11 November 2018

MENKO Darmin Nasution said that palm oil is a strategic industry. The government has also issued a number of regulations to strengthen the competitiveness of commodities, such as the production of cooking oil made from palm oil.

Could it be that by developing cooking oil, Indonesia's economic growth is much more advanced? The following is an excerpt of an interview with the President Director of PT Mahkota Group Usli Sarsi.

Analisa: There are many cooking oil industries made from palm oil. Your company is a newcomer to cooking oil processing, do you see any potential in this business?

Usli: We see that Indonesia's population continues to grow. That means the demand for cooking oil will continue to grow. If the current production capacity does not increase, the domestic demand for cooking oil may decrease. Even now, the production capacity of cooking oil can be said to be insufficient to meet domestic needs because it must also be exported.

Analisa: What about the export of Crude Palm Oil (CPO), is it not disrupted?

Usli: Indonesia has been exporting oil palm plantation products in the form of raw materials in the form of CPO. Then CPO from Indonesia, abroad is processed into finished materials, one of which is cooking oil. Just imagine that CPO importing countries such as China and India dare to invest tens of millions of US dollars to establish a cooking oil factory. So why don't we dare? Even though the raw materials are very much available.

From here we see that raw material dependency is very high. If Indonesia has many cooking oil factories, then the products of oil palm plantations can be processed into finished materials for export. That way the selling price can be higher. In addition, it will increase employment and increase the country's income. If Indonesia produces a lot of cooking oil, foreign factories will automatically stop. Countries that have been importing CPO can simply buy cooking oil in bulk form from Indonesia.

In terms of price, it is certainly more profitable than importing CPO and processing cooking oil. In terms of quality, Indonesian-produced cooking oil is better than overseas.

Analisa:  What is the reason why Indonesian cooking oil is better?

Usli: Here's the thing. CPO, the raw material for production, still contains acid. CPO cannot be stored for long because the acidity can rise. The higher the acidity, the lower the price of CPO. The more acid, the more CPO has to be disposed of. Indeed, the acid in CPO can still be used for soap production. Only the value will drop. Imagine if CPO is directly processed into cooking oil in Indonesia, it can minimize the acid in CPO.

Meanwhile, if CPO is exported, there will be more acid because of the long journey. In addition, if CPO is processed into cooking oil, it lasts longer because it has gone through filtering so that there is no more acid.

We currently have 26 storage tanks. Each has a capacity of 3,000 tons. Of course, more cooking oil can be stored for a long time. So nothing is wasted.

Analisa: Indonesia is the largest producer of CPO. The fact is that the price of CPO is determined by Malaysia and the Netherlands. Is it possible for Indonesia to determine the price?

Usli: This is about trust. We must admit, currently Malaysia and the Netherlands are still trusted in determining CPO prices because they are able to maintain the quality of CPO. So if we can do the same, surely the market will trust us. Of course, gaining trust cannot be instant, it takes time.

Analisa:  If a lot of CPO is processed in Indonesia into finished materials, does it not reduce export demand?

Usli: If CPO is increasingly processed into finished materials, it will be better. When there is a lot of demand for CPO abroad, while the availability of CPO for export is small, the price of CPO can rise. In order for existing factories abroad to continue operating, inevitably there must be raw materials. Whatever the price of CPO will be bought. Of course, the ones who benefit the most are farmers, CPO mills, and CPO processing plants.

If this happens, it is clear that the Indonesian economy can grow fast. I see that the government wants CPO to be processed domestically. Biodiesel 20 percent or B20 is one of the government's efforts to absorb CPO. The government has made it mandatory for 20 percent biodiesel in diesel fuel, otherwise sanctions will be imposed.

The government has even planned to accelerate it to B30. Imagine if this is done, the absorption of CPO is not only for cooking oil for human consumption, but machines also use CPO. The Indonesian government also asked China to implement B5 to be environmentally friendly.

Analisa: In fact, despite the rising dollar, the selling price of fresh fruit bunches (FFB) to farmers actually fell?

Usli: Why does this happen, when 80 percent of CPO is exported? FFB prices should also rise. The problem that occurred in the 3rd quarter was that palm oil production increased 3 times. At the time of abundant production conditions, many PKS did not dare to produce because their storage tanks were full. PKS does not dare to stockpile more because CPO cannot last long in storage.

Because many mills refused, farmers ended up selling the FFB at low prices for fear of rotting. If the FFB is not processed within 3 days, it will rot and the price will drop. This is the problem that occurs. So it is not only the farmers who lose, but also the mills. Because that is the only way palm oil is processed into finished materials, so that it can last longer.

Analisa: Is it possible for other countries to keep up with Indonesia's CPO output?

Usli: No country can produce CPO in large quantities. Oil palm plants only grow in areas that have two seasons. Areas that are not too cold and not too hot. Apart from palm oil, vegetable oils such as sunflower, soybean, and several other plants can be processed into cooking oil. But in terms of production, cooking oil made from palm oil is much cheaper. This is a great potential to increase Indonesia's economic growth. (fahrin malau)

Source : http://harian.analisadaily.com/jentera/news/indonesia-berpeluang-kembangkan-minyak-goreng/647103/2018/11/11​