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Crude palm oil (CPO) producers are to be obligated to set aside some of their products for domestic needs.

The domestic market obligation (DPO) policy will come into effect as from June 1, 2007.

“The DPO implementation is a mandate of the State Decree on Plantations,” said Anton Apriyantono, Agriculture Minister, after accepting bird flu vaccine aid from Chinese government at the Agriculture Department building, Jakarta, yesterday (29/5).

“(The implementation provision) is the Agriculture Minister Decision for a start,” he said

Anton explained that for the time being, the DMO policy was being implemented in order to fulfil domestic cooking oil needs because cooking oil is one of the nine staple household goods.

Therefore, CPO stocks are prioritized for domestic needs.

“It's unfortunate (for producers) if the price abroad is high, but we limit it here,” said Anton.

On the other side, in order to secure domestic stocks, the government cannot determine the price.

“We still leave the price to the market mechanism,” said Anton.

Regarding the CPO quota per producer, he went on to say it will be determined later with the Industry and Trade Departments.

“It can't be set by us alone,” said Anton

What is certain is the minimum limit being calculated based on the company's tax payment and amount shipped abroad.

Anton said that the DMO policy is effective even for companies associated with Malaysia.

Fahmi Idris, the Industry Minister, instead stated that the DMO policy for fulfilling domestic palm oil need will be effective by the end of the month.

He explained domestic CPO needs reach 4.5 million tons per year.

“So the obligation (DMO) amount is between 4.5 million to 5 million tons per year,” he said, on Monday (28/5) at the Vice President's office, Jakarta.

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