InfoSAWIT, JAKARTA - Palm oil plantation development in national scale has become the pillar of economy in this nation. It also encourages the increasing crude palm oil (CPO) production in Indonesia as the biggest vegetable oil production in the world. CPO downstream industries should also develop as same as the smallholders get increasing production.
The wider palm oil plantations delivered the increasing CPO production in every year. It averagely reached about 5% to 11% per year. According to Indonesian Palm Oil Association (IPOA), CPO production was stagnant to get more or less than 10% per year.
IPOA thought, CPO production in 2023 just reached 50,07 million tons. It just got increased 7,15% from the previous year. The 2023 increasing production happened for the increasing CPO price and encouraged to get more superior seeds and palm oil plantation expansion.
The increasing CPO production was the same with the increasing consumption in this country up to 23,13 million tons in 2023. One main factor to escalate the increasing consumption in Indonesia was biodiesel program. It was the same with biodiesel mandatory program that was mixed to 30 percent diesel or B35. This surpassed the consumption for food oil needs in this country. By the late of 2023, CPO final stock could be stable or about 3,14 million tons.
Though CPO production got escalated in Indonesia, CPO selling price did tend to be stagnant and decreased the export value. If in 2022, CPO and its derivative product value reached US$ 39,07 billion, in 2023, the exports just reached US$ 30,32 billion. The main factor derived from cheaper CPO and its derivative products in the globe.
It also happened from the decreasing export demands on vegetable oils. The countries in the globe had uncertain condition. This triggered the competition of other vegetable oil selling price, including palm oil. As the result, CPO selling price tended to be stagnant for some time.
This got worse by the cheaper American dollar. In 2022, American dollar exchange was at about Rp. 15.731. But in 2023 1 US$ was about Rp. 15.416 in average. The cheaper American dollar made palm oil business in Indonesia worse.
This happened because CPO and its derivative product business from Indonesia still oriented to export activity. CPO and its derivative product selling price would make American dollars. The stagnant selling price for some time got pressed from the cheaper American dollar to the previous year. As the result, the business got more pressure in 2024.
CPO business in 2024 would face uncertain climate issue. Besides, the unstable geopolitics that happens in many countries, could be the wide description about business challenges this year.
That is why CPO increasing production should also encourage palm oil downstream sectors in this country. By having downstream products, there would be main profits by consuming environmental and renewable products from palm oil.
Besides, the increasing downstream industries should take smallholders to get the same profits. The smallholders would massively play their roles to develop the future sustainable palm oil business. Hopefully. (*)
