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Indonesia's certified palm oil market dominance

31

Jan

Indonesia's certified palm oil market dominance

“Globally, sustainable palm oil production that has been certified by RSPO has reached 12.15 million tons or approximately 17% of the [...]

Indonesia's certified palm oil market dominance. “Globally, sustainable palm oil production that has been certified by RSPO has reached 12.15 million tons or approximately 17% of the world’s total palm oil production,” explained Tiur Rumondang, Director of the Roundtable on Sustainable Palm Oil (RSPO) Indonesia.
Up to 2016, there was approximately 1.8 million hectares (ha) of palm oil plantation that was RSPO-certified. Tiur stated that this number is still relatively small, namely around 12% of the total palm oil plantation area in Indonesia.
Based on data from the Ministry of Agriculture, the total palm oil plantation area in Indonesia has reached 10.8 million ha. Meanwhile, the palm oil factories that have acquired RSPO certification number around 174 factories from 37 member company groups of RSPO operating in Indonesia.
Tiur mentioned, the awareness to obtain RSPO certification in Indonesia is showing a positive growth trend. This can be seen from the increasing number of certified and sustainable palm oil plantations, compared to 2015 which only reached 1.46 million ha.
The productivity of certified palm oil plantations is also claimed to have increased. If usually one hectare produces 4 tons per year, it can now reach 5 tons per hectare per year.
“We also do not know for sure whether the increase in productivity is supported by good and proper seeds and management. What is certain is that certified palm oil plantations have economic advantages,” added Tiur.
He said, there are many benefits of implementing sustainable RSPO certification. Some of the benefits include being able to compete at international level, and higher market acceptance, especially for product users in the European Union.
RSPO has a target of achieving 50% market absorption of Certified Sustainable Palm Oil (CSPO) in Indonesia up to 2020. Tiur said that achieving this target would not be easy, they need to work extra hard to convince business actors and plantation owners.
“Our biggest challenge is the operational culture of plantation companies. For decades, they have operated without anyone monitoring them, but as soon as they join RSPO, there is someone monitoring them,” he said.
The challenge to build awareness for certification is most difficult in medium- and small-scale palm oil companies. Their target market is the domestic market which does not require special certification, so they believe that they do not need CSPO.
There are eight main principles that must be fulfilled by a palm oil company in order to obtain RSPO certification. When expanded, there are 143 specific criteria that must be fulfilled. RSPO sustainable certification is valid for five years, and there is a separate audit every year.
http://industri.kontan.co.id/news/indonesia-dominasi-pasar-cpo-bersertifikat

Indonesia to set February crude palm oil export tax at $18 per tonne

31

Jan

Indonesia to set February crude palm oil export tax at $18 per tonne

The government's price reference is set at $815.52 per tonne for next month. An export tax of $18 per tonne is applied whenever the export price is [...]

Indonesia to set February crude palm oil export tax at $18 per tonne. The government's price reference is set at $815.52 per tonne for next month. An export tax of $18 per tonne is applied whenever the export price is between $800 and $850 per tonne.
The rising export tax may encourage planters to sell more of their products to domestic buyers, according to Indonesian Palm Oil Association (GAPKI).
`If the export tax is too high, maybe it won't be attractive for exports. Domestic consumption could be larger for biodiesel,` said Fadhil Hasan, executive director of GAPKI.
Sahat Sinaga, executive director of the Vegetable Oil Industry Association, said imposing an $18 tax on top of a $50 per ton levy, will hurt competitiveness.
`It is like telling (companies) not to export,` Sinaga said.
Any sign that exports from the world's largest palm oil producer are being reduced by the tax increase would support Malaysian benchmark palm oil futures.
On Friday, palm oil contracts for April on the Bursa Malaysia Derivatives Exchange were trading around 3,060 ringgit ($691) a tonne, down less than 1 percent.
The export tax for cocoa beans will be kept unchanged in February at 5 percent.
http://www.reuters.com/article/us-indonesia-palmoil-exports-idUSKBN15B0AR

Elia Massa Manik: Bringing the State-Owned Plantation Holding Company to Become a World Class Company

31

Jan

Elia Massa Manik: Bringing the State-Owned Plantation Holding Company to Become a World Class Company

“Last year, our revenue was approximately Rp37 trillion. But we had a loss reaching Rp615 billion,” said Elia Massa Manik. After reviewing the [...]

