Indonesia palm oil prospect

In order to study Indonesia palm oil prospect, it is needs to estimate the market opportunities (increased consumption) in the world market. Based on the previous estimation, the consumption level until 2025 is expected to range between 41.45 - 44.45 million tons. On the other hand, world CPO production in 2004 was 25.67 million tons. Thus, the chance to increase production until 2025 is ranged from 15.78 - 18.78 million tons.
With a fairly open market opportunity both in terms of world exports or consumption, CPO producing countries will try to exploit these market prospect. Malaysia and Indonesia is to lead this competition. As expected, Malaysia as the main producer is expected to take these opportunities with increased production at a rate of 2.8% -1.5% per year. Indonesia is predicted to increase production at a rate between 3.0% -7.6% per year.
There are several arguments told that with the support of consistent and effective policy, associated with the Indonesia palm oil prospect, this country is expected to capitalize on most of these market opportunities. The main factor is the availability of land that is still quite large. The availability of land suitable for palm plantation in Indonesia reaches about 2.9 million ha. On the other hand, Malaysia faced difficulties because of the very limited land for expansion. Other countries such as Thailand, etc. are also not predicted as the real competitor because of their limited land, and its policy which not putting palm oil as a commodity. Nigeria palm oil output is estimated to be only sufficient to meet their domestic needs.
With this argument, Malaysia is predicted to take the opportunities by 20% (3.16 - 3.76 million tons) and approximately 40% (6.31 to 7.51 million) will be utilized by other states. Indonesia is estimated to take the greatest prospect to utilize about 40% or about 6.31 to 7.51 million. This means that with the assumption that productivity is about 3.5 tons of CPO / ha, they have a chance to expand between 1.80 - 2.15 million ha. If the expansion carried out between the years 2005-2025, then every year they should expand about 120 -140 thousand hectares to support their palm oil prospect.

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Palm oil downstream industry development

Agriculture expert from Bogor Agricultural University (IPB), Prof Erliza Hambali told through the development of the palm oil downstream industry, it could be one of Indonesia's biggest foreign exchange producer. According to Prof. Erliza Hambali, the industry can be relied upon as a driver of national economy and are able to produce large amounts of foreign exchange. Referring to the data issued by the chamber, protection of national income in 2010 of crude palm oil (CPO) reached U.S. $ 14 billion.
Prof. Erliza argues, the income from CPO at U.S. $ 14 billion can be increased through the development of palm oil downstream industry (IHKS). With such development, value-added product in Indonesia can be utilized as much as possible both to improve people's welfare state and foreign exchange.
He said that, until now Indonesia is the country's largest CPO producer in the world. This reputation has been borne by Indonesia since 2006. According to him, the advantages of Indonesia at the sub-sector needs to be kept on hold and was developed to improve the welfare of the community.
He believed the development of the palm oil downstream industry may be the important key in the national economy forward, foreign exchange, job creation, increase added value for CPO and improve national food security and energy.

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World's palm oil producers

Indonesia is now the world's largest palm oil producer beat Malaysia, Bangkok, Thailand, and several other agricultural countries. In the last 5 years, the development of palm plantations in that country reached 5 million hectares of the reserve potential of 19.7 million hectares, or much broader than with Malaysia remaining 4.6 million hectares. Previously, Malaysia known as the largest producer but now their land had limited and was replaced by Indonesia. A rapid development of palm oil industries in this country,is supported by land and climatic conditions which is suitable for plant growth.
Meanwhile, the development of downstream businesses is continued to be developed. CPO is generally processed into refined oil, in the form of cooking oil (olein) and other products such as cocoa butter substitute (CBS), industrial margarine, and so on. The development of its chemical industry is also very heavily developed. The oleochemical industry today has been developed by some of the world's palm oil producer. In fact, in addition to an existed plant in Tanjung Morawa, today, one of the companies has nearly completed the world's largest oleochemical industry, which is located in Kuala Tanjung, North Sumatra. Construction of the plant has attracted one of the largest consumer goods manufacturers in the world, to order their products over the next 15 years.
Indonesian Palm Oil Association (Gapki) said Indonesia's CPO production in 2005 reached 15.2 million tons. From that volume, $ 4 million tons is consumed for domestic purposes and the remainder, 11.2 million tons, for export. This quantity can be compared with the export data from the Indonesia Bank data that said during 2005, it reached U.S. $ 4,707 million. If the price per tonne of CPO reached U.S. $ 400, then the number is very similar to the export volume issued by Gapki, which is about 11.2 million tons.
Then by the production volume of 15.2 million tons, whether this country has become the biggest producer or not? For that purpose, you may look for the production data from Bank Negara Malaysia, or the Malaysian Central Bank, which is seen producing highly reliable data. The result is the production from Malaysia in 2005 only 14 million tons. This means that Indonesia was already the world's largest palm oil producer. These facts speak for themselves eventually.

