Kuala Lumpur, November 21

Indonesia and Malaysia, the world’s top two palm oil producers, signed an agreement today 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 the Organisation of the Petroleum Exporting Countries (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 nations account for 85 per cent of world’s palm oil production, and plunge in prices have hit 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 four 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 organising and harmonising 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.