According to the Indonesian Palm Oil Entrepreneurs Association (Gapki), there is no longer a need to implement the domestic market obligation (DMO) policy.
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According to Gapki General Chair Eddy Martono, there is no longer a need for the current DMO policy because the amount of palm oil produced currently exceeds the amount consumed. “The policy is more appropriate (for implementation) when prices are high, raising concerns about a lack of domestic supply. Currently, the DMO policy raises costs by approximately US$ 20 per ton,” Eddy said on 24th January.
According to Gapki, the production of palm oil—both palm kernel oil (PKO) and crude palm oil (CPO)—will reach 53–55 million tons by 2024. Government policies can affect the absorption of palm oil or the consumption of DMOs in the interim. “Yes, (DMO absorption) is determined by the amount of palm oil exported and the government's required proportion. That could change depending on the government,” he explained.
The Domestic Price Obligation (DPO) and DMO palm oil policies currently in place, according to the Indonesian Palm Oil Farmers Association (Apkasindo), should be reviewed or repealed. The reason is that since the first DMO policy was put into effect in 2022, the price of palm oil has dropped significantly on a global scale. Apkasindo reported that the average Rotterdam International CPO price in 2023 was 25.9% lower than the price in 2022, according to prices from the Apkasindo DPP data post.
In the meantime, there has been a 10.7% drop in the average price of Kharisma Marketing Bersama Nusantara (KPBN) KPBN CPO in 2023 when compared to the previous year’s average. The price of farmers' Fresh Fruit Bunches (FFB) will be held back or not increase if the DMO and DPO policies continue to be in place under the current circumstances, according to General Chairman of Apkasindo Gulat ME Manurung.
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