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Would Biodiesel Program Escalate CPO Price?

Doc. InfoSAWIT
Would Biodiesel Program Escalate CPO Price?

InfoSAWIT, JAKARTA - In the previous, the government thought that to make crude palm oil (CPO) more expensive is by making CPO Supporting Fund (CSF) and its derivative. The numbers of fund would be subsidizing biodiesel by hoping that the domestic biodiesel production would be increasing and could absorb CPO production.

It is hoped that the increasing CPO demand, the CPO price would be better and the other implication was that FFB price in the smallholders would be too and eventually would increase the smallholders’ exchange rate from the people’s plantations.

But, junior researcher of Yayasan Madani Berkelanjutan, Intan Elvira told that the theory cannot be realized. CPO price in the domestic does not significantly increase and it tends to be in fluctuation. In 2014, for instance, the average CPO price based on Belawan and Dumai, was Rp 9.084/Kg. It was before the government published CSF. But after CSF runs, CPO gets cheaper and in 2019 it was Rp 6.829/Kg,” Intan Elvira said.

To make the smallholders’ FFB price better, Ministry of Agriculture needs to improve the formula to decide their FFB price, from production cost approach in the POF level to be the combination of production cost in POF level and smallholders’ level.

Ministry of Agriculture needs to design the matrix of FFB price determination based on the quality of FFB as the official reference which is published by revising Regulation of Minister of Agriculture No. 1 / 2018 about FFB Price Decision. “It needs to arrange the special scheme by regulation of minister about linear price determination between the increasing CPO price and K index. In many cases, the increasing FFB price is not as elastic as the increasing CPO price,” she said.

Then PFMA needs to change the strategies to use CSF and focus to improve the smallholders’ welfare, such as, implementing smallholders’ replanting program, increasing the infrastructures in the plantation, increasing human resources. These are important so that the mandate of Laws No. 39 / 2014 about Plantation could be realized well.

“The regulation regulates that CSF is for smallholders’ replanting planting, increasing infrastructures in the plantations, and increasing human resources,” Trias Fetra mentioned.

Besides, PFMA should improve the scheme of CSF to smallholders’ replanting program based on the valid data (in spatial and numeric), cut off the complex bureaucracy, such as, multi-level technical recommendation and candidates to get the programs. (T2)

Source: Majalah InfoSAWIT, February 2021