Indonesia Should Not Fear Losing EU’s Palm Oil Market: Gapki

World’s largest palm oil producer Indonesia should not fear losing the European Union or EU, as the Southeast Asian country still has a lot of other markets to export its top commodity to, according to the Indonesian Palm Oil Association or Gapki.

“Palm oil industry will continue to grow. The commodity is a basic need for food manufacturing and bioenergy. So Indonesia does not need to fear losing the EU because there are other markets out there that will just keep growing,” Gapki chairman Joko Supriyono told reporters in Jakarta on Wednesday.

“What’s more important is how we can fight for our palm oil on the global trade, regardless of the market,” Joko said.

Gapki data show Indonesia exported 3.75 million tons of palm oil products to the EU-27 in the first 11 months of 2022. This marked a 14 percent decline from the same period in 2021. The Gapki export data encompassed crude palm oil (CPO), biodiesel, and oleochemicals, as well as refined, bleached, and deodorized palm olein (RBD).

“I doubt the EU actually wants to ban palm oil. Remember how the past export ban really baffled them that they came after the president,” Joko said.

And while the EU continues to remain discriminatory against Indonesian palm oil, exports to the US are on the rise. The US now climbed two spots to be the third-largest importer of Indonesian palm oil last year.

Indonesia shipped over 2 million tons of palm oil products to the US from Jan. to Nov. 2022, up by 15 percent from last year’s figures of 1.792 million tons. Gapki attributed the rising palm oil export to, among others, biodiesel use in a number of US states.

“We used to only export 400,000 tons in the past. The trans fats issue, coupled with biodiesel use, is driving up our export to the US. So palm oil exports for food and biodiesel to the US are rising,” Joko said.

Another highly potential market for Indonesia is Pakistan. Indonesia’s palm oil exports to Pakistan amounted to 2.357 million tons in the first 11 months of 2022, although this was a slight decline from the 2.381 million tons recorded over the same period in 2021.

“The Silk Road connects China with Pakistan, and from there, we can get to Europe. So we can set up some sort of hub in Pakistan. Let’s not forget that Central Asia is also a huge market that we can penetrate into [from Pakistan],” Sahat M Sinaga, the deputy chair at The Indonesian Palm Oil Board, also told the press.

Indonesia’s overall palm oil export amounted to 30.8 million tons in 2022, marking an 8.5 percent decline from the previous year. China accounted for a large portion of Indonesia’s palm oil exports. China imported 5.866 million tons of Indonesian palm oil products in Jan-Nov 2022.

Gapki reported that overall palm oil export had been on the decline for the past four years.

The EU’s discriminatory deforestation law is making the world’s top palm oil-producing nations Indonesia and Malaysia restless. The European bloc has agreed on a law that would ban the import of products linked to deforestation.

President Joko “Jokowi” Widodo and his Malaysian counterpart Anwar Ibrahim recently agreed to fight against the EU’s discrimination against palm oil. Not long after Anwar’s Jakarta visit, Malaysia announced that it was mulling stopping its palm oil export to the EU.

When asked by the press to comment on Malaysia’s ban plan, the Gapki chairman said, “Indonesia and Malaysia need to be truly in sync when facing the EU.”

According to Joko, the close neighbors had often been out of sync in their ongoing feud against the EU.

“For instance, Malaysia and Indonesia initially agreed to have the same standard on 3- monochloropropanediol [3-MCPD]. But in the end, Malaysia ended up following the EU’s standard,” Joko said.

The 3-MCPD are contaminants found in edible oils and food made from such oils.

A few years ago, the EU proposed that it would set 2.5 ppm as the acceptable safety limit for 3-MCPD consumption. Indonesia thought that this was unfair because the 3-MCPD content on other vegetable oils was only capped at 1.25 ppm. The Council of Palm Oil Producing Countries (CPOPC) —of which Malaysia and Indonesia are members— at the time pushed for one single 2.5 ppm limit to apply to all vegetable oils.

Tags: export, Indonesia, EU, European Union, GAPKI, palm oil, markets