Thursday, 18 December 2014


The palm oil had its unique characteristics compared to other vegetable oils in that it had well balanced composition of saturated fat and unsaturated fat. By that compaction the coconut palm was the raw materials for various food, cosmetics, and biodiesel lubricant. Sahat Sinaga, Chairman of the Association of Indonesian Vegetable Oil Producers [GIMNI] was quoted as saying.

In 2012 world’s consumption of palm oil was posted at 51.86 million tons, while in 2013 it was 57.72, million tons. As world’s population increased, predictably by 2020 it came to 60 million tons.

To Indonesia and Malaysia, and also some countries in Africa and South America which were in a tropical zones, coconut Palm was God’s endowment because it could only grow in a tropical area and it could no it grow in other climates. This plant was also highly productive, yielding 4 tons of oil per ha/year while Kanola produced in sub-tropic countries only produced 800 kg of oil/ha/year while the saturated and unsaturated fat was not balance so Kanola was known as soft oil.

Because Poconut Palm was efficient the production cost was low and CPO could be priced low. From October 2012 to June 2014 it was cheaper by USD 180 – USD 290 /ton than Kanola oil. As Kanola Oil was outsmarted by CPO in all aspects, Kanola producing countries were launching massive black campaign against Palm Oil.

The negative campaign was first waged in 1970’s in the form of big articles in print media saying that Palm oil was poisoning America. When biodiesel was developing in Europe in 2012 black campaign was again waged on palm oil and palm oil was accused as the cause of deforestation, and also the source of bad cholesterol, destroyer of bio diversity and palm plantation robbing people’s land breaking human rights. In terms of trading palm producer countries were accused of doing dumping to make the price cheaper.

At home rumors was spread out that palm business was dominated by a few tycoons; this was related to history that in 1970 when palm industry started, the technology was only commanded by palm plantation companies. CPO factories were also accused of processing fresh plumes from their own plantation and any outsider trying to sell fresh plumes they would be accused of stealing.

Even today there was general perception that to defend palm means to fight for the rich; this was the obstacle when trying to solve palm problem.

Some doctors in Indonesia were influenced by the black campaign abroad and they perceived that food fried in palm oil might cause heart disease and obesity.

“The attack on palm oil would heighten in time to come. This was deliberately done to provoke palm producers to launch a counter attack and spenden, the price of palm oil would have to be increased and be the same as Kanola soft oil”

Players o f palm industry in Indonesia were in fact already well organized with all the associations playing their roles. On the upstream side, growers as producers of fresh plumes were united in the association of Indonesia’s Palm Farmers while CPO producers were united in the Association of Indonesian Palm Traders.

On the downstream side there was industry doing refining, fracsinating and modification oif CPO combied in the Association of Indonesian Vegetable Oil Industry, Oleo Chemistry Industry united in the Association of Indonesian Oleochemistry Industry, Bio Siesel Industry and the Association of Indonesian Biofuel Industry.

In Indonesia, what was non-existent or very few if they existed at all was special industry processing more on the downstream side which increased the plus point chain, processing of liquid and solid waste and industries related to minimizing glass-house effect emission, bio patic, bio-lubricant, particle board, beta karoten etc.

The palm Oil Downstream Industry had been developing well thanks to the Regulation of the Ministry of Finance number 128/PMK.001/2011 on export commodities being taxed where high tax was imposed on upstream products and low tax was imposed on downstream products.

In 2011 composition of export volume of coconut palm was 60% VPO and 40% downstream products, im 2012 and 2013 changed to 39% CPO and 61% downstream products. The production capacity also increased from 25 million tons/.year to 45 tons/year. (SS)

Business News - November 21, 2014

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