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Tax change effect on palm oil business

Indonesia change its policy of export tax provision of palm oil derived products obtain business reaction from buyer country such as India. The Hindustan country is planning to raise import tariffs of those commodities that will go into their country.
Anticipating the release of the policy, the traders in the country of Hindustan is buying more palm oil derivative products such as RBD olein from Indonesia. A total of 50,000 tons of that olein has been bought by the importer from India. The sources from Indonesia traders and India said the purchase was also a part to anticipate the demand for festivals or holidays in India. The edible oil processing industry in India is driving the government to raise import tariffs of those commodities from 7.7% to 16.5%. This is to protect the their industry interests which is now experiencing idle.
Secretary General of Indonesian Palm Oil Association (Gapki) Joko Supriyono said not know about that action from India. But clearly the current government of India will raise the its import tariff. He explained the presence of Minister of Finance Regulation No. 128/PMK.011/2011 on Regulation Amendment of the Minister of Finance Number 67/PMK.011/2010, it change the set of export tax on palm oil business is more expensive 0.5% to 4.5% from the previous.
"With India raise Indonesia CPO import tariffs became increasingly uncompetitive as it is subjected to the tax both in the producer country and also the destination country," he said.
Joko said India and Indonesia have the same interest-related to the CPO trade between the two countries. But with the government policy to change the rules so Indonesia palm oil products is more uncompetitive.
"Yes, it is strange (situation), if the state imposed a policy of import tariffs, then it is normal, but Indonesia also imposed a policy of export tariff," he said.
In addition to the change in export tax in accordance with the Minister of Finance Regulation No. PMK 128/PMK.011/2011, the Indonesia government has also added a total of 14 palm oil derived commodities(downstream products) are subject to tax exports. Previously those items, include crude palm oil (CPO), which is subjected to exports tax only amounted to 15. Thus there are 29 oil derivative products are subject to tax exports.
It is set in the Minister of Trade Regulation (Permendag) No. 26/M-DAG/PER/9/2011 which is officially assigned at September 14th 2011. HPE as many as 14 palm oil derivative products are subjected to export tax that starting from September 14th 2011 until September 30th , 2011.

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World palm oil production

World palm oil production during the last two decades has increased about 7.3% per year. This situation is highly influenced by Malaysia and Indonesia which contributed 80% of the global market.
In the next five years, crude palm oil or CPO production is expected will increase but smaller than the world consumption. Malaysia still dominated about 50% of the world market, while Indonesia is at the second level with 30%. Currently, those countries are the leading CPO producers with controls more than 80% market share.
World palm oil production is also contributed by other countries such as Nigeria, Colombia, Thailand, Papua New Guinea, and even the Ivory Coast, which are arguably only the complements. Malaysia ranked top with the volume in 2003 reached 13.35 million tons, while Indonesia is still 9.75 million tons. In 2004, Indonesia CPO reached 11.5 million tons. That's why a lot of optimism among analysts said that they would soon beat Malaysia, especially if you see the land area in Malaysia is more limited, while in Indonesia is still so widespread.
Palm oil (PO) in Indonesia is mostly absorbed by the food industry, especially cooking oil (CoO) and non-food industry such as cosmetics and pharmaceutical industry. However, the greatest market potential is the frying oil. That potential is evident from the increase of population has implications for the increasing of food needs. Until 1997, their cooking oil production just reached 3.1 million tons of with PO contribution of 2.3 million tonnes of CoO (74%) which require 3.3 million tonnes of PO.
World palm oil production will continue to increase in the future, considering that it has the highest oil productivity per hectare plantation, even when compared with corn, canola, or soybean oil.

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Palm oil products

Palm oil products are growing significantly, both in terms of needs and types. In connection with the increasing needs of domestic consumption Indonesia, the Indonesian government has tried to increase its production through the development programs of the private and the public, in addition to continue to promote the growth of downstream industries.
There are some cooking oil feedstock produced in Indonesia, among others, derived from coconut oil (CO), crude palm oil (CPO) and from Palm Kernel Oil (PKO)
CPO is obtained from its fruit fibers which is processed until soft and then squeezed. The results of this extraction can be used as base material for frying oil, margarine, etc.
In that processing, palm nuts are not broken and will be processed further to produce PKO. Because the oil produced from the kernel is very little compared to the CPO, the nuts are directly exported without further processing stages.
The oil can be traded in different forms, depending on the stage of its processing technology. Related to the edible oil industry, there are six types of its products are traded, namely palm oil (PO), pre-treated PO (PTPO), refine bleach & deodorize PO (RBDPO), refine bleach deodorize palm kernel oil (RBDPKO), pre-treated olein (PTO) or known as olein and refined crude olein.
CPO is the raw material for fatty acid, refine stearine (RS), and refine olein. The main market of refine stearine and fatty acid is the soap factory, margarine manufacturing, and chemical industry. RO can be mixed along with certain additives to obtained margarine, shortening, and bar soap.
Palm oil products in downstream level include intermediate products. They are the oleofood such as frying oil, margarine, and shortening. Cooking oil production increased 13-20% per year during 1991 to 1995 to reach 1,502,027 tons in the last year.
Increased CPO-based frying oil production beat down the Crude Coconut Oil / CCO and copra as a cooking oil raw material. PO productivity per hectare of plantation area is generally higher than coconut oil production.
Development of frying oil in Indonesia is shown by the increased demand for CPO. Every year it tends to increase with increasing downstream industries, such as frying oil and oleochemicals. Indonesia's domestic CPO consumption needs in 1995 about 3.3 million tonnes.
Currently, PO is the most dominant alternative copra substitution compared with maize and beans. This is because cooking oil price from PO is cheaper than from copra or CO.
In Indonesia, consumed cooking oil is divided into groups as follows: 1) CO from middle or small-scale industrial, 2) refine coconut oil, this type is obtained by refining the fist type mentioned before. 3) klentik oil (javanese name), this type is made by small entrepreneurs with fresh coconut as raw materials, and has good smell but is not durable. 4) others such as corn, peanut oil, and so on. 5) from PO. 5) margarine from vegetable oils.
Palm oil products can be expanded in future to produce a commodity in the new field, including health and energy, such as health supplement rich with vitamins A and biofuels.

