30 September 2021

Oil palm can only thrive in tropical regions along the equator that have abundant rainfall and certain other agro-climatic conditions. Along the 40,075 Km equatorial line around the earth, 78.7% is in water and 21.3% is on land. That means not much land on earth can be planted with oil palm.

Geographically, only four continents are crossed by the equator, namely Africa, Asia, Osenia and South America. Of these four continents, not all countries can also be planted with oil palm. Only Indonesia, Malaysia and a small part of Africa and a small part of Central and Latin America. Indonesia is the paradise of oil palm. That is because Indonesia has the largest land area that can be planted with oil palm compared to countries that can be planted with oil palm. This reason is also the palm oil plant that was first brought by the Dutch from Africa as many as 4 seeds from year to year continues to expand.

Citing data from the Directorate General (Dirjen) of Plantations of the Ministry of Agriculture, Indonesia, the area of oil palm plantations in 2020 reached 14.99 million hectares, an increase of nearly 272 thousand hectares compared to the previous year which amounted to 14.724 million hectares. With this area, Indonesia is the country with the most extensive oil palm plantations in the world. This automatically increases palm oil production. BPS recorded that Indonesia's exports of palm oil products in 2016 reached US$ 14.36 billion, then four years later (2020) BPS released exports of palm oil products reaching 34 million tons, this figure is lower than 2019 which reached 37.39 million tons.

Economic Power

In the past, economic power was held by countries that had many oil wells and coal mines as energy sources. The abundance of energy owned by many countries is competing to develop technology and industry. Unfortunately, the development of technology and industry is not matched by an increase in the availability of energy sources. Finally, the availability of energy is running out, while the need for energy continues to increase to turn on technology and drive industry.

The depletion of energy availability raises concerns. How can technology be turned on and industry move if energy sources are not available. In order to keep technology alive and technology machines moving, alternative energy sources such as wind, sunlight, water, geothermal and nuclear energy were developed.

Initially, the use of alternative energy can still meet the needs of technology and industry. But technology and industry continue to develop, energy needs continue to increase. Alternative energy such as wind energy, sunlight, water, geothermal turned out to be unable to meet the growing needs of technology and industry. So to meet the increasing energy needs, nuclear energy was developed as an alternative.

The use of nuclear energy is believed to be able to meet technological and industrial needs. Japan is one of the countries that uses the most nuclear energy for technological and industrial needs. Unfortunately, the use of nuclear energy has a negative impact on the environment. This has been experienced by Japan when an earthquake occurs, nuclear energy is damaged and has a negative impact on the environment and surrounding humans.

In order to keep technology alive and industry moving without having to give a bad impact on the environment, the use of energy from plants was developed such as rice, corn, palm oil and so on. Of the various types of plants that can be developed into energy, palm oil is the most possible.

It is the most productive, yielding four to nine times the yield of other oilseeds. The selling price of palm oil is also the cheapest, with an average margin of 20 percent compared to the selling price of other oilseed crops. Another advantage is that the production process costs less per ton, at around US$ 200 per ton, compared to US$ 360 per ton for soybean oil, which has the second lowest production cost per ton. Overall, no oilseed crop comes close to palm oil in terms of yield and production costs.

Oil palms also require the least amount of fertilizer among other oilseeds and edible oil crops. Oil palm requires about 2 kilograms of pesticides and 47 kg of fertilizer to produce 1 tonne of oil, while soybean requires 29 kg of pesticides and 315 kg of fertilizer and rapeseed requires 11 kg of pesticides and 90 kg of fertilizer to produce each tonne of oil. In terms of land use, soybean, sunflower and rapeseed also require five to eight times more land than palm oil to produce each ton of oil.

Palm oil has the advantage of being a sustainable source of energy to meet the needs of technology and industry that continues to grow. Unfortunately, not many countries can produce energy from palm oil raw materials. Negative issues (black campaign) are also intensively carried out by many countries as a form of concern about the increasingly widespread use of palm oil raw materials, especially for energy needs. The flourishing palm oil plantation is a gift from God to improve the welfare of the Indonesian people.

Based on data from Oil World, the trend of using palm oil-based commodities in the global market continues to increase over time, beating other vegetable oil-based commodities such as wheat oil, corn oil, coconut oil. Palm oil's market share continued to increase from 22 percent in 1965 to 40 percent in 2016. While soybean oil's share fell from 59 percent to 33 percent in the same period.

Since 2004 the use of palm oil commodity has occupied the highest position in the world vegetable oil market, reaching about 30 million tons with an average growth of 8% per year, beating the soybean oil commodity of about 25 million tons with an average growth of 3.8% per year. Another widely used commodity is sunflower oil, which is about 11.5 million tons with an average growth of 2.2% per year. Going forward, this growth rate is expected to continue, and possibly even increase in line with the trend of using alternative oil-based fuels such as biodiesel.

Production Increase

Although Indonesia already has the largest oil palm plantation in the world, there are still many investors who want to open new land. This is because the use of palm oil-based commodities in the global market continues to increase from time to time. Unfortunately, investors' desire to open new oil palm plantations is still hindered by Presidential Instruction (Inpres) Number 8 of 2018 concerning Postponement and Evaluation of Oil Palm Plantation Licenses and Improvement of Oil Palm Plantations or commonly called the Presidential Instruction on Oil Palm Moratorium.

​Although the Presidential Instruction on Palm Oil Moratorium ended on September 19, the Ministry of Environment and Forestry (MoEF) will continue to stop new licenses for oil palm plantations in forest areas. One of the reasons why oil palm plantation licenses are not yet open is because the government has committed to move towards a net carbon sink by 2030 for the forestry and land use (FOLU) sector.

The MoEF also updated the area of the Indicative Map for the Termination of New Permits (PIPPIB) for 2021 period II to 66,139,183 hectares, down from 66,182,094 hectares declared in the first period of this year.Without the addition of new land permits, Indonesia can still meet the needs of the global market by increasing productivity. It must be admitted that Indonesia's palm oil productivity is still inferior to Malaysia. Malaysia has been able to produce 3.96 tons/ha. Meanwhile, data from the Director General of Plantations averages 3.66 tons/ha. Whereas with good processing it can reach 7.8 tons/ha. This shows that palm oil is the future of Indonesia.

Source : Analisa