is for our Government to decide."

Indonesia and India had toyed with the idea of barter trade in 1998 withNew Delhi planning to buy palm oil and timber in exchange forpharmaceuticals and rice. But the proposal did not materialise as thetalks got deadlocked over the opening of an escrow country in a thirdcountry.

"We currently are exporting palm oil to Russia for a counter trade we didwith them. We bought Sukhoi aircraft from them," Mr Bangun said.