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FFB Price Reaches IDR 2,100/kg, Government Enthusiasm to Boost Palm Oil Products

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JAKARTA – The agricultural sector continued a positive growth trend in the second quarter of 2021, which was 0.38% year on year (YOY). The agricultural sector, which contains palm oil commodities, also contributed to the national economic recovery.

Export performance in Q2-2021 also recorded a high growth of 31.78% (yoy). With this performance, palm oil contributes 13% to Indonesia’s non-oil and gas exports. International Crude Palm Oil (CPO) prices continued to increase, reaching US$ 1,100 per MT, this increase had an impact on improving farmers’ purchasing power/farmers’ exchange rate (NTP) >103.4 and in line with the increase in FFB prices ranging from 1,800-2,100 per kilogram . Therefore, Coordinating Minister for Economic Affairs Airlangga Hartarto said with a control of 58% of the world’s palm oil market share, Indonesia should have become a price leader, not a price taker. In one of the webinar events discussing palm oil, Airlangga said the national palm oil industry has contributed to alleviating poverty and creating jobs for more than 16 million workers. “In other words, the palm oil industry is a strategic sector for the community’s economy that needs to be controlled not only by the government, but by all components of society,” said Airlangga in a written statement, Wednesday (18/8/2021). The current government continues to develop policies that encourage domestic demand for palm products, including through the development of biodiesel (B30) as an alternative fuel to reduce dependence on fossil-based fuels. The B30 program has contributed to efforts to reduce Greenhouse Gas (GHG) emissions for around 23.3 million tons of carbon dioxide (CO2) in 2020. The government supports the B30 program in 2021 which aims to maintain CPO price stabilization.

With a distribution allocation target of 9.2 million KL, the government’s commitment is to save US$ 8 billion in foreign exchange due to reduced diesel imports. In addition, in 2021, the government will also continue to replant 180 thousand hectares of oil palm plantations owned by farmers. This effort is carried out with the aim of increasing the productivity of smallholder oil palm plantations with old plants whose productivity is less than 3-4 tons/ha. Replanting is carried out with the use of superior seeds and the application of Good Agricultural Practices (GAP), resulting in an increase in the productivity of oil palm plantations which in turn can increase their income optimally. The government is also working to increase the acceptance of Indonesian palm oil with the Indonesian Sustainable Palm Oil (ISPO) Certification. With ISPO confirming Indonesia’s commitment to reducing deforestation and greenhouse gas emissions from the palm oil sector. Regarding discrimination against Indonesian palm oil, the government and stakeholders of Indonesian palm oil have made various efforts by carrying out diplomatic, advocacy and positive campaigns or counters against various negative campaigns that have no basis at all aimed at Indonesian palm oil. The government continues to develop a common perception and shared narrative regarding Indonesian palm oil based on scientific evidence. “However, these various efforts will have a stronger impact if they are supported by news or publications by the media,” Airlangga added.*

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