Palm Oil Industry Is Extractive | Myth & Facts 3-02

FACTS – An economic sector is called extractive if it only takes or harvests what is available in nature. This includes hunting, fishing, logging and mining. In contrast to these activities, oil palm plantations are non-extractive economic activities because CPO is obtained by cultivating oil palm and further processing the oil, using modern management and science and technology.

An increase in CPO production is achieved both by increasing the size of plantation areas and expanding oil productivity per hectare. The per-hectare productivity of Indonesian oil palm plantations had generally increased year by year until 2016 (Figure 3.1).

From 1970 to 1990 the contribution of per-hectare productivity to overall CPO productivity was still about 39 percent. Then it increased to 44 percent from 1991 to 2000 and 0% 20% 40% 60% 80% 100% 1970 1975 1980 1985 1990 1995 2000 2005 2010 2016 Share of Area Share of Productivity 33 to 45 percent from 2000 to 2016. In other words, the increase in Indonesia’s CPO production is not only caused by an increase in the production area but also from increased productivity in the area.

In the future, the contribution of per-hectare productivity is expected to increase and become a source of growth for national palm oil production. CPO production growth from increased perhectare productivity is more sustainable than that from the expansion of plantation area. On the 100th anniversary of Indonesia’s first oil palm plantation in 2011, it was agreed a long-term productivity of 35 tons of oil palm fruit bunches (TBS) per hectare with a yield of 26 percent or equivalent to about 9 tons of oil per hectare should be achieved.

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