Govt Preparing Cooperatives To Produce Red Palm Oil

JAKARTA – The Ministry of Cooperatives and Small & Medium Enterprises (Kemenkop-UKM) said that they are preparing a number of cooperatives that group oil palm smallholders across Indonesia to develop factories that will produce red cooking oil based on the crude palm oil (CPO) as part of efforts to strengthen the supply chain of cooking oil at domestic market.

“It’s now time for the oil palm smallholders to take part in the development of downstream palm oil industries. They can realize it by establishing their own cooperatives that will process the vitamin-A rich CPO into red cooking oil in order to meet the local need of cooking oil,” Cooperatives and Small & Medium Enterprises Minister Teten Masduki said during his meeting with representatives of the Indonesian forum of sustainable oil palm smallholders (Fortasbi) recently.

The meeting was a follow-up step to the Fortasbi’s meeting with President Joko Widodo (Jokowi) on 23 March 2022. During this meeting, President Jokowi asked the farmers to develop factories that will produce red cooking oil from the CPO. “The smallholders can realize it by setting up their own cooperatives,” the minister said in a press release on Thursday, 26 May 2022.

During a meeting with editors in Jakarta on Monday, 13 June 2022, Minister Teten said that in line with the direction of President Jokowi, his ministry will develop four factories to produce the red cooking oil in four provinces, namely North Sumatra, Riau, Jambi, and Central  Kalimantan. “It’s in line with the request of President Jokowi that smallholders should take part in fulfilling the local need of cooking oil at domestic market,” he said.

According to him, the government will also set up a task force, involving the Kemenkop-UKM; cooperatives’, small and medium businesses’ revolving fund management institution (LPDB-KUMKM); the oil palm plantation fund management board (BPDPKS), farmers’ organizations and other related institutions.

“The aim is to realize the aspiration of the farmers to take part in the supply chain of cooking oil at domestic market. That way the farmers can ensure the sale of their palm fresh fruit bunches (FFB) that will then improve their public welfare,” said Teten.

He said that the oil palm smallholders control 41 percent of Indonesia’s total oil plantations of 16 million hectares, and produce 35 percent of national production of CPO. “There is also a technology that is already developed by the palm oil research center (PPKS) Medan. With the technology, the red cooking oil can be produced efficiently with relatively small investments. With only an investment of Rp7.0 billion, a factory can produce 500 kg per hour,” he said.

He said that before the outbreak of Covid-19 pandemic his ministry had a program called corporatization of farmers with one main goal is to improve their public welfare. It will be combined with the pilot projects of red cooking oil to have tackled problems facing the smallholders. The Kemenkop-UKM will also develop an ecosystem for the production of red cooking oil and continue the corporatization program of oil-palm smallholders that will be linked to the market, funding, and modern technology of processing.

“In terms of financing, we’ll combine the financing of the self-sufficient smallholders with BPDPKS, LPDB, and banks,” he said.

He is optimistic that the farmers’ cooperatives will be able to meet the local need for cooking oil through the production of the red cooking oil. “If all smallholders are united through cooperatives, at least 35% of total CPO production can be fulfilled by the oil-palm farmers. They can meet the expectation of President Jokowi that the cooking oil can be supplied by the oil-palm smallholders,” he said.

According to the minister, the red cooking oil will become a new standard of palm oil-based cooking oil, which is usually bleached to clear the reddish color of CPO. “Actually, the red cooking oil has been produced in other foreign countries. Malaysia has produced it and exported it to China. In Cameroon, 30 percent of national production of cooking oil is red cooking oil,” he said.

“It’s more healthy as it is rich in vitamin A. It’s also more efficient and competitive compared to the conventional cooking oil. We want to create a new standard of cooking oil, but without changing the current standard,” said Teten.

Meanwhile, Fortasbi Senior Advisor  Rukaiyah Rafik said that the Fortasbi  only granted membership to cooperatives that already had the international standards, such as the Roundtable on Sustainable Palm Oil (RSPO) and Indonesian Sustainable Palm Oil (ISPO), which have been accepted globally.

“The development of factories to produce the red cooking oil is a good news for the self-sufficient oil-palm smallholders in Indonesia amid the unstable price of palm oil. It is mainly because of the significant drop of palm oil exports due to the CPO export ban imposed recently by the administration of President Jokowi,” said Rukaiyah.

One of the cooperatives that has been  ready to develop the red cooking oil factories is the village unit cooperative (KUD) Tani Subur in Kota Waringin Barat, Central Kalimantan. The KUD Chairman Sutiyana said recently that his cooperative Tani Subur is already well prepared  in terms of raw material supply.

“We have plantations of around 7,300 hectares. We’re ready to process 30 tons per hour. We’ve also secured a location for the factory development. Insya Allah (God’s Willing), we’ll become the first cooperative in Indonesia that will have cooking oil factory,” said Sutiyana.

He said they will get financial assistance of Rp120 billion per factory from BPDPKS. “If it’s not enough, we’ll get loan from the revolving fund of LPDB. We’re ready to repay the loan,” he said. (*)

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