Malaysian palm oil futures reversed earlier gains to fall in the second half of trade on Wednesday, dragged down by expectations of rising production in the coming months.
JAKARTA: Indonesia's palm oil association said on Friday it is worried that a French plan to reduce the use of palm oil in biofuels will prompt other European countries to follow suit, damaging exports of the important commodity.
France's environment minister has said the government would take steps to restrict the use of palm oil in biofuels in order to reduce deforestation in countries of origin.
The plan is the latest international pressure to be put on the palm oil industry.
A few months ago, the European parliament called for the European Union to phase out the use of vegetable oils in biodiesels that are produced unsustainably.
The U.S. government is investigating Indonesian biodiesel exports on suspicion of dumping.
Although France is not a significant export destination for Indonesian palm oil, its action could be followed by other EU members, said Fadhil Hasan, executive director at Indonesia Palm Oil Association (GAPKI).
"It will be very impactful if followed by other countries, especially when their excuses are the same as those of the European parliament," Hasan told Reuters.
Indonesia exported a combined 4.37 million tonnes of palm oil to the European Union last year, its second largest market after India.
A non-binding European parliament motion in April called for a single Certified Sustainable Palm Oil (CSPO) scheme for Europe-bound palm and other vegetable oil exports to ensure they are produced in an environmentally sustainable way.
Indonesia and Malaysia, the world's top producers, are working together to prevent implementation of the resolution.
In response to the French plan, the Indonesian trade ministry secretary general, Karyanto Suprih, said the government would do everything it could to defend national interests, including bringing the issue to the World Trade Organization.
France "will not stop trying" to curb palm oil use, Suprih added.
"If now the issue is the environment, maybe next time it's another issue," he said, adding that the Indonesian government has done a lot to address environmental issues.
"We have done a lot and will not stop making improvements," he said.- Reuters
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