POINTERS: Palm Oil Industry in 2018 and Its Prospect in 2019

By: Dr. Fadhil Hasan

Mohamad Fadhil Hasan is the Director of Corporate Affairs Asian Agri Group, and Board Member of the Indonesian Palm Oil Association. In addition, he is also member of the Committee for National Economy and Industry of Republic of Indonesia and Chairman of Indonesian Bank Central’s Supervisory Board (BSBI). Fadhil Hasan has more than thirty years experiences in conducting economic policy research and consultancy in macroeconomics, industries, and agricultural, both in government and private sectors.

He graduated from Bogor Agricultural University, earned an MSc from Department of Economics, Iowa State University, USA and finished his Ph.D program at the University of Kentucky, USA majoring in Agricultural Economics.

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The presentation discusses palm oil industry in 2018 and its prospect in 2019 from perspective Indonesian palm oil industry. Price of CPO hit the lowest level in 2018 due the following factors; a. Production is higher than expected, while demand is weak, thus stock is abundant; b. Crude oil prices declining; c. Protective policy by importing countries; d. An increase in soybean production and a decline in its price; e. US-China trade war. However, price recovery is in the sight in 2019. How fast and to what extend this price recovery will take place is subject to several variable in and outside the industry such as, better implementation of B-20 program in Indonesia; lower stocks, elimination of Indonesia’s export levy, reduction of import tariff in India, trade war between US-China, and crude oil prices.

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Questions & Answers (7) :

MOHD RAFIZAN BIN SAMIAN

5 years ago

Is there any initiative from the government of Indonesia to stop oil palm plantation on peat soil?

Fadhil Hasan:
Actually, since 2011 the government implement moratorium of conversion of primary forest and peatland for economic activity including oil palm plantation. So, no new permit issued for oil palm plantation in peatland. The moratorium has been extended up to now.
5 years ago

MOHD RAFIZAN BIN SAMIAN

5 years ago

Is there any law in Indonesia to curb open burning of forest for palm oil plantation?

POINTERS SECRETARIAT:
Posted on behalf of the speaker : Yes since 1997 there is government regulation to ban burning practices and this regulation is strengthened in 2009 by Environmental Act which ban strictly this practices and subject to the criminal act.
5 years ago

HCLeow

5 years ago

Pak Fadhil, in one of your answer on total of 6-7m tonnes of CPO to be used for B20 (PSO & non-PSO) is this include B20 by PLN? PLN mentioned that PLN is converting four power plants to use fuel made wholly from crude palm oil, have you taken into consideration of this? if not what would be the full potential CPO volume for B20 blending? Thank you.

POINTERS SECRETARIAT:
Posted on behalf of the speaker : Yes that already include the volume will be used for B20 in 2019. In addition, Indonesia PLN will convert three diesel powered plants in East Kalimantan and South Sulawesi with combined 112 megawatt capacity and a gas machine power plant in Papua with 10 megawatt capacity.
5 years ago

Anthony Yap

5 years ago

As Indonesia is significant member in Council of Palm Oil Producing Countries (CPOPC). a) what are the steps to counter European Union’s (EU) latest push to exclude palm oil biofuels from its renewable energy? b) Any recommendation to improve cooperation among member in CPOPC?

Fadhil Hasan:
Basically we will bring this case to WTO, government already make responses to the Delegated Act of RED II. We also in coordination with other members of CPOPC to determine the next step in responses to the RED II. CPOPC will have meeting in Jakarta on 27-28 February to discuss among others the RED II and what should the CPOPC responses.
5 years ago

Roby Fauzan

5 years ago

Can you please inform us the age profile distribution estimate of Indonesia oil palm trees? How many % at the age of 0-3, 4 - 8, 9 - 12, 12 - 20, 20 - 25 and above 25 years after planting? What is the average age?

Fadhil Hasan:
I have not had the data on distribution of trees in such detail range, but once I have I will post in this webinar.
5 years ago

POINTERS SECRETARIAT

5 years ago

TQ for your presentation. Your paper emphasize that extending the B20 biodiesel mandate to non-PSO members is an important factor that influence 2019 CPO price. Can you provide estimate on the additional volume of CPO that will be used with this policy initiative.

Fadhil Hasan:
Additional of 3-3.5 million tonnes of CPO will be used for implementing B20 in Indonesia, thus total of 6-7 million tonnes of CPO for both PSO and non-PSO
5 years ago

YAP YAU KOONG

5 years ago

What are the other steps taken by Indonesia to counter the price depression for 2019 foreseeing the production is going to increase by another 4%, besides the current initiatives?

Fadhil Hasan:
Production will increase at slower rate after hit high record in 2018, thus we expect that price will show uptrend provided that program B-20 in Indonesia and Malaysia run well and any other variables also support this price uptrend. We also make another efforts to penetrate in new markets and encourage other countries to implement mandatory biofuel program.
5 years ago