REPUBLIKA.CO.ID, JAKARTA - As two world's largest crude palm oil (CPO) producers, Indonesia and Malaysia agree to take step to strengthen the falling price of CPO. The neighboring countries affirmed to stick to the CPO production quota to stabilize its price, Indonesian Minister of Agriculture Suswono said on Monday.

Affirmation was issued after Suswono met Malaysia's Plantation Industries and Commodities Minister Tan Sri Bernard Dompok. He said that both must take the step considering that Malaysia and Indonesia currently accounted for about 90 percent of global CPO production. "This is the important livelihood in both countries," he explained.

Indonesia produced 24.10 million tonnes of CPO last year, increasing from 22.10 million tonnes of 2010. Suswono estimated the CPO production this year would reach 22.6 million tonnes from a planted area of 8.9 million hectares.

Meanwhile, Malaysia in 2011 produced 18.9 million tonnes of CPO from a planted area of 5 million hectares. For this year, Dompok predicted the CPO production reach 18 million tonnes.

The approach of production quota of each country will be different. Malaysia will be replanting 300,000 hectares of oil palm plantations to replace 25-year-old plants.

Dompok also said Malaysia planned to manage the quota by using more palm oil in the country such as for biodiesel. But, he said it had not yet fully implemented due to limitation on its facility.

In the other hands, Suswono said that Indonesia encouraged the downstream of CPO to anticipate the usage of CPO. Suswono also appreciated Indonesian plan to form regional commodity exchange with China, Thailand, Vietnam, and Japan. The exchange is expected to decrease Asian dependence on London and US commodity exchange on determining the commodity price. Suswono said that the plan must be supported because the CPO price still depended on Rotterdam, Netherlands.

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