PALM INDUSTRY

PALM INDUSTRY

The Screams of Palm Farmers, Operations Rise Selling Prices Down

Giras Pasopati , CNN Indonesia | Thursday, 27/11/2014 12:17 WIB

Bandung, CNN Indonesia - The price of fresh fruit bunches (TBS) of oil palm aged 10 years in Riau again dropped to Rp 1,681 per kilogram, after it broke the price of Rp 1,708 per kilogram after subsidized fuel price hike (BBM). The Association of Oil Palm Smallholders (Aspekpir) stated that the price correction is more due to increased operational costs. 

"Before the fuel price of fresh fruit bunches rose to Rp 1,500 per kilogram, then to Rp 1,780 last week, this week fell to Rp 1,681 and next week could fall again," said Chairman Aspekpir Setiyono Riau on the sidelines of the International Palm Conference (IPOC) 2015 in Bandung, Thursday (27/11).

According to Setiyono, the government's policy to raise the price of subsidized fuel causes the transportation cost of palm oil industry in Riau to increase about 15 percent from before. Not only that, the operational costs to buy fertilizers and harvest palm also boosted. "The current operational cost is around Rp 600 to Rp 800 per kilogram, so we have to operate this operation because it is the lowest price," he said.

Setiyono detailing during this composition of transportation costs to the selling price of palm oil amounted to Rp 100 per kilogram. Meanwhile, the cost of harvesting palm oil per kilogram is Rp 100. "As for the fertilizer cost of Rp 400 - Rp 600 per kilogram, it can still rise again now," he said. 

Despite increasing operational costs, Setiyono said the palm oil industry has not dared to raise the price of palm oil FFB because of the demand side there has been no increase. 

"We'll see first.As before the year 2000, the time of the new year and Idul Fit TBS price must rise, now sometimes even down because there was still a little palm land," he said.

Setiyono said the sustainability of the oil palm business is diminishing with the increasingly large palm oil companies dominance. Currently, he said, the area of oil palm plantations in Riau reaches 2.4 million hectares, of which about 1 million hectares is controlled by private companies. "This farmer will be the company's shield against NGOs should be more prosperous," he said.