Indef: Moratorium on Palm Oil should not be Extended

JAKARTA, SAWIT INDONESIA - Institute for Development of Economics and Finance (Indef) criticized the government's reasons for extending moratorium program on palm oil as the policy may reduce palm oil productivity which is growing rapidly today.

"The question is why the government wants to extend the moratorium on palm oil when it is growing rapidly, whereas logically, the rapid growth of palm oil can serve as a prove that palm oil is relatively better than other plantations," said the Director of Indef, Enny Sri Hartati, in a press conference held in Pejaten, South Jakarta on Monday (10/7).

According to her, the success of palm oil industry has stimulated the national economy which can serve as a model for other plantation commodities, such as cocoa, sugar cane, coffee, and others.

"It means that things that make palm oil to be competitive, such as its business management to fulfill plantation and economic capability, can be emulated. Although, in one point, there is still a criticism about some palm oil industries which still marginalize smallholdings, and some are developing smallholding, and so on," she added.

She thought that the success of palm oil industry was due to the role of companies that provide easy access on the financing and training cultivation to farmers.

Therefore, the government should rather facilitate the uncompetitive non-palm oil plantations through agricultural training and credits, than through moratorium policy, to improve palm oil industry.

"Palm oil contributes less than 10% of agricultural credits, but 8% of it is palm oil commodity. If the step is implemented, other plantations may grow like palm oil," she said.