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Asian Agri Group will Boost Exports to Africa

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Arsianews, Jakarta – The Asian Agri Group will target new export markets for crude palm oil (CPO) and derivative products starting this year. A number of countries that have the potential to become new export markets are mainly in North Africa, such as Algeria, Morocco and Tunisia. Efforts to boost this new market because there are still many obstacles that squeeze the palm oil industry.

Asian Agri’s Director of Sustainability and Stakeholder Relations Bernard A. Riedo revealed, the company found a new export market for CPO and its derivative products that had not been maximally cultivated. Besides North Africa, a number of countries in East and West Africa also have potential as new markets. So far, many CPO exports have been directed to Western Europe, India, China, Pakistan and Bangladesh.

Although the new market is promising, minimal infrastructure problems in African countries are obstacles that hinder export efforts there. Bernard exemplifies Nigeria and Ethiopia which actually have great potential. “But the export there is hampered by infrastructure problems,” he said.

Another challenge faced is the export of Indonesian palm oil derivative products in the form of finished goods such as margarine, soap, and cosmetics which are still less competitive. This is because the new palm oil market countries want finished goods.

Indonesia lost to Malaysia in terms of exports of palm oil derivative goods because of the high cost of producing palm oil products in Indonesia. In the Asian Agri case, for example, a large palm refinery plant was in Sumatra and Kalimantan. While most of the packing products processing factories are located in Java. This causes production costs to be expensive. Ironically, Indonesia is not technologically inferior to Malaysia about processing palm oil into finished goods.

The various problems mentioned above can actually be overcome with the assistance of the Indonesian Government to encourage cooperation between business actors in Indonesia and business people in these African countries. “Or conversely they can join invest here (Indonesia), for example, maybe downstream products,” he said.

From countries that have been the main export destinations for Indonesian palm oil, other challenges also arise. India, for example, according to Asian Agri’s Director of Corporate Affairs Fadhil Hasan, has tripled CPO import tariffs. While in the European Union, barriers come from negative campaigns against oil palm, which led to the Renewable Energy Directive (RED) policy II.

The core of this RED II is that the European Union categorizes oil palm as a high-risk crop. As a result, Europe limits the use of mixed biofuel from CPO to a maximum of 7%. The European Union even targets that it will no longer use CPO as a biofuel feedstock by 2030.

Fadhil asked the Indonesian Government to take decisive steps on these discriminatory policies. “Indonesia must be firm in opposing this RED II policy. We should bring this matter to the World Trade Organization (WTO), “he said.

Moreover, the palm oil industry still faces challenges in the form of a drop in CPO prices. At present, CPO prices have been corrected to below US $ 500 per ton.

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