Indonesia’s
potency to increase Crude Palm Oil (CPO) production is quite significant even
without expansion of plantation area. One attempt is by boosting productivity
of oil palm plantation, especially community-owned oil palm plantation.
Currently, average productivity of community-owned oil palm plantation is only
at 2-3 ton/hectare, while productivity of private-owned oil palm plantation is
at 6 ton/hectare.
Minister
of Agriculture, Suswono, said that if production of community-owned plantation
can be increased two fold from the current figure at 2-3 ton/hectare,
Indonesia’s CPO production will have reached two-fold of Malaysia’s CPO
production.
Size
of oil palm plantation in Indonesia is around 8 million hectare, and Malaysia
only 6 million hectare. Indonesia’s CPO production is around 19 million ton,
while Malaysia nearly 17 million to. “We do not need land expansion”.
Data
of the Directorate General of Plantation of the Ministry of Agriculture
recorded that size of Indonesia’s oil palm plantation in 2011 reaches 8.9
million hectare and in 2012 estimated to reach 9.27 million hectare. From the
total size of oil palm plantation, around 40% or 3.6 million hectare is
community-owned plantation.
The
government admitted that reduction of area expansion is one of government’s
attempts of denying the negative campaign against oil palm plantation
development. Yet however, the government stated that not all campaigns launched
by international non-governmental institutions and importers against CPO
product are true.
Some
of the negative campaigns are: CPO is hazardous to health, oil palm plantation
development harms the environment and causes deforestation, and it kills orang
utans. These campaigns are launched because cooking oil products of European
countries, such as soybean oil, grape seed oil, and sunflower oil are less
competitive than CPO.
Recently,
France raised import duty on CPO import up to 300% due to health reason. Some
European countries apply food product labeling stating that the food does not
contain CPO raw material.
Yet,
the government is still promoting development of sustainable palm oil
plantation. One of the attempts is by launching ISPO (Indonesia Sustainable
Palm Oil). ISPO becomes a standard reference in oil palm plantation
development. The principles and criteria of ISPO are almost similar to RSPO
(Roundtable on Sustainable Palm Oil).
In
the future, with increase of CPO production and increasing barriers in the
foreign market, the government expected domestic CPO consumption to increase.
Downstream industry producing derivative products up to finished products must
continually be empowered. Other potential market is the biodiesel market.
“By
producing CPO derivative products, market will continually be maintained.
Moreover, it is concerned that the international market will decline due to the
global financial crisis. In addition to that, trade barriers will also
increase”.
To
promote enhancement of export of CPO derivative products with high added value
and guarantee availability of raw material for domestic industry, the Ministry
of Trade has proposed a restructuring of export duty on CPO and its derivative
products. It is expected to give incentive to give incentive to CPO downstream
industry as set forth in Regulation of Minister of Trade No. 128/2001. And,
palm kernel export control as stated in Regulation of Minister of Trade No.
01/M-DAG/PER/01/2007 is performed.
The
government has also developed CPO industry clusters to enhance optimization of
capacity and diversification of CPO derivative products. The industry clusters
are located in Sei Mangkei (North Sumatera), Dumai (Riau), and Balikpapan (East
Kalimantan).
Data
of the Ministry of Agriculture recorded that from total non oil & gas
export performance in 2011 at USD 162 billion, export of CPO and derivative
products reaches USD 19.4 billion or 12% of total Indonesia’s non oil & gas
export. CPO export in the first quarter of 2012 (January - March 2012) already
reaches USD 5.1 billion. It increases 48.4% from export in 2011 at USD 3.4 billion.
Agricultural
observer, Bustanul Arifin, admitted that Indonesia is the biggest CPO producer
in the world. Its production in 2012 is estimated to reach 24 million ton with
total export of 18 million ton and domestic consumption at 6 million ton. But, the
role of community-owned CPO plantation is continually declining to 41%, and
plant productivity is low.
The
new scheme of ISPO become a new problem to the businesses. And, there is also
problem of plasma-core structure faced by the CPO industry. Other problem that
must also be solved by the government is controversy over export duty which
will reduce competitiveness. “Sustainability as required by the global market
is hard to be fulfilled”.
Business News - January 18,2013
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