PALMOILMAGAZINE, JAKARTA – Posma Sinurat, Chairman of the Palm Oil Mill Division at the Indonesian Palm Oil Professionals Association (P3PI), highlighted the importance of Indonesia playing a greater role in determining crude palm oil (CPO) prices. Despite being the world’s largest palm oil producer since 2006, global CPO prices are still largely dictated by the Malaysian and Dutch markets.
“Why do we always follow Malaysia’s CPO prices or those in the Netherlands? Why don’t we take the lead in setting our own prices? What harm is there in being the price determinant?” Posma questioned during an NTV Insight discussion on Tuesday, December 23, 2024, as quoted by Palmoilmagazine.com.
Posma explained that Malaysia has taken strategic steps since the 1980s by establishing a CPO exchange, which laid the foundation for setting global market prices. Standardization in quality and quantity was key to Malaysia’s success in gaining international market trust.
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In contrast, Indonesia, while possessing its own standards, lags behind in building an integrated system. However, Posma praised the government’s recent efforts to prioritize the establishment of a domestic CPO exchange.
“Indonesia has learned from experience, even though it’s been slow. We understand the importance of this step. Our CPO exchange is operational, and some transactions have already taken place,” Posma noted.
He expressed optimism that Indonesia’s CPO exchange would eventually become the backbone of price sovereignty. By doing so, Indonesia would not only remain the largest producer but also emerge as a key global price setter.
“As this system matures, market trust will grow. This will enable us to truly achieve sovereignty in determining CPO prices,” he emphasized.
Although the progress has been slow, Posma considers it a positive start. “Better late than never,” he concluded.
The government’s efforts to strengthen Indonesia’s role in the global CPO market signal a promising future for the palm oil industry. By asserting price sovereignty, Indonesia can enhance competitiveness and generate greater economic benefits for all stakeholders in the domestic palm oil sector. (P2)
