Indonesian Palm Oil Association (GAPKI) Chairman, Joko Supriyono, delivering his welcome speech at the 12th Indonesian Palm Oil Conference in Nusa Dua, Bali. (JG Photo/Ratri M. Siniwi)

Indonesian Palm Oil Industry Must Buck Up to Meet Global Demands: GAPKI


NOVEMBER 25, 2016

Nusa Dua. As the 12th Indonesian Palm Oil Conference, or IPOC, inaugurated in Nusa Dua, Bali on Thursday (24/11), Indonesian Palm Oil Association, known as GAPKI, chairman urged industry players to prepare for a better outlook next year.

This year, production of the commodity dropped by 15 to 20 percent compared to last year — the first drop in 20 years — mostly due to the El Nino effect on Malaysian and Indonesian palm stock in the first half of the year.

“Indonesian palm oil production is predicted to only reach 30 million tons in 2016,” said GAPKI chairman, Joko Supriyono, during his opening speech at IPOC on Thursday. “Meanwhile, exports of CPO [crude palm oil] and its products is expected to be around 22.5 million tons, or a drop of around 15 percent compared to last year.”

Joko added that the average price of CPO increased to $663 per ton this year from January to October, from $630 per ton in 2015, thanks to the government’s B20 biodiesel program, which allowed palm oil prices to stabilize.

“As the most productive and efficient vegetable oil, palm oil certainly will contribute significantly to this, and Indonesia as the largest producer of palm oil is in a better position compared to other palm oil producing countries in fulfilling the demand of vegetable oils,” the chairman explained.

However, this can only take place by meeting the demands for sustainable palm oil through strengthening and accelerating the Indonesian Sustainable Palm Oil certification, ensuring that it meets international standards, as well as getting more downstream players certified.

For the industry to achieve a higher level of competitiveness and efficiency, Joko called out the government to improve infrastructures due to the high costs of logistics in the industry.

“Right now the price of palm oil products are discounted by $15 to $20, compared to Malaysian products, due to bad infrastructures, which affect the quality of products,” Joko stated.

According to the chairman, this year's La Nina weather factor will complement palm out output in 2017 with high hopes on a rise in production.

Although Joko did not specify exact numbers, he is still keeping his hopes up for the industry’s prospects, due to the constant demand for palm oil from around the world, especially with the expected population growth of up to 8 billion by 2025.

This year, the 12th IPOC garnered over 1,200 participants from 23 countries. The two day conference ends Friday.