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Indonesia plans to divert palm oil exports to India if EU cuts imports

The Economic Times - December 4, 2019

Rituraj Tiwari, Medan – Indonesia, the world's largest producer of palm oil, is focusing big on exports to countries like India and China to overcome the likely setback it may face from the European Union, which may cut down on imports of palm oil products because of concerns about the environmental damage caused by land-clearing fires.

The country produces around 40 million tonnes of palm oil every year and exports 73% of it. "EU alleges Indonesia of deforestation caused by palm oil plantation expansion. But the fact is that, we are not expanding our plantation.

We are replanting the 25-year-old palm trees. EU allegations are baseless and we have moved WTO against this discrimination," said Donald Siahaan, chief operating officer, Oil Palm Science Techno Park (OPSTP), Indonesia's Oil Palm Research Institute.

Lolita Bangun of Indonesian Palm Oil Association said Indonesia is trying to push more of its oil exports to India and China while diverting a large portion of its oil palm to biodiesel programme. The EU is the second-largest palm oil market after India, consuming about 7.5 million tonnes of palm oil yearly.

"The sluggish exports to EU have prompted us to look for other options for utilizing our oil palm without compromising on our production capacity.

We are in diplomatic talks with Indian and Chinese governments to increase our export share and at the same time the country plans to launch B-30 biodiesel programme from next January, raising the proportion of palm oil in the biofuel from the existing 20% to 30%," she said.

The B-30 programme is expected to reduce fossil diesel fuel consumption by 165,000 barrels per day (bpd). Now, Indonesian president Joko Widodo wants the country to start planning for B50.

"We have to safeguard future of 17 million farmers whose livelihood is based on oil palm industry.

If EU prefers to import less oil from us, we will increase domestic demand by blending more palm oil with biodiesel," said Muhammad Arwin Nasution, director commercial at PTPN, agovernment-owned plantation producer.

[The reporter was in Indonesia at the invite of the Indonesian embassy.]

Source: https://economictimes.indiatimes.com/news/economy/foreign-trade/indonesia-plans-to-divert-palm-oil-exports-to-india-if-eu-cuts-imports/articleshow/72358125.cms