Elia Massa Manik: Bringing the State-Owned Plantation Holding Company to Become a World Class Company. “Last year, our revenue was approximately Rp37 trillion. But we had a loss reaching Rp615 billion,” said Elia Massa Manik. After reviewing the performances of PTPN I through PTPN XIV, said Elia Massa, it was decided at the Shareholder Meeting to proceed with the restructuring. The main goal was to achieve efficiency and effectiveness in every aspect. Restructuring is not just about finances. The holding company is paying Rp12.5 billion each day in interest alone. “That is why improving PTPN is now our common duty. Ultimately, if PTPN is healthy and our plantations are thriving, we will be more prosperous,” he explained. Under the leadership of Elia Massa Manik, the number of PTPN directors have been reduced to a maximum of three. In the past, a single PTPN could have four to five directors. Elia cited the example of private national plantations where the number of directors is limited to two. “Meanwhile, PTPNs can have up to five directors. I would rather focus on improving productivity, then deal with the number of people. The new directors were selected internally, so we picked the best,” he explained. “We have to change at the top management level. A leader becomes a role model. If we can improve the role model, then the acceleration and improvement process will proceed much more quickly,” he explained. So, what is Elia’s strategy to transform the state-owned plantation holding company into a world-class company? The following is an excerpt from an interview by the editorial team of Majalah SAWIT INDONESIA following the changes in the board of directors at PTPN I through XIV in Jakarta, in mid-July: “In your view, what are the key improvements that you will prioritize to improve the performance of this state-owned plantation company?” Currently, our average production costs are around 35 percent higher than those of private companies. This needs to be addressed. The high production costs are caused by the relatively low productivity. In my opinion, the way to manage costs is pretty much the same everywhere. These are the areas that we are focused on. The improvement process begins by improving the people structure in general. At private national companies, the number of directors normally does not exceed two to manage a plantation. However, we’ve had as many as five directors on the boards of our PTPNs. Consequently, we have rationalized the management structure. I would rather focus on improving productivity than reducing the number of people. That’s why the changes are starting at the top management level. Ultimately, the leader becomes a role model. By improving the role models, I am confident that the acceleration and improvement process will proceed much more quickly. At the same time, we can build a better system. Consequently, we are accelerating the integration of our systems, so that they will eventually be managed with an integrated system. Telkom will be responsible for this process. The contract has already been signed and we are expecting the systems to be fully integrated within a year. That will allow Mr. Wahyu (editor’s note: Deputy Minister of State-Owned Enterprises) to monitor them. Of the 14 PTPNs, only one, PTPN X, currently has an effective SAP system implementation. Later on, we will build the system up from the ground up. That way, each manager will be responsible for the profit and loss of their plantation. We will also be making changes to our system. “What targets did the Minister of State-Owned Enterprises set for you before you took charge as President Director of PTPN 3 Holding?” The target was to make it healthy. “How do you intend to make PTPN healthier?” To improve the agro industry, we need to implement a three-pronged approach, namely upstream, midstream, and downstream. The upstream sector needs to be more efficient. To make downstream operations (downstream) successful, we need an efficient upstream. This is a challenge in managing an agro holding company. If we can’t improve efficiency, then forget about downstream activities. They will fail. Currently, 95 percent of our PTPN operations are upstream, and palm oil is our mainstay. That’s why we need to expand and boost capacity. “Is it possible to improve productivity as quickly as possible?” Productivity can be improved within three years. In the case of oil palm, productivity is determined by the variety and the density of the palm trees. For example, if our plantation has 120 trees per hectare and another company has 130 trees per hectare, productivity will naturally be different. We also need a consistent replanting program for various age groups. I have only been in my position for three months and the government has a program to boost the productivity of sugar cane farmers. Over the last five years, the amount of land planted by farmers with sugar cane has declined by 5%, leading to a drop in production. We need to encourage productivity, and PTPN needs to increase its cane land. If we want to achieve self-sufficiency and price stability, we need to do that. Cocoa is another example. We used to have 20,000 hectares of PTPN cocoa plantations. Today we only have 3,000 hectares. The price may not have been good at the time and there were also pest attacks. That’s why we need to develop better planting strategies. We can’t go around converting crops willy-nilly. Although the price of cacao has been good in the last five years, we have been converting our crops, and this is a lesson that we need to learn. https://sawitindonesia.com/rubrikasi-majalah/sosok/elia-massa-manik-membawa-holding-bumn-perkebunan-menjadi-world-class-company/

Prof. Hermanto Siregar : Improvement of PTPN III Can Increase Productivity and Efficiency

24

Jan

Prof. Hermanto Siregar : Improvement of PTPN III Can Increase Productivity and Efficiency

“PTPN III's transformation is quite good because there are efforts towards efficiency to improve the company's performance. With this [...]

Prof. Hermanto Siregar : Improvement of PTPN III Can Increase Productivity and Efficiency. “PTPN III's transformation is quite good because there are efforts towards efficiency to improve the company's performance. With this transformation effort, production has the possibility to increase physically by around 10%-15% even if that number is not high, it is already good enough. The reason behind the insignificant production increase is due to the world's economy that affects the price of national commodities and internal needs for improvements,” Hermanto Siregar said when contacted by Sawit Indonesia in mid January 2017.
In this case, he also supports the plan to improve the management of PTPN III by reducing the number of directors and commissioners in the company because it can cut company expenses, as well as bureaucracy in policy making. “This plan is a good plan because it can reduce company expenses, decisions in the management level can be made faster and more efficiently and the policies can be implemented quicker,” he explained.
https://sawitindonesia.com/rubrikasi-majalah/sajian-utama/prof-hermanto-siregar-pembenahan-ptpn-iii-dapat-tingkatkan-produktivitas-dan-efisiensi/

Indonesia Contributes 50 Percent of Environmentally Friendly CPO.

