The Hindu Business Line : Indonesia palm oil exports to India up 30 pc in Jan-May

INDONESIA's palm oil exports to India increased by over 30 per cent during January-May this year, while its shipments to other nations rose 46.5 per cent.

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

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

Mr Bangun said the rise in palm oil production in Indonesia, the second-largest producer in the world, could be attributed to increase in yield, mature area and oil extraction rates. Production this year is likely 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 are working 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 per cent) in it. Still, countries such as Pakistan and Bangladesh prefer it over Malaysian palm oil. "Maybe, we could prefer Malaysian palm oil if it is $2 a tonne higher but not more," a Pakistan shipper said.

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

India levies 45 per cent import duty on crude soyabean oil, whereas for crude 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. The market for this is becoming thin," he said.

Stating that Indonesia was not solely depending on India for palm oil exports, Mr Bangun said it had found market in Pakistan, Bangladesh, West Asia, 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 with New Delhi planning to buy palm oil and timber in exchange for pharmaceuticals and rice. But the proposal did not materialise as the talks got deadlocked over the opening of an escrow country in a third country.

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

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