Monday, October 25, 2021
Recent Developments in the Indonesian Palm Oil Industry - Palm oil has an important role in economic growth in Indonesia. This plant produce vegetableoil that can be managed into products to meet market needs. The high market demand cause the addition of land that is getting wider every year.
Palm oil is still the leading sector of plantation commodities because, in addition to being the largest nonoil and gas foreign exchange earner, it is also an opener of jobopportunities for millions of people in Indonesia.
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In the production of crude palm oil, world demand continues to grow along with the increasing trend of Crude Palm Oil (CPO) consumption in countries such as China followed by EuropeanUnion countries. In recent years, CPO exports increased by an average of 9.9% per year.
This growth triggers the continued increase in plantation areas to support maximum CPO production. Until 2009 national oil palm productivity continued to increase. However, this is not in
line with data obtained from the Central Statistics Agency which states that a decline of 30%
in 2010 continued into 2011 with a decline of 19% at the beginning of the year.
There are many rumors circulating that the performance of the palm oil industry in Indonesia
is declining due to high export duties for CPO exports. However, this is also caused by variousother factors such as changing seasons, frequent late replanting of plants, poor maintenance management applied to plantations, unclear spatial policies, regulations on forest conversion
that have not been controlled, and a number of other problems.
Plantation activists consider that the government's lack of attention to these small things will
reduce domestic CPO productivity. This is worrying because considering the high
consumption activity of crude palm oil in the world market while not being supported by
adequate management facilities will make Indonesia unable to compete with Malaysia which
is said to be superior in terms of management and technology.
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The main problem of CPO trade in the world lies not only in the decline in productivity and
how to fulfill it but also in the unstable selling price of CPO and the export quantity
of processed products. This fluctuation is heavily influenced by global issues such as the low awareness
of palm oil plantation managers in Indonesia about environmental sustainability which causes
high deforestation in Indonesia and unhygienic processed products from factories in
this tropical country.
Overcoming the fluctuations in CPO prices, the two largest crude palm oil-producing parties in the world entered into an agreement, namely Indonesia and Malaysia. The two countries through their respective parent organizations of oil palm plantations agreed to sign cooperation which states to maintain the stability of the selling price of CPO.
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There are other things that make Indonesia a little behind from neighboring countries. Despite appearing as the world's largest producer of CPO, Indonesia still exports crude and semi-finished oil, while 80% of Malaysia's palm oil exports are in the form of ready-to-use products. If you want to increase the export value of derivative products, the government must use technology and better management from neighboring countries. It's not that we can't have quality products, it's just that the handling is still not optimal.