24

Jan

Indonesia Contributes 50 Percent of Environmentally Friendly CPO.

RSPO Indonesia Director Tiur Rumondang said here on Tuesday that opportunities to gain much profit from RSPO certification is widely opened in the [...]

Indonesia Contributes 50 Percent of Environmentally Friendly CPO.. RSPO Indonesia Director Tiur Rumondang said here on Tuesday that opportunities to gain much profit from RSPO certification is widely opened in the future. That is because of the total area of 3.24 million hectares CPO in the world, half of it is located in Indonesia.
The world demand on CPO is higher than other commodities such as soybean and sun flower seeds oil, Tiur noted, adding that due to its excellence the demand in global market until November 2016 is more than 60-million metric tons.
 `There are 1.8 million hectares of RSPO-certified CPO in Indonesia. This area is only ten percent of the total area of ten million hectares in the country,` Tiur noted. She explained that the awareness to get RSPO certification in Indonesia shows positive trend, seen from the increasing of certified-CPO area in 2015 which was 1.46 million hectares. Of the 1.8 million RSPO-certified-CPO in Indonesia, about 30 percent or 315,768 hectares are located in Riau province. The certified areas have produced 5.75 million tons fresh palm oil, 1,27 million tons metric CPO and 313.4 tons metric kernel.
 The number of RSPO certification holder in Riau is ten companies, and 31 RSPO-certified CPO factories, while the area under the farmer partnership management reached 65,450 hectares. The sustainable RSPO certification is valid for five years and is audited every year.(*)
http://www.antaranews.com/en/news/108991/indonesia-contributes-50-percent-of-environmentally-friendly-cpo

EU Big Market for Indonesian Palm Oil, but Big Challenges Remain

24

Jan

EU Big Market for Indonesian Palm Oil, but Big Challenges Remain

The people behind these negative campaigns aim to limit the inflow of CPO into the European Union due to environmental as well as health concerns [...]

EU Big Market for Indonesian Palm Oil, but Big Challenges Remain. The people behind these negative campaigns aim to limit the inflow of CPO into the European Union due to environmental as well as health concerns (although some speculate they actually want to limit the import of cheaper crude palm oil for the benefit of locally-produced edible oils such as sunflower oil, canola oil or soybean oil).
In the year 2017 negative campaigning continues. Several authorities in Europe had already listed palm oil, an edible oil, as a cancer risk. The European Food Safety Authority (EFSA) reported that palm oil generates more of a potentially carcinogenic contaminant than any other edible oil when refined at temperatures of at least 200°C. Nutella, the hazelnut and chocolate spread made by Italian confectionery firm Ferrero, became a victim when calls were made to boycott Nutella due to its palm oil content.
In recent years there has been a series of anti-CPO campaigns in the EU, including:

In 2012 France proposed higher import duties on crude palm oil. It is believed this proposal was aimed at protecting the country's own sunflower oil production.
In 2014 there started to emerge various products in Belgian and Italian supermarkets with the label `palm oil free`, in an attempt to promote those products that do not contain palm oil.
In 2015 there spread many negative stories about Indonesia's palm oil industry after the severe forest fires that occurred on the Indonesian islands of Sumatra and Kalimantan in late-2015.
In 2016 France again proposed (progressive) import duties on palm oil imports (again the plan was cancelled after discourse).

Sahat Sinaga, Executive Director at the Indonesian Vegetable Oil Refiners Association (GIMNI), said these negative campaigns have a big impact on palm oil consumption in the European Union. In full-year 2016 Indonesia is estimated to have only exported 3.3 million tons to the EU, down 21 percent from 4.2 million tons of palm oil shipments in the preceding year. Toward the future, the figure may continue to decline and therefore Sinaga does not see a good future for palm oil shipments to the EU in case it involves palm oil shipments for food. However, EU demand for biodiesel or oleochemical is expected to increase. Therefore, exporters are advised to focus on the non-food palm oil-related shipments to the European Union.
Indonesia's Palm Oil Exports Volume to Top Markets:

2011

2012

2013

2014

2015

2016¹

India

4,980

5,253

5,634

4,867

5,798

3,944

European Union

3,500

3,650

4,800

4,123

4,233

2,963

China

2,032

2,842

2,343

2,357

3,990

1,920

in thousand tons             ¹ January-September 2016 period only Source: Statistics Indonesia (BPS)
http://www.indonesia-investments.com/news/todays-headlines/eu-big-market-for-indonesian-palm-oil-but-big-challenges-remain/item7548

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