Indonesia’s Palm Oil Industry is Facing International Trade Competition and the Phenomenon of Post-truth

Palm oil, widely known as the “green gold,” has become a favorite and multidimensional product offering numerous benefits.

For the general public, it’s just palm oil – they are indifferent and unaware that there are actually various palm species. At least, there are two palm species.

Read Kuritzin, Chairman of the Russian Chambers of Commerce and the book “Sawit untuk Negeri”

Elaeis guineensis is predominantly cultivated in Indonesia due to its high oil content, while Elaeis oleifera has the advantage of being a shorter plant, facilitating fruit harvesting. Currently, these two species are extensively crossbred to obtain desired advantages.

The “green gold”

Palm oil, often referred to as “palm kernel,” is a versatile and multipurpose commodity that is familiar to us and is a crucial product for Indonesia, the world, and the environment.

The primary product of palm oil is crude palm oil (CPO). In reality, there is a diverse range of derivative products from this commodity. Many palm oil-derived products are part of our daily lives, from morning to night – including soap, toothpaste, cosmetics, cooking oil, ice cream, moisturizing cream, and even biodiesel for vehicles, all produced from fresh fruit bunches (tandan buah segar – TBS) of palm plants.

Palm is a long-lived plant that thrives in remote or marginal areas, absorbing CO2 throughout its 35-year lifespan.

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Biological Palm Family In the biological family, or taxonomy, there are two species/types of palm: Elaeis guineensis and Elaeis oleifera. It’s worth noting that the majority of palm in Indonesia belongs to the oleifera type.

From the two species mentioned above – each has different characteristics and advantages. Guineensis is more extensively cultivated in Indonesia due to its high oil content.

On the other hand, Oleifera has the advantage of being a shorter plant, making fruit harvesting easier. Currently, these two species have been extensively crossbred to obtain desired advantages.

Kalimantan and Sumetera: Palms grow best

Growing Conditions Palms thrive in warm temperatures, sunlight, and an annual rainfall of over 2000 mm, with high humidity between 80% – 90%. The optimum temperature is between 24oC – 28oC with approximately 6 hours of sunlight per day, evenly throughout the year.

The ideal humidity is 80-90%, fitting the conditions of most Indonesian islands. Indonesia’s equatorial position, archipelagic form, and maintained humidity make it an ideal place for palm growth and cultivation.

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Regions crossing the equator with a tropical climate are suitable for palm growth. Palms grow best in tropical areas between 12o North and 12o South, from coastal regions up to an altitude of 400 m above sea level.

Planting palms on land with a slope <12o or 21% is preferable for easy harvesting. Air humidity is crucial for Indonesia, being an archipelagic nation.

Tropical regions with lower humidity, like in Brazil, are less suitable for palm growth. Although Brazil is on the equator, its continental shape doesn’t provide the required air humidity for palm growth.

Despite originating from a West African island, palm is an exotic plant for Indonesia. However, Indonesia’s geographic conditions align perfectly with palm growth requirements, enabling it to thrive and bear fruit abundantly throughout the year.

Palm requires optimal soil acidity between 5.0 – 5.5, with groundwater below 50 cm. Rich soil nutrients guarantee high production, but these nutrients can be substituted with fertilizers. Considering these growing conditions, Indonesia’s archipelagic nature is highly suitable for optimal palm growth.

Therefore, it’s no wonder that Indonesia currently holds the highest levels of palm oil production and cultivated area in the world. Indonesia surpassed Malaysia in terms of area in 2005 and in terms of production in 2008 (Gunarso, et al., 2013).

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The fertility of Indonesian soil, its soil acidity, and sufficient nutrients contribute to the rapid growth of palm in Indonesia. Moreover, modern palm cultivation has addressed soil nutrient deficiencies through the use of required fertilizers.

Facing challenges on two fronts

Indonesia’s palm oil industry is facing challenges on two fronts: international trade competition and the phenomenon of post-truth.

  1. International Trade Competition
    The palm oil industry in Indonesia, being a major player in the global market, encounters fierce competition in international trade. Various countries are vying for market share, and issues related to trade policies, tariffs, and sustainability standards pose significant challenges. The industry must navigate complex trade dynamics, including negotiations and agreements, to secure and expand its position in the global market. Additionally, concerns about environmental and social sustainability have led to increased scrutiny, affecting the industry’s international image.
  2. Post-Truth Phenomenon
    The term “post-truth” refers to a situation where emotional or personal beliefs have more influence on public opinion than objective facts. In the context of the palm oil industry, misinformation and subjective narratives can shape public perception, potentially impacting international trade relations. False or misleading information about the environmental and social impact of palm oil cultivation may influence consumer choices, trade policies, and market access. Addressing post-truth challenges requires the industry to engage in transparent communication, providing accurate information about sustainable practices and the positive contributions of the palm oil sector to the economy.

To overcome

To overcome these challenges, the Indonesian palm oil industry can consider the following strategies:

  • Sustainable Practices: Emphasize and implement sustainable cultivation practices, adhering to internationally recognized standards. This includes efforts to reduce deforestation, promote biodiversity, and ensure fair labor practices.
  • Transparency and Communication: Foster transparent communication within the industry and with stakeholders. Proactively share accurate information about the positive contributions of the palm oil sector to economic development, job creation, and poverty alleviation.
  • Collaboration and Certification: Collaborate with international organizations, NGOs, and certification bodies to demonstrate commitment to sustainable practices. Obtaining certifications such as RSPO (Roundtable on Sustainable Palm Oil) can enhance the industry’s credibility.
  • Advocacy and Diplomacy: Engage in diplomatic efforts to address trade-related challenges, negotiate favorable agreements, and advocate for fair treatment in international markets. Strengthening relationships with trading partners and participating in global forums can be beneficial.
  • Investment in Research and Innovation: Invest in research and development to find innovative solutions that enhance productivity while minimizing environmental impact. This can include advancements in agricultural practices, technology, and alternative uses for palm oil by-products.

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By addressing these challenges strategically, the Indonesian palm oil industry can navigate the complexities of international trade and counteract the impact of post-truth narratives, fostering a positive global image and sustainable growth.
(Benteng Daud)

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