It’s Time for a Stronger Palm Oil Partnership

Palm oil is a strategic commodity for Indonesia’s economic development. Smallholder farmers are now developing themselves to reach higher standard of oil palm plantation. They replants their plantation boost productivities, develop skill to build their capacity, and any other efforts to develop their plantation.

On the other hand, palm oil big companies are preparing themselves to penetrate wider markets. Prospects for the industry seem positive in the near future. That’s why close partnerships between private companies and smallholder farmers will be the key point to the development of national palm oil sector in the future. In this case, big companies need to support smallholder famers, either to provide best quality seeds or improve their management skill. “Smallholder farmers are playing important role in national palm oil industry,” said Joko Supriyono, Chairman of Indonesian Palm Oil Association as he spoke on Asian Agriculture & Food Forum (ASAFF) 2018 in Jakarta Convention Center (JCC), Thursday (28/6/2018) as quoted by Investor Daily.

Joko also said, such partnership is important as Indonesia plays significant role in global palm oil market. Currently, Indonesia is the top Indonesia is the top palm oil producing country in the world with total production reached 42,04 million tons in 2017. Almost 31,05 millions tons of them exported to global market. Indonesia`s oil palm plantation and processing industry is a key industry to the country`s economy. The export of palm oil is major foreign exchange earner. “Palm oil is the nation’s number one foreign exchange earner that has reached US$22,9 billion,” said Joko.

Palm oil export market remains open even though the industry has come under fire in some countries over its impact on forest destruction. The global vegetable oil market, including palm oil, is currently witnessing a positive growth and is projected to grow of around 5 millions tons per year. This is the reason why palm oil has also essential important role to ensure world’s food security. However, just because the prospects seem positive doesn’t mean that the industry is enjoying a more settled condition.

Because, there at least two challenges lurking about that undermine growth of Indonesia’s palm oil industry. Firstly, the anti-palm oil campaigns in western countries. Secondly, internal challenges faced by smallhoder farmers including productivity and development challenges. From this point of view, the partnerships between smallholder farmers and big private companies has become very important. ***