Palm Oil Industries
Palm oil industries are the industries that operate or produce kinds of product, such as palm oil, its derivative products, such as, margarine, soap, cosmetics, and biomass. Palm oil could grow well in tropical areas, such as, in Malaysia and Indonesia, and some others. Indonesia is the biggest palm oil producer in the world within about 40 – 50% of the total production in the world.
Its production starts from FFB harvest in the plantations. FFB would be transported to mills and has some phases, such as, the separation of FFB and bunch, separation of kernel from its mesocarp, process kernel to be crude palm oil, filter CPO, and purifying kernel oil to be palm oil – ready to be sold.
According to the data from Ministry of Industry in 2020, there were 3.636 business units that had something to do with palm oil industries in Indonesia, including the mills, refinery, and downstream products, such as, oleochemical, biodiesel, and others.
As the biggest palm oil producer in the world that reached 43,5 million tons in 2020, palm oil industries in Indonesia significantly contributed to the revenue and economy by hiring 6,5 million workers in every palm oil supply chain.
Data from Ministry of Agriculture revealed that in 2021 palm oil plantations in Indonesia laid about 16,32 million hectares.
Of the numbers, about 12,42 million hectares were official and acknowledged by the government.
About 3,9 million hectares were illegally developed or without permit. The Government of Indonesia keeps trying to solve illegal palm oil plantations, escalating supervision and implementing sustainable and environmental cultivation.
Economy Impact
For having massive advantages in daily life, palm oil is potentially increasing the economy in the nation.
It is one major export commodity from Indonesia that delivers economic advantages for the country and the people. Here are some advantages from palm oil: it highly contributes to revenue. Palm oil exports delivered big revenue for the country. Indonesia also supplied 60% of the total supply in the world. In 2020 according to Central Bureau of Statistic, palm oil exports reached US$ 20,47 billion. The numbers decreased about 13,6% compared to 2019 that reached US$ 23,68 billion. Though they decreased, palm oil is the main export commodity from Indonesia that significantly decreased to the economy nationally.
It also escalates the smallholders’ income. Palm oil is the living source for 3,5 million smallholders. Its cultivation delivers stable and high income for the smallholders and escalate their economy. It also develops economy in many villages.
Not only that palm oil is proved to be one sector that hires many workers. Palm oil industries provide employment to about 6 million men in Indonesia. Besides the smallholders, palm oil industries need workers (labors) in processing, transportation, and marketing.
It develops infrastructures. Palm oil industries need good infrastructures, such as, way, and airport to transport and distribute palm oil products. Developing infrastructures could open the chance to develop other economic sectors.
It contributes to escalate renewable energy production. Vegetable fuel or biofuel from palm oil can be taken for advantages as the source of renewable energy. This could help decrease the dependence on fossil energy, and contribute to escalate renewable energy production.
But it needs to underline that palm oil industries have many negative impacts for health and environment. It needs the right on – target regulation to minimize the negativity but maximize economic advantages. Palm oil industries are significant to develop Indonesia’s economy. (*)
By: Muhammad Robby Habib Fahrin / Student of Universitas Nahdlatul Ulama, Sidoarjo
