The Mills Do not Need Government’s Subsidy

Foto by Jefri Tarigan_SawitFest 2021
The Mills Do not Need Government’s Subsidy

InfoSAWIT, JAKARTA – Crude palm oil (CPO) production in Indonesia in 2021 reached more than 47 million tons. If assumed, fresh fruit bunch (FFB) produced by PT Perkebunan Nusantara (PTPN) reached 4% of the total production, it can be used to produce palm cooking oil for the needs in this nation.

Senior practitioner in palm oil business, Maruli Gultom said, palm cooking oil needs in this nation reached about 200 million liters or about 160 thousand tons of CPO per month.

"The best solution for palm cooking oil needs in this nation could be from CPO that PT Perkebunan Nusantara (PTPN) produced for the company belongs to the country,” Gultom recently said to InfoSAWIT.

He continud, CPO produced by the government’s company should be the prior to be used to the people’s needs.

“If FFB and CPO from PTPN are not enough to fulfill palm cooking oil needs in this country, the government could buy it from the smallholders that produced about 41% of the total CPO production nationally,” Gultom said.

Based on what InfoSAWIT searched, CPO production marketing from PTPN through PT Kharisma Pemasaran Bersama Nusantara (KPBN) as the government’s institution that sells CPO in auction, when domestic market obligation (DMO) and domestic price obligation (DPO) ran some time ago, CPO should actually was Rp 9.000/kg to be processed to be palm cooking oil at Rp 14.000/liter. unfortunately, KPBN still sold CPO based on reference export price which was more than Rp 13.000/kg.

Referring to what President Joko Widodo instructed and Minister of Enterprises Erik Tohir said, the government prioritized to fulfill the people’s needs to get economic palm cooking oil. “The government prioritized the people’s needs to get economic palm cooking oil,” President Joko Widodo said when delivering announcement about CPO and its derivative export ban on (27/4/2022).

Based on the information from KPBN, CPO trade on 13 May 2022 was as follow:

The tender at KPBN (Rp./Kg), Excld PPN


Belawan & Dumai Rp.13889-INL;

Siak Rp.13839 (WD). The highest tender Rp.12260-IBP;

T.Duku Rp.13789 (WD). The highest tender Rp.12400-EUP;

T.Bayur  Rp.13789 (WD). The highest tender Rp.12290-WIRA;

Palopo Rp.13689 (WD). The highest tender Rp.11700-EUP;


Palembang Rp.18636 (WD). The highest tender Rp.17200-UNILEVER;

Lampung Rp.18493 (WD). The tender Rp.16000-AMJP

According to the trade at KPBN, palm oil observer in national scale, Ignatius Ery Kurniawan said, this would be difficult to sell palm cooking oil at Rp 14.000/liter because CPO is more than Rp 13.000/kg. If the government is serious to realize it, the assignment should be delivered to PTPN to supply CPO needs based on when DMO ran at Rp. 9.000/kg. If cheap CPO is available, palm cooking oil would be cheaper and could be sold at Rp 14.000/liter.

"PTPN should start providing CPO needs for the markets in this country namely in DMO based on what President Joko Widodo instructed. Do not get its own profits and sacrifice the smallholders,” Ery who was once as the Secretary II Indonesian Palm Oil Board in 2009, mentioned.

The cheap CPO is the main condition to produce palm cooking oil in cheap price so that the people could buy it. The government should deliver special assignment to PTPN as CPO producer and Palm Oil Plantation Fund Management Agency (PFMA) as subsidy provider if there is price gap. “If the numbers are not enough, the government could buy FFB from the smallholders in normal price and PFMA should subsidize the fund,” Ery said.

The good governance with good and bond regulation would realize the economic palm cooking oil just like what President Joko Widodo instructed. “There should be strong will and focus to what the people’s need in the first place,” he suggested it to PTPN.

The trade should derive from cheap supply to manage the supply chain so that the people could buy it at Rp 14.000/liter.

"Do not waste the time to supply cheap CPO to produce palm cooking oil for the people of Indonesia because PTPN belongs to the people as well. So it has to be able to do it,” Ery said. (T1)