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Indonesia, the world’s biggest palm oil exporter, plans to lower export levy rates of the tropical oil to improve competitiveness against rival vegetable oils and raise farmers’ income, a government official said on Wednesday.
Palm oil typically trades at a discount to soft oils. However, it has lost the edge over soyoil and sunflower oil in recent months amid ample supply, driving away major buyers India and China.
“Traditionally (palm oil was) always the cheapest, but now it is very competitive with soybean oil and sunflower oil. By lowering (export levy), we hope to improve smallholders’ welfare and price competitiveness,” Dida Gardera, a senior official at Coordinating Ministry of Economic Affairs told Reuters.
Small farmers often complain that exporters offer them cheaper prices for their palm fruits to compensate for higher export taxes.
Under current rules, Indonesia imposes a levy between US$55 to US$240 per metric ton for crude palm oil exports, depending on global palm oil prices, which is charged on top of a separate export tax.
There are 17 brackets for the levy, with the lowest tax rate kicking in when palm oil price is below US$680 per ton, and the highest rate when the price is above US$1,430 per ton.
The new levy rates will also have “simpler” price brackets, Dida said, without disclosing further details.
Indonesia collects levies on shipments of palm oil products to fund programmes such as smallholders replanting scheme and biodiesel blending mandate.
Exports of Indonesia’s palm oil export in the first half of this year stood at 15.07 million metric tons, a 7.65% drop year-on-year, data from the country’s biggest palm oil producers group GAPKI showed.
Source: The Edge Malaysia
