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Strategic Concept for Biofuel Resilience: Stop Importing Fossil Fuels



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Strategic Concept for Biofuel Resilience: Stop Importing Fossil Fuels

InfoSAWIT, JAKARTA - The palm oil industry has become an economic pillar in Indonesia and Malaysia since its development in the 1970s. Through the PIR (Nucleus Estate Smallholder) scheme in Indonesia and FELDA (Federal Land Development Authority) in Malaysia, smallholder farmers have been actively involved in managing plantations. From an initial area of about 300,000 hectares, palm oil plantations in Indonesia have now expanded to 17 million hectares, with an additional 3 million hectares of licensed land yet to be planted. This totals 20 million hectares, making it one of the nation's strategic resources.

Palm oil is processed into Crude Palm Oil (CPO) from the fruit's husk and Palm Kernel Oil (PKO) from the palm seeds. Advances in agronomic technology and techniques have allowed for an increase in palm oil yield of up to 32%, with the potential production of Fresh Fruit Bunches (TBS) reaching 40-45 tons per hectare per year. With such high production efficiency, palm oil has become the most productive oil-producing crop in the world.

In addition to cooking oil, palm oil is now also used to produce various oleochemical products and biofuels, including biodiesel, biojet fuel, and biogasoline. This technology has emerged in response to international pressures regarding renewable energy. Interestingly, palm oil-based fuels have better quality compared to fossil fuels. Biodiesel B40, which will be available in 2025, has a cetane number of 51.2, making it compatible even with European vehicles.

However, there are challenges often voiced, such as claims that biodiesel can damage engines. These claims need further testing with transparent data. The author's experience, having used diesel vehicles with biodiesel for seven years, shows no significant issues.

The Ministry of Agriculture has tested 100% biodiesel (B100) since 2009, with results indicating higher efficiency compared to pure diesel. B100 allows for a travel distance of 13.1 km per liter, while diesel only allows for 9.6 km per liter. However, the main issue is not the quality of biodiesel but the availability of palm oil feedstock.

The productivity of palm oil plantations in Indonesia remains relatively low. Smallholder plantations only achieve 2.5 tons per hectare per year, far below the optimal potential of 8 tons per hectare. State-owned plantations (PTPN) show the highest productivity, reaching 4.1 tons per hectare, but they only account for 3.5% of the total national palm oil area. To improve productivity, cross-sector coordination is needed, including the Ministry of Agriculture, Industry, and Trade, as well as BPDPKS and local governments.

Long-term plans include increasing national palm oil production from 50 million tons to 100 million tons through intensification. Some steps that can be taken include:

Increasing fertilizer use: Subsidizing fertilizer from 1 kg per tree per year to 8 kg per tree per year could multiply productivity.

Implementing modern agronomic technology: Production Force Management methods can increase productivity by up to 100%.

Water management and infrastructure: Controlling waterlogging and improving production roads for distribution efficiency.

Utilizing licensed land: Planting on 3 million hectares of licensed land that has yet to be cultivated.

Additionally, strengthening the role of PTPN is crucial. With higher productivity and significant tax contributions, PTPN should be expanded. This could include taking over abandoned or problematic private plantations and opening new land in neglected areas.

At the downstream level, establishing State-Owned Enterprises (BUMN) for biofuel factories is a strategic necessity. Currently, biodiesel production is dominated by the private sector. By building 120 biofuel factories, Indonesia could process 60 million kiloliters of fuel from palm oil, creating national energy independence.

The impact of fertilizer subsidies for palm oil not only increases TBS productivity but also farmers' income. The multiplier effect includes increased tax and non-tax revenue for the government, far exceeding the cost of subsidies.

In conclusion, the B100 program is technically and non-technically feasible to implement. The main challenge is the availability of raw materials, but solutions for increasing productivity are available. With the courage to take strategic steps, such as expanding the role of PTPN, providing fertilizer subsidies, and building biofuel factories, Indonesia can establish itself as a global palm oil market leader. Furthermore, national energy resilience can be achieved, supporting sustainable development and solidifying Indonesia's position as an innovative agrarian country that contributes to regional economic growth, job creation, and poverty reduction. (*)

Author: Memet Hakim / Senior Palm Oil Agronomist, Founder of Metoda Production Force Management / Advisory Board of APIB & APP TNI


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