InfoSAWIT, BANDUNG – Indonesia's palm oil industry stands at a crossroads, balancing production challenges with opportunities in downstream development. Setia Diarta, Director of Forest and Plantation Products Industry at the Ministry of Industry, emphasized that while crude palm oil (CPO) production has shown growth projections in recent years, the sector faces several critical issues.
Currently, about 9% of Indonesia's oil palm plantations are non-productive, and 46% of the productive plantations are experiencing declining yields. This situation raises concerns about the stability of raw material supplies for the downstream industry.
“Projected CPO production in 2024 indicates an upward trend. However, the success of the palm oil downstream industry depends heavily on improving Good Agricultural Practices (GAP) in plantations to ensure a stable supply of raw materials,” Diarta explained during a seminar on Technological Innovation held in Bandung in mid-July 2024.
The availability of standardized raw materials, such as CPO and Crude Palm Kernel Oil (CPKO), is a critical requirement for advancing downstream programs. However, the sector faces potential bottlenecks in downstream growth due to a lack of high-quality raw materials meeting industrial standards.
In terms of palm oil used for food consumption, Indonesia has a surplus. According to Ministerial Regulation No. 1528 of 2022, the national demand for bulk cooking oil, simple packaged oil, and subsidized “Minyakita” products is approximately 3.65 billion liters per year, equivalent to 3.25 million tons.
Meanwhile, the needs of industries, small and medium enterprises (SMEs), hotels, restaurants, catering businesses (HORECA), and higher-income households purchasing branded cooking oil are governed by market mechanisms.
“Maintaining a balance between production and market demand is crucial. While there is an oversupply of cooking oil for household consumption, the downstream industry must secure high-quality raw materials to support growth and the development of value-added products,” Diarta concluded. (T2)
This article is part of the November 2024 edition of InfoSAWIT.
