"I am very optimistic," Derom Bangun, chairman of the Association of the Indonesian Palm Oil Producers (Gapki), told Reuters shortly before leaving for the Netherlands with government officials for talks on the issue. "We are hoping for a solution which can be well-accepted by both parties," he said in Medan, Indonesia's key commodity trading centre and capital of North Sumatra. "I will take some samples of CPO in my luggage. We've got two problems here -- to find a solution to the blockage of CPO in Rotterdam... (and) to upgrade facilities and the quality control system in Indonesia," he added.

Exports from Belawan have stopped
Thediscovery of the contaminated crude palm oil has effectively halted exports from Belawan, Indonesia's main export port for CPO. Local players are waiting for the government to do something and some contracts have been washed out by foreign buyers pending a probe on the case. Bangun said the Indonesian government had taken several measures to make sure the next shipments would be safe, including cleaning storage tanks, conducting rigid tests to make sure the oil was not contaminated and also securing the transport of the oil from plantations to the port. "Tanks will be cleaned up and the CPO will be guarded from the plantations to Belawan so that it will be secure...(tests) have been improved (so) that they are now able to determine diesel contamination," he said.

Many traders believe the contamination most likely took place when the oil was transported from the plantations to the port. Others speculated truck drivers could have stolen palm oil from tanks when they transported it to Belawan, and replaced itwith much cheaper diesel to avoid detection.

Bangun said the Indonesian government welcomed an offer by the Dutch Margarine, Fats and Oils Association to assist Jakarta in preventing a repeat of the contamination in the future and also to check the facilities in Belawan port every year.

Bangun said that in the wake of a slowdown in CPO exports, producers were shipping by-products such as RBD olein, RBD palm oil and stearin.

Indonesia's crude palm oil output is expected to top six million tonnes in 2000 against up to 5.5 million this year because of higher yields. Most is grown on the island of Sumatra.