Indonesia and Malaysia, the world's top two palm
oil producers, signed an agreement Saturday to set up a council for palm
oil producing countries in a bid to ensure price stability by managing
production and stock in the global market.
Officials said the Jakarta-based council will be a body similar to that of OPEC for oil producers.
Indonesian
Resources Minister Rizal Ramli said the council will be a "game
changer" for an industry under pressure from falling prices and
unsustainable farming practices.
The two countries account for 85 percent of the world's palm oil production, and the plunge in prices have hurt their economies.
Rizal
said the council will address impediments to trade to boost
competitiveness in the world market, and promote green and sustainable
farming. It will also aim to improve the livelihoods of more than 4
million oil palm smallholders in Indonesia and some 500,000 in Malaysia,
he said.
"It will be a game changer for the palm oil industry in many ways," Rizal said after a signing ceremony to establish the council.
Malaysian
Plantation, Industries and Commodities Minister Amar Douglas Unggah
Embas said the council will not fix the price of palm oil, but will seek
to ensure a sustainable price by organizing and harmonizing stock
management.
He
said membership will be extended to other producers such as Brazil,
Colombia, Thailand, Ghana, Liberia, Nigeria, Papua New Guinea, the
Philippines and Uganda.
Rizal
said the council will develop a framework for sustainable palm oil. By
pushing for high standards of sustainable farming, he said it will help
to prevent the burning of forests to clear land for agriculture in
Indonesia that has caused a thick dusty haze across the region every
year.
"We know we still have to work hard to minimize the impact" of haze, he said.
The
two countries will each contribute $5 million to the council's
operations and operational details are still being ironed out, officials
said.
Palm oil is commonly used in food, fuel and other products.
By: The Associated Press.
Review: Emerging Market Formulations & Research Unit, Flagship Records.
For The #FacebookTeam.