The Indonesian Association of Palm Oil Producers (GAPKI) is projecting the country’s pam oil output to rise buy 4.18 percent this year to reach 49 million tons of Crude Palm Oil (CPO) compared to last year’s 47.03 million ton, its chairman Joko Supriyono said on Thursday (4/2.)
“Our analysis is that production will still rise, even though not by much, but it will still rise,” Supriyono told a virtual press conference on the industry’s 2020 performance and projection for 2021.
He said that good prices in 2019 have allowed growers to better maintain their plantation, especially concerning fertilizers in 2020, and the results would be better production this year. Good weather and fair prices were estimated to also help production to grow in 2021.
Besides CPO, Indonesia was projected to also produce 4.65 million tons of Palm Kernel Oil (PKO) in 2021 compared to 4.55 million ton in the previous year.
And despite of the still weak economy due to the COVID-19 Pandemic, domestic consumption is projected to continue to rise this year.
“At the very least when compared to last year, it will undergo an increase,” Supriyono said projecting overall consumption of palm oil, including oleochemicals and biodiesel, to reach 18.504 million tons in 2021.
He said the government’s mandatory B30 policy was the main reason behind the rise in the domestic consumption of palm oil. “With the government’s commitment to continue this B30 program, biodiesel consumption is expected to reach 9.2 million Kiloliters, or equal to about eight million tons of palm oil,” Supriyono said.
The usage of oleochemicals is expected to reach two million tons domestically while exports were expected to reach 4,5 million tons.
“The increase in exports would depend very much on whether the (COVID-19) vaccine would be able to cover most of the world or not. I think that demand will really depend on the ongoing vaccination program,” he said, adding that a successful program will restore economic activities and thus improve demand.
He projected exports to rise in 2021 to reach 7.5 million tons of CPO compared to 7.171 million tons last year. Exports of CPO processed products were estimated to increase by 13.72 percent to 24 million tons while and those of its derivatives such as lauric products and oleochemicals were expected to reach six million tons.
Supriyono also said that GAPKI planned to focus in activities in three areas in 2021. They were closely monitoring and safeguarding the implementation of the Omnibus Law passed last year as well as the issuance of its implementing regulations. He said GAPKI will help ensure that implementation of the law achieve its intended aims the aims – boosting investment and simplifying business and investment procedures.
GAPKI, will also focus on strengthening sustainability in the sector by accelerating the sustainability certification under the Indonesian Sustainable Palm Oil (ISPO) scheme of all its members.
The third focus would be to strengthen partnership to accelerate the government’s oil palm replanting program for smallholders.
Speaking of 2020, Supriyono said that despite the COVID Pandemic, the Indonesian palm oil sector managed to continue to operate and perform well.
“Domestic consumption in 2020 actually rose compared to 2019 and this we need to be thankful for because everywhere else consumption weakened but in our country, it rose,” he said, adding that the increase in domestic consumption was supported by a rise in biodiesel consumption following the government’s B30 program and in oleochemicals.
The consumption of oleochemicals, an important raw material for cleaning and antiseptic agents much needed during the pandemic, rose by 60.51 percent to 1.695 million tons in 2020 while that of biodiesel rose almost 24 percent to 7.226 million tons.
But the large-scale restrictions imposed by the government to battle the pandemic pushed down the consumption of palm oil as food by 14.52 percent to 8.428 million tons in 2020.
Weak global for palm oil because of the ongoing pandemic and a number of other reasons also pushed down Indonesia’s palm oil exports last year.
CPO exports went down from 7.399 million tons in 2019 to 7.717 million tons in 2020 while exports of CPO processed products also went down from 23.736 million tons to 21.103 million tons.
Exports of Lauric products went down by 4.5 percent to 1.831 million tons while those of biodiesel dropped drastically by 97.2 percent to just 31,000 tons. The export of oleochemicals, however, went up by 20.3 percent to reach 3.871 million tons in 2020.
Supriyono stressed that an important point in 2020 was that palm oil was a major contributor to the surplus in the country’s trade balance, contributing $22.9 billion in revenues.
“The point is that palm oil is important and dominant in contributing to the Indonesian trade balance,” he said.
Supriyono said that the contribution of the palm oil sector had allowed the country/s trade balance in 2020 to post a $21.7 billion surplus.