This Reuters article suggests to me that palm oil prices may...

This Reuters article suggests to me that palm oil prices may move higher. Anybody agree to disagree?
09:03 20Aug07 -FEATURE-Palm oil not a field of dreams for all Indonesians
By Fitri Wulandari and Lewa Pardomuan
LANGKAT, Indonesia, Aug 20 (Reuters) - Palm oil prices might
be going through the roof and making investors and businessmen
rich, but the soaring prices have not improved the lot of pickers
and locals working on the fringes of the palm oil industry.
On the island of Sumatra, one of the main palm oil-growing
islands in Indonesia, the world's second-largest producer after
Malaysia, 52-year-old Minah salvages unspoilt fruit from partly
rotten palm branch that have fallen to the ground.
The Indonesian mother of eight ekes out a living on a
state-run palm oil plantation near her house by picking through
fallen branches to extract fruit which she sells for 600 rupiah
per kg (6 U.S. cents) to a middleman.
"The plantation doesn't mind as long as I don't touch bunches
still on trees," said Minah, as flies and other insects perch on
her hands, stained by the sticky brown juice that oozes from the
fruit.
The sales net her around $1 to $2 per day.
"And people say palm oil is expensive," she remarks.
Almost half of Indonesia's 220 million people still live on
less than $2 a day, according to the World Bank.
Poverty levels remain high despite a pledge by President
Susilo Bambang Yudhoyono to tackle widespread poverty made worse
by chronic unemployment and underemployment.
In Langkat, about 50 km (30 miles) west of North Sumatra's
provincial capital of Medan, hundreds of people rely on palm oil
-- the world's second most popular edible oil after soy oil.
They work as illegal fruit collectors like Minah, small
holders, drivers, middlemen and labourers for palm oil refiners.

HISTORIC PRICES, HIGH EXPORT TAXES
In nearby Malaysia, palm oil futures trading on the Bursa
Malaysia Derivatives Exchange in Kuala Lumpur -- the benchmark
for global prices -- hit a historic high of 2,764 ringgit
($798.8) a tonne in early June.
The price has since dropped but is still within sight of the
highs, helped by soaring demand for palm oil in manufactured
foods as well as for new greener biodiesel made from palm oil.
Obtained by crushing palm oil fruit, the reddish-brown oil is
also used in cookies, toothpaste and ice cream.
Indonesia is set to overtake Malaysia as the world's top
producer this year with output seen at 17.4 million tonnes, up
from 15.9 million tonnes in 2006.
But back in Sumatra, many farmers struggle to make ends meet
while revenue at big plantation companies such as PT Astra Agro
Lestari Tbk has doubled on sky-high palm oil prices.
The plantation companies are enjoying a boom in commodity
prices driven by strong demand from countries such as India and
China and demand from the biofuel sector.
The biodiesel frenzy has also sparked mergers and takeovers
across the plantation sectors in Asia. Big firms with their
financial muscle are able to expand their plantations and hire
people to work for them while small holders are left behind.
With little support from the government, some palm oil
farmers have to cope with high prices of fertilisers and a lack
of funds to maintain their plantations and boost output by
replacing old, unproductive trees.

EXPORT TAX
Jakarta's recent decision to raise the export tax on crude
palm oil to 6.5 percent from 1.5 percent is another blow to
farmers as it has caused prices to drop to around 1,000 rupiah a
kilogram from 1,200 rupiah.
"I can't rely on palm oil alone to survive, especially
because the price of fertiliser is very high," said Juanda
Peranginanginthe, a 25-year-old farmer who cultivates 70 palm oil
trees inherited from his father.
Farmers bear the brunt of the increased excise tax because
refiners now refuse to buy fresh fruit bunches without a
discount, said Asmar Arsjad, head of the Indonesian Palm Oil
Farmers Association, which represents 5 million smallholders.
Indonesia has 6.07 million hectares of land planted with palm
oil, of which 45 percent is owned by private firms. Smallholders
own 43 percent of the country's palm oil plantations while state
plantation firms own the rest.
Indonesia raised the export tax for crude palm oil and its
by-products to stabilise domestic cooking oil prices which surged
due to global palm oil price hikes and dealt a blow to millions
of poor Indonesians who rely on the oil as a staple food.
Rusman Sihombing, a driver who has been working for a palm
oil collector for five years, said he has to transport 5,000
kilograms of the fruit to break even due to the paltry fees he
receives for hauling the crops to refiners.
"I am not sure if the increase in (palm oil) prices actually
has an impact on people here," he said.
($1=9,310 rupiah)

Monday, 20 August 2007 09:03:09