JAKARTA — The Indonesian Oil Palm Research Institute (PPKS) predicted that Indonesia’s palm oil production this year (2021) will reach 53 million tons, or an increase of 1.92% from the national production last year at 52 million tons.
“Better weather condition and the increase of growers’ financial capacity to fertilize their oil palm plantations as a result of the price increase of crude palm oil (CPO) will contribute to the recovery of production this year,” PPKS socio-techno-economic researcher Ratnawati Nurkhoiry said recently during a virtual public discussion on considering the prospect of palm oil industry in 2021.
She said that based on the projection of PPKS, an independent oil palm research center based in Medan, North Sumatra, the CPO production increase this year might be also driven by the increase of domestic demand, which is especially to meet the higher need of oleo-chemical and biodiesel. But the need of palm oil for food will be stagnant as most of people will stay at home most of the time due to the implementation of the large scale social restrictions (PSBB).
Generally, the oil palm plantation companies have been continuing their production activities by strictly implementing the health protocol in their respective areas despite the raging spread of Covid-19 pandemic. Such condition has made the palm oil as the priority commodity to support the exports and the national economy during 2020.
During 2020, the export of refined palm oil dropped, but the demand and export of oleo-chemical increased as it is used to produce hand sanitizers which are highly needed during the outbreak of Covid-19 pandemic. The biodiesel program had also increased the local absorption of palm oil during 2020. The international market of CPO saw an interesting trend during 2020 as the palm oil price was continually rising, reaching more than US$700 per ton.
“The palm oil industry managed to survive in 2020 and in 2021 it is expected to grow higher and give a big contribution to the national economy,” said Ratnawati.
She pointed out that actually the year 2021 will be a year of recovery, not only for the palm oil industry, but also for other industries. It is because in 2021 the vaccination against Covid-19 will be started, creating a new hope for all industries to grow.
According to her, the CPO price at the global market is also expected to increase this year to between US$750 – 900 per ton. The global vaccination is expected to push up global demand for palm oil, despite the issue of new Covid-19 variant that needs to be watched out.
There is a possibility of palm oil price decrease during the second semester 2021, due to the production recovery as weather will be more conducive. “But with the price of CPO being kept at favorable level, the price of fresh fruit bunches (FFB) from the growers will be still at favorable level. The price in 2021 is expected to stay at the highest level, although it will be fluctuating. But the FFB price at between Rp1,600 – 2.100 per kilogram (kg) is still good for growers,” she said.
According to her, the export volume of palm oil this year is projected to reach around 34 million tons, but it will depend on the growth of demand and its price fluctuations. Indonesia’s main export destinations are China, India, and the European Union (EU), despite the fact that export to EU is getting tougher due the EU policies that are not friendly to the palm oil industry.
She said that Indonesia should keep lobbying the EU to accept Indonesian palm oil, which is actually produced based on the principles of sustainability as required by the government through its Indonesian Sustainable Palm Oil (ISPO) program.
“But Africa is a potential market to tap. The government and palm oil producers should try to open the market. The Indonesian Palm Oil Association (GAPKI) has seen the potential market of Africa and is now trying to tap the market,” she said. (*)
Source : Investor Daily | Featured image via ensia.com
