At the end of this month, palm oil companies must accept a new policy which is quite shocking for the Indonesian trade world. Because on May 1, 2023, the Indonesian Ministry of Trade issued a regulation limiting Crude Palm Oil export quotas. This rule regulates the Domestic Price Obligation (DMO) policy for CPO palm oil to be 1:4, smaller than the previous 1:6. With this regulation, the export volume of Crude Palm Oil is only four times the supply to the local market. The Indonesian government made this policy to ensure that the supply of palm oil as a raw material for cooking oil in the country was sufficient. So what exactly is Crude Palm Oil?
What is Crude Palm Oil?
Crude palm oil is palm oil which is included in the class of crude vegetable oils. When it has been processed, CPO can be the main raw material for making cooking oil. Cooking oil is a palm product that is widely consumed by people around the world. Cooking oil accounts for 40% of all vegetable oil use worldwide. The main reason many people use palm cooking oil is because it is cheap and easily available. Oil, which is Indonesia’s export commodity, has a high consumption interest. Because it can be processed into food products, beauty products, and chemicals.
Why is CPO Export Restricted?
The Indonesian government is working to increase the Domestic Price Obligation (DMO) to ensure that the demand for cooking oil in Indonesia can be fulfilled. Previously the price of oil in Indonesia had experienced a significant price increase due to the scarcity of cooking oil. This policy will stabilize the price of cooking oil in Indonesia and maintain the price of oil for export. Even though currently the Crude Palm Oil export restrictions will make CPO stocks in the global market limited. This can also help Indonesian palm oil entrepreneurs to distribute their products domestically. Because the price of CPO on the world market has decreased. The decline in CPO prices was due to the increased availability of vegetable oils in the global market. Especially canola oil from Australia and Ukraine.