Wednesday, 25 November 2015


Today the Palm Plantation Fund Management Board (BPDPKS) were concentrating effort on two areas, i.e. rejuvenation of farmers’ palm plantations and subsidy for bio diesel processing. However BPDPKS was open to any suggestion related to CPO industry disclosed this on Friday (24/7).

The sound underlying principle adopted by Board was “palm to palm” meaning fund from palm industry for re-investment in palm industry, not elsewhere. Thereby it was expected that mis spending of budget the way it happened in the past such as “fund from palm for reboisation” would never happen again.

Palm rejuvenation was a priority because it was the core problem of people’s plantation. Indonesia was once a number one CPO exporter in the world but now not anymore because there was no rejuvenation plan. Now rubber, coffee, and clover were having problem because there was no Government support for people’s plantation.

The process or aid giving to farmers was by business, i.e. Credit extention. “I fact palm business is prospective but farmers are powerless when they have to face the bank. Here is where the Board play their role to help them” Bayu said.

By the Board’s help credit for farmers could be on long term basis because palm itself was a long term process, one life basic because palm itself was a long term process, one life cycle might take 20 to 30 years. The interest charged could be below market standard so farmers would not be too heavily burdened.

Seed procurement by BPDPKS could guarantee that the seed given were of high quality, provided by legal and certified distributors. The problem that some land was not certified would be overcome with the help of the Board.

The Rejuvenation process was not exercised by the Board but by an independent third party. “There is a new business opportunity for cooperative bodies who could do the task. We need more players because palm rejuvenation is a Herculean,” Bayu said.

Each year there were 300,000 ha of palm plantations that needed to be revitalized. The cost for palm rejuvenation was around Rp60 million per hectare. A legal company was needed to undertake the task because the process needed rental of heavy equipments, fertilizer buying, labor etc.

BPDPKD was still scheming up the best mechanism for rejuvenation process. There had been many inputs and they were being considered. “there was a company wishing to finance pam rejuvenation process on condition that the old palm trunks were given to them to be used as raw material for pulp” Bayu said.

Subsidy for bio diesel from BPDPKS would pay for the price difference between MOPS and bio diesel price. In accordance with the regulation of the Ministry of Energy and Mineral Resources it was mandatory for Pertamina to mix bio solar up to 20%. The handicap was the price difference between MOPS and bio-diesel.

“With the provision of price difference there is n reason for Pertamina not buy bio diesel at home. Now Pertamina is running a tender for bio diesel supply” he said.

In terms of supply there was no problem at all. Today CPO product came to 30 million tons. Of that amount the part to be processed into trying oil was 8 million tons, export of CPO was still 19 million tons.

“So this year with B 15 the need for biodiesel came to 5.5 million tons. Exported CPO could be altered for bio diesel. No problem at all” he said.

BPDPKS also financed research on the effect of bio-diesel on vehicles. And the change in environment in terms of bio diesel. “Universities which are automotive specialists like ITB and ITS are welcome to come up with proposals, we will finance the project,” he said. (SS) 

Business News - July 28, 2015

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