GAPKI: 5 Factors Keep Palm Oil Business Growing

JAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Joko Supriyono said that there are five factors that indicate Indonesian palm oil business still has great prospects to continue growing robustly.

First, there is still a big potential to increase domestic consumption. “The consumption of palm oil is categorized into three groups, namely for foods, energy (biodiesel), and as raw material to feed various non-food industries. So, there is big potential to further increase the domestic consumption,” he said.

He pointed out that due to its efficiency, versatility, and its other rich properties, the palm oil is so widely used in the food industries. For biodiesel, its consumption will highly depend on the government’s support. “As long as it is made mandatory, then the increase of consumption for biodiesel will also push up the consumption of crude palm oil (CPO),” said Joko Supriyono in a press statement recently in Jakarta.

Second, Palm oil production is the most stable among all vegetable oils, such as soybean and sunflower. “If there is any production problem in producing countries of vegetable oils, such as soybean in the USA or sunflower in eastern Europe, then the palm oil is the most possible alternative to meet the global demand.

Third, Indonesia’s downstream palm oil industry is steadily growing. Currently, most of its CPO production has been locally processed. In 2020, the export of CPO was only around 21 percent of the total export volume of palm oil. In 2019, only 20 percent of Indonesia’s CPO production was exported or around 7.0 million tons of the total production at around 35 million tons. The rest was in the forms of refined, bleached, deodorized (RBD) fractions, RBD stearin, oleochemical and biodiesel.

Fourth, the government has been aggressively countering the negative campaigns launched by certain groups. If there is any product labeled with no-palm oil or palm oil free sold in Indonesia’s local market, then the national drug and food control agency (BPOM) will confiscate the product as it is against the prevailing regulations. “GAPKI has been also aggressive in reporting such case if we find products with such labels sold at the local market,” he said.

Fifth, the prices of CPO and derivative products are highly potential to rise as land areas for oil palm plantations are getting limited, while demand for vegetable oils has been continually rising. “All these factors have shown that the palm oil business in Indonesia is still very promising in the long term,” he said.

According to him, in addition to those five factors, the weather factor that had caused CPO production decrease during the last two years has also driven up palm oil price. GAPKI data shows that in 2020, CPO production dropped 0.3 percent from 47.18 million tons in 2019. In 2021, Indonesia’s CPO production reached 46.88 million tons, a decrease of 0.31 percent from that in 2020 at 47.03 million tons. In 2022, the palm oil production is projected to increase by 4.52 percent to 49 million tons. (*)

Source:  Rakyat Merdeka