Several downstream palm oil industry associations have outlined key parameters for the successful downstreaming of the national palm oil industry. Currently, the export portion of crude palm oil (CPO) is significantly lower than processed CPO products. The Chairman of the Indonesian Palm Oil Association (Gapki), Eddy Martono, disclosed data on CPO and downstream palm oil product exports for 2024. According to data from the Central Statistics Agency (BPS) and the Palm Oil Plantation Fund Management Agency (BPDPKS), CPO exports reached 2.17 million tons, a decrease of 26.48% compared to January's 2.81 million tons. Meanwhile, processed palm kernel oil (PKO) exports rose from 106,000 tons in January to 129,000 tons in February 2024. Eddy emphasized that for the export portion of processed palm oil to reach 100%, the Indonesian government needs to clarify and open pathways for export markets. Eddy stated to Kontan recently. He added that investors would be more inclined to enter and expand if the downstream product market is clearly mapped out. Smooth downstreaming positively impacts domestic employment absorption.
Meanwhile, the Executive Director of GIMNI, Sahat Sinaga, mentioned that the success of palm oil downstreaming depends on what is more profitable for exporters. He noted that several Indonesian industries abroad are based on CPO raw materials and will import CPO if prices are low. “If palm oil exporters find it more profitable to sell derivative products, with lower export duties and levies, they will export these products rather than CPO,” Sahat told Kontan. He further explained that the timing of when 100% of palm oil exports will be in derivative form depends on what offers more profit to exporters. “Whichever is more profitable and better, that is what will happen,” he clarified. He highlighted that the volume of downstream products is approximately 8.6 times higher than crude oil volume, and the price averages 1.5 times higher than CPO prices. “Therefore, the government’s downstreaming program for palm oil is running smoothly and successfully,” he concluded.
