Thursday, 11 October 2012


Challenge and problem in development of national oil palm industry in the future will be heavier. To maintain growth momentum of the industry which could absorb 3.5 million direct workers, there are many things that must be paid attention to by oil palm industry operators. Fadhil Hassan, Executive Director of Indonesian Palm Oil Association (GAPKI), stated this matter.

Indonesia’s success as the biggest palm oil producer in the world is not only due to climatologically factor, agronomic techniques, and land suitability, but especially due to government’s policy at that time which supports development of oil palm industry, whether policy concerning production, financing, infrastructure support, and a good cross-sectoral cooperation. As the biggest CPO producer in the world, Indonesia is facing bigger and more complex challenges that require handling and policy support from all stakeholders, especially from the government.

The challenges are: rampant negative campaign on Indonesia’s CPO product launched by domestic and foreign non-governmental institutions (NGO); increasing demand for a sustainable oil palm industry management; the appearance of new competitors in oil palm industry like Brazil and Africa.

Development of national oil palm industry is facing challenges related to unconducive and overlapping policy between one governmental institution and another. For example, policy on regional spatial planning in relation to land certainty for expansion, export duty on CPO, and imposition of double taxation. In addition to that, inadequate infrastructure has caused development of oil palm plantation in the future to become more limited.

Another thing that must be paid attention to is fluctuation of CPO prices in short and medium terms in the midst of weakening of CPO prices in the global market in the first semester of 2012. Yet, however, export of palm oil and its derivative products up to July 2012 grows by 7% if compared to the same period of last year. If climate condition is continuously supportive, the expectation is that Indonesia’s CPO production in 2012 will reach 25.5 million tons with export expectation at 18 million tons.

With the various challenges as mentioned above, it is worth questioning whether Indonesia will be able to maintain its position as biggest CPO producer in the world in the midst of government’s optimism in setting target of CPO production to reach 40 million tons by 2020. Concerning the effect of crisis, according to Fadil, currently there is a decline of demand in China. While in fact, China is the second largest palm oil importer in the world, where in 2011 China imported around 5.9 million tons of palm oil. Size of China’s oil palm plantation reaches 1.5 million hectares.

Demand for palm oil in China is predicted to grow by 10% each year and is predicated to reach 8.6 million tons by 2015 and 12 million tons by 2020. China is the third largest palm oil consumer in the world, where a major percentage of palm oil is used for catering industry, food processing industry, and consumer product and chemical industry.

Plant Breeder of Indonesian Oil Palm Research Institute, Razak Purba, said that one of the attempts that can be done to reduce environmental issue is by increasing productivity. If average productivity of oil palm plantation in Indonesia is 5 tons of CPO/hectare/year, to produce 25 million tons of CPO/year it only requires 5 hectares of area. This will satisfy the environmentalists, whether those who really care about environmental destruction or those who only want to earn a living, he said.

Can such productivity be achieved? Of course, it can, considering that plant breeders from various world’s oil palm seed producers have produced varieties that could produce 8-10 tons of CPO/hectare/year, he said. Such productive plant must be supported by suitable land and agroclimate and consistent application of Best Agricultural Practices (BAP).  

Business News - August 31, 2012  

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