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Unsaturated fatty acid

Unsaturated fatty acid (UFA), such as monounsaturated fatty acid (MUFA) and polyunsaturated fatty acid (PUFA), can have positive health benefits when consumed in sufficient quantities. Actually there so many fat types and certain types have benefits for heart health?
Classification of fats and oils can be viewed from several aspects, one of which is its saturation aspect. They can be distinguished based on its double bonds. Saturated (SFA) if it doesn’t has any double bond and unsaturated if it has one, two or three double bonds.
Examples of unsaturated fat
There are so many kind of agricultural product which contain high UFA, such as sunflower, canola, olive, soybean, peanut, flax seed, and fish oil.
The examples mentioned above, more specifically also contain high essential fatty acids - linoleic acid (Omega 6), alpha linoleic acid (Omega 3) and arachidonic acid. The scientists found that they proved to have several important benefits such as helping the body burn the fat, lower bad cholesterol (LDL), helps in the lubrication of joints, prevent strokes, maintaining blood pressure, and optimize brain health.
Unsaturated fat benefits
Is good fat really exist? We always have long been told to limit the amount of fat in our diet in order to keep our cholesterol levels. The fact is, we need a certain amount of them in our diets. It helps us absorb essential vitamins like A, D, E, and K
A study by Grundy from the Faculty of Medicine, California, USA, proves that the body's cholesterol levels may go down if the diet contains more MUFA and PUFA than SFA. Dietary SFA for a month proved to raise cholesterol levels. While the dietary MUFA, dropped it sharply, including LDL and HDL. In dietary PUFA, LDL and total cholesterol decreased, while HDL relatively unchanged.
PUFA are known to increase the intelligence and the immune system of children under five. Long chain unsaturated fatty acid (especially the omega - 3 DHA) have been shown to play an important role in the prevention and treatment of blocked arteries (atherosclerosis), thrombosis, hypertriglyceridemia, and high blood pressure. It has the potential for prevention and treatment of asthma, arthritis, migraine, and some types of cancer which is prostate, breast and colon cancer.
Unsaturated fat types
Most of UFA are fatty acids containing one double bond in their hydrocarbon chain. Fatty acids with more than one double bond are unusual, mainly found in vegetable oil, and called by PUFA. Polyunsaturated triglycerides tend to form oil.
PUFA can lower total blood cholesterol, especially LDL. If you want to consume this, you can be choose fish, seafood, safflower oil (Carthamus tinctorius), and sun flower oil. MUFA can reduce the presence of bad fats in the blood, such as cholesterol. By consuming them, HDL rises and LDL cholesterol goes down. So, it is good to be eaten for health. It is contained in olive oil, canola oil peanut oils, meat, fish, poultry, and avocado.
Unsaturated fat health risk
Although it is considered as a good fat, excessive consumption of UFA remain dangerous. If the total fat intake is more than 30 percent of food consumed, fat deposits in the body will increase. It increases the risk factor of increased blood fat that can cause heart and blood vessel disease. UFA forms the cell wall of the body. Consumption of high UFA should be followed by adequate intake of antioxidants such as vitamin E.
SFA, UFA, and trans would enhance the body's calorie. The public still considers only SFA which is bad for health, which are widely found in meat and its derivative products and fried foods. Each 1 gram of fat contains 9 calories, whereas 1 gram of starchy produces only 4 calories.
In addition to long chain SFA, trans fats is also bad for health. These are produced through industrial processes, such as margarine and cooking oil. In food packaging, it is called as hydrogenated fat. They do not only increase LDL, but also lowers the amount of good cholesterol. Unlike the SFA that only increase LDL.
The role of unsaturated fatty acid need to be studied further to ensure the influence of food and agricultural products that contain these components on human health.

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