From: Cempaka Nature, Agriculture and Environment - 26/02/2009
Indonesia and Malaysia have agreed to work together in strengthening the prices of global commodities, particularly crude palm oil and rubber, through production cut backs.
Malaysia and Indonesia jointly account for 85 percent of global palm oil production and 40 percent of natural rubber production.
State news agency Antara reported Thursday that the two countries had issued a joint statement saying that they were preparing measures to “ensure stable pirces in particular for palm oil”.
"These measures include managing palm oil stocks and reducing supply through replanting programs," the statement said.
Plantation Industries and Commodities Minister Peter Chin Fah Kui and Minister of Agriculture of the Republic of Indonesia Dr. Ir. Anton Apriyanto met in Kuala Lumpur on Wednesday to discuss bilateral cooperation on the matter.
The Indonesian Minister is in the city to attend the Developing-Eight (D-8) Ministers Meeting.
For palm oil, the ministers have agreed to accelerate replanting of oil palm trees which are above 25-years old, implementation of biofuel program, increasing domestic demand for crude palm oil and jointly engage major importing countries of palm based methyl ester in addressing non-tariff barriers for the exports of biofuel.
Malaysia has implemented the blending of five percent palm based methyl ester with fossil diesel.
Indonesia implemented a minimum of one percent blending program in the public transportation sector and a minimum of 2.5 percent blending in the industry and commercial sector. These minimum percentages will be increased to 2.5 percent in the public transportation sector and five percent in the industrial and commercial sectors.
Both ministers also want to exchange production and stock level data on a regular basis to facilitate stock management and promote palm oil through engaging the related legislators of importing countries.
As for rubber, both countries will accelerate replanting of rubber trees aimed at managing the supply of natural rubber.
"Malaysia has revised upwards the original target of replanting rubber areas to 50,000 hectares in 2009 from 32,000 hectares. Indonesia is replanting 55,000 hectares with rubber in 2009," the statement was quoted by Bernama as saying.
Meanwhile, both countries also agreed to control the expansion of new planted area for rubber, encouraging the reduction of tapping frequency.
The ministers hope that these measures will reduce price volatility and contribute towards stability of both palm oil and natural rubber prices in the longer term.
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