JAKARTA – The Indonesian Palm Oil Association’s (GAPKI) Foreign Division Head Fadhil Hasan said that Indonesian palm oil industry is now facing three serious challenges, which should be thoroughly resolved to avoid future downturns.
Fadhil said the three challenges are concerned with global trade restrictions, export market diversification, and stagnant production of palm oil.
“We have many problems on the supply side, which include stagnant production. We don’t expect any area expansion, although demand has been continually rising. So, there will be a mismatch of supply and demand. If we don’t solve the problems of supply and trade restriction, it will be very tough for us,” Fadhil said through the podcast of Rosediana Suharto on Monday (22/1/2024).
According to Fadhil, to deal with the trade restriction he proposed that the government should pursue dialogs. “In case of Indonesia’s concept and proposal is rejected, the government should pursue a solution through the mechanism of the World Trade Organization (WTO),” he said.
He said that Indonesia should not emulate the policies imposed by European Union (EU) for other kinds of commodities. “We cannot say…you are wrong. But at the same time we do the same, like banning exports of nickel, quartz sand, and others,” the senior economist of INDEF (the Institute for Development of Economics and Finance) said.
Fadhil said that regulations like the European Union Deforestation-free Regulation (EUDR) will continue to exist to hinder Indonesian commodities on the grounds of climate change. Indonesia, therefore, should start diversifying its export market.
“We cannot do it soon, but we have to start implementing it (diversification). Looking forward, we have to reduce our reliance on export markets, and maximize our domestic market,” he said.
Regarding the production, he noted that based on data of GAPKI during the last five years since 2018, Indonesia’s palm oil production, including CPO and CPKO, averaged at around 50.6 million tons per year.
“The realization of replanting program for smallholders’ oil palm plantations during the period of 2016-2023 only reached 306,000 hectares. In 2022 alone, only 36,000 Ha plantations were replanted. But actually, the government has targeted that the replanting program should reach 180,000 Ha of plantations every year in 21 palm oil producing provinces,” said Fadhil. (*)
Source: sawitindonesia.com
