BUSINESS ENGLISH

BUSINESS ENGLISH - PRESENTATION

 

PALM OIL IN INDONESIA

Palm Oil Production and Export in Indonesia

Only a few industries in Indonesia have shown rapid growth in the palm oil industry over the past 20 years. This growth is seen in the amount of production and exports from Indonesia and also from the growth in the area of ​​oil palm plantations. Driven by increasing global demand and rising profits, oil palm cultivation has been significantly increased by both smallholders and large entrepreneurs in Indonesia (with negative impacts on the environment and decreasing the amount of production of other agricultural products as many farmers switch to oil palm cultivation).

The majority of Indonesia's palm oil production is exported. The most important export destination countries are China, India, Pakistan, Malaysia and the Netherlands. Although the figure is very insignificant, Indonesia also imports palm oil, mainly from India. Indeed the majority of palm oil produced in Indonesia is exported (see table below). However, as Indonesia's population continues to grow (accompanied by a rapidly growing middle class) and government support for the biodiesel program, demand for domestic palm oil in Indonesia also continues to grow. The increasing domestic demand for palm oil could actually mean that shipments of crude palm oil from Indonesia will stagnate in the coming years if the Indonesian government remains committed to a moratorium on peatland conversion The Indonesian Palm Oil Association (Gapki) said Indonesia could produce at least 40 million tons of palm oil per year starting from 2020.

The palm oil plantation and processing industry is a key industry for the Indonesian economy: palm oil exports are an important foreign exchange earner and this industry provides employment opportunities for millions of Indonesians. In terms of agriculture, palm oil is the most important industry in Indonesia which contributes between 1.5 - 2.5 percent of the total gross domestic product (GDP).

Nearly 70% of oil palm plantations are located in Sumatra, where the industry began in the Dutch colonial period. Most of the rest - around 30% - is on the island of Borneo.

1. Sumatra

2. Kalimantan

In terms of geography, Riau is the largest palm oil producer in Indonesia, followed by North Sumatra, Central Kalimantan, South Sumatra and West Kalimantan. According to data from the Central Statistics Agency (BPS), the total area of ​​oil palm plantations in Indonesia currently reaches around 11.9 million hectares; almost three times the area in 2000 when around 4 million hectares of land in Indonesia were used for oil palm plantations. This number is expected to increase to 13 million hectares by 2020.

State-owned enterprises (BUMN) play a very simple role in the Indonesian oil palm sector because they have relatively few plantations, while large private companies (for example, the Wilmar Group and Sinar Mas Group) are dominant because they produce a little more than half of the total palm oil production in Indonesia. Small scale farmers produce around 40 percent of Indonesia's total production. However, most of these small farmers are very vulnerable when there is a decline in world palm oil prices because they cannot enjoy cash reserves (or bank loans) as large companies enjoy.

What should be known about Oil Palm Trees 

1. Palm trees planted in Indonesia are said to originate from the African continent brought by the Dutch and planted in what is now known as the Bogor Botanical Gardens in 1848. It was only planted commercially in a plantation in North Sumatra in 1911.
2. Types of oil palm planted in Indonesia are usually from the Elaeis Guineesis Jacqu variety.
3. Oil palm trees begin to bear fruit when they are around three years old and have an average productive period of around 25 years.
4. Palm oil fruit can be harvested for 12 months in one year.
5. Mature palm oil trees can grow up to 20 meters tall.
6. Each fruit bunch contains about 50 percent oil.
7. Palm fruit seeds, called kernels, produce palm kernel oil.
8. Average Palm Oil production per hectare per year can reach 10-12 tons, but the average in Indonesia ranges from 2-4.5 tons, while for palm kernel oil an average of around 0.5 tons.
9. Stems of plants are covered with midrib until the age of 12 years. After the age of 12 years, the dried fronds will come off so that the appearance will be similar to a coconut tree trunk.
10. Common oil palm tree diseases are:  a). Root / Palm Rot disease (Blast disease) caused by the fungus Rhizoctonia lamellifera and - Phytium sp. This fungus attacks the root system of oil palm plants that are in the soil and causes plant roots to rot. b). Basal stem rot (Ganoderma) which is also caused by fungi - Ganoderma applanatum, Ganoderma lucidum, and Ganoderma pseudofferum - and attacks the base of the stem of the plant and makes it rot and easily contagious. c). Rot rot (sprear rot) that often attacks young plants, the cause is unknown. d). Yellow line disease (patch yellow), attacks the leaves of plants and is caused by the fungus Fusarium Oxiysporum. e). Crown disease is caused by genes from the parent plant. f). Anthra-nose (Anthracnose) attacks leaves and bones and is caused by several types of fungi, namely Melanconium sp, Glomerella cingulata, and Botryodiplodia palmarum.
11. A good and highly recommended palm spacing is 9 meters between plants, using an equilateral triangle pattern.
12. The diameter of an oil palm tree is around 25-75 cm with a bigger base when it is fully grown. Palm trees generally have 40 to 55 compound leaves and can reach 60 if not pruned.
13. Palm fronds can reach 5-7 meters, some even 9 meters.

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