Jakarta. Indonesia has slashed the reference price of crude palm oil, or CPO, for June, thus reducing export duties as the controversial trade system shake-up nears.

The Trade Ministry has announced that the CPO reference price next month is set at $1,029.51 per metric ton, down $20.07 or 1.91% from May, after taking into account key bourses. The benchmark price -- used to determine export duties and levies -- is currently at $1,049.58 a metric ton. 

“We cut the benchmark price following declining demand from our main importers, such as India,” Trade Ministry senior official Tommy Andana said.

And so, the CPO export duty shrinks from $178 per metric ton in May to $148 a metric ton the following month. The June export levy is at 12.5% of the reference price, hence at nearly $128.6892 per metric ton. Levy currently stands at $131.1978 per metric ton. 

Indonesia will also charge a $33 export levy for every metric ton of packaged cooking oil of palm olein weighing no more than 25 kilograms. The country is the world’s largest palm oil supplier.

June will see the start of Indonesia’s new one-gate policy. President Prabowo Subianto wants to channel all palm oil exports through one state-run entity. The country’s sovereign wealth fund even set up an entirely new body -- Danantara Sumberdaya Indonesia (DSI) -- to oversee all these exports. The transition period will start on Monday, and will have palm oil exporters reporting their sales to DSI. The agency is set to take over all export functions by early 2027.

Palm oil farmers' group POPSI warned that DSI would only add salt to the injury, as export duties had already dealt more than enough pressure.

“Farmers are already dealing with so much pressure. The lengthy supply chain, coupled with the export duties and levies, has lowered the price of [the raw material] fresh fruit bunches. DSI will only worsen it,” POPSI chair Mansuetus Darto said.