
Indonesia, the world’s largest producer and exporter of palm oil, has announced new restrictions on exports of used cooking oil (UCO) and palm oil residues, aiming to ensure supplies for the local cooking oil and biodiesel industries, in line with new regulations published on Wednesday.
Furthermore, the decision aims to support the fuel blending mandate known as B40. This mandate requires that 40% of diesel be composed of palm oil. The new ratio replaces the previous ratio, which was 35%. This initiative reinforces the country’s commitment to expanding the use of biodiesel and strengthening its domestic economy.
Indonesian authorities have previously identified irregularities in the sector, including cases where exporters mislabeled cooking oil destined for the subsidized “Minyakita” program as UCO and exported it abroad as feedstock for biodiesel. To avoid such problems, the new regulations require exporters of UCO and waste, including palm oil mill effluent (POME), to obtain government export allocations.
Reduction in exports and impacts on the domestic market
Ministries, such as the Ministry of Commerce and the Ministry responsible for coordinating food affairs, will determine these allocations in meetings. In addition, POME can produce biogas, fertilizers and fuel, expanding its applications within the country.
From January to November 2024, exports of UCO and palm oil residues fell by 13,75% compared to the same period in 2023, totaling 3.95 million tons, according to data from Statistics Indonesia. Despite this, the government remains concerned about signs of a shortage of Minyakita in the domestic market, with prices exceeding the regulated maximum ceiling by around 10%.
Indonesia requires palm oil exporters to allocate a portion of their production to the domestic market. The government controls the prices of this measure, ensuring the supply of Minyakita. This way, the product reaches the population at affordable prices. However, members of the palm oil industry have expressed concerns that the B40 mandate could disrupt exports and impact international competitiveness.
Source: Bernadette Christina | Notícias Agrícolas