Wednesday, 15 January 2014


Government was optimistic that target of palm oil production for 2014 million tons will be achieved, despite last year’s production target which is not achieved. The reason is that increase in palm oil production will occur this year due to the increase in plants that are able to produce. Director of Perennial Plant at the Ministry of Agriculture, Hendrajat Natawidjaya, in Jakarta (Tuesday, January 7), said that Other Land Use Areas (APL) will be the backbone of the production increase. The possibility of expansion occurred in APL, because there is a moratorium on primary forest and peatlands.

Based on data from Ministry of Agriculture, from 2010 to 2013, the realization of production is always below the target. In 2010, the realization of production only reached 94.65% or 21.95 million tons, next year only reached 94.55% or 23.52 million tons, and in 2012 at 91.49% or 23.52 million tons and in 2013 the estimated realization is only 90.33% or 24.43% million tons.

Bad weather hampers the performance of the production of crude palm oil (CPO). High rainfall affects in CPO production to 28 million tons. In addition to increase of productivity of palm oil crops, many new palm oil processing plants have started operations. “We hope that this year palm oil production will increase because many processing plants are starting to open,” he said.

Unlike the government, the Indonesian Palm Oil Association (Gapki) predicted that this year’s production is not as smooth as last year. Because many plantations in Sumatra experienced production decrease.

It is predicted that Indonesia’s CPO production will decline to 500,000 tons this year compared to last year. Unlike the data of the government, Indonesia’s CPO production reached 28 million tons. In this year, Indonesia’s CPO production was only 27.5 million tons.

The production decline, in addition to weather, is also caused by palm oil crop cycle. He explained that during the months of October to December, palm oil crops in Indonesia are productive. This is affected by change of cycle. Typically, after fruiting, the plant will rest approximately 9 to 10 months. In this year, the period increases to 15-16 months.

As for exports, Gapki projected that there will be an increase this year compared to last year. Based on data from Gapki, last year CPO exports reached 18.15 million tons. This year, CPO exports rose slightly to 19 million tons. The largest export market, Joko said, is still dominated by China and India. However, he worried that CPO exports to India next year will go down. Last year, volume of CPO exports to China amounted to 3.5 million tons. While CPO exports to India could reach 5.4 million tons.

Joko said that due to decrease in production, exports of palm oil, especially in the last 3 months have decreased. Although supply decreases, Joko said that weakening demand makes the price of CPO stagnant. CPO demand fell due to the global economy which has not yet recovered. Demand from China and India also declined. August export volume fell by 6.9% compared to July or declined to 1.48 million tons. However, on an annual basis, in the period January to August 2013, exports of palm oil and its derivative products increases 18.6% from 11.54 million tons in 2012 to 13.69 million tons in 2013. (E)

Business News - January 10, 2014

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