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POINTERS 2014 MPOC
Palm Oil Internet Seminar
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Section 1: CPO Price Trend:
Indonesia Palm Oil Industry: Current State and Outlook 2018
By: Mr. Mohamad Fadhil Hasan

Mohamad Fadhil Hasan is Corporate Affairs Director of the 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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This paper discusses current state and outlook of Indonesian palm oil industry in 2018. Growth of palm oil production in Indonesia shows the declining trend in the next ten years compared with the historical trend of the past ten years. In the meantime demand for palm oil is predicted to expand at slower rate than that in the past five years due to factors of China economic growth moderation, and more intense negative campaign. However, demand for palm oil is projected to be higher in its supply suggesting the palm oil price uptrends within the 2017-2027 time frame.

Current policy on biodiesel blending in Indonesia and its prospect in China, along with recovery of export in importing countries will affect the demand, while policy on moratorium and restrictions on palm oil expansions will determine the supply side. These factors, together with other variables will determine performance and price of Indonesian crude palm oil in 2018.


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Questions & Answers (8) :
Sam Yen
10 months ago
Do you have a regional breakdown of palm oil production and domestic consumption by regions ie. Sumatra, Java, Kalimantan, Lesser Sunda, Sulawesi, Maluku, Papua?
Fadhil Hasan:
We have data breakdown on regional basis on production, but no consumption (except data on cooking oil consumption). You can have that through Directorate General of Estate Crips, Minsitry of Agriculture.
10 months ago
gus Lim
10 months ago
What is the local consumption of palm oil in Indonesia per month. In Malaysia we take 250,000 metric tons as an estimate. Indonesia with a population of 220 - 230 million people, do you think local consumption is over 800,000 metric ton per month.
Fadhil Hasan:
Local consumption per month in Indonesia in 2017 vary from 821,000 tonnes (lowest) to 978, 000 tonnes (hihest). But average is 922,000 tonnes and the total consumption per year is 11,064 million tonnes.
10 months ago
gus Lim
10 months ago
What you do think Indonesian exports will be for the year 2018. Can we see expect to see exports of 35 million for palm and laurics combined.
Fadhil Hasan:
Combined (palm and lauric oils) export in 2018 is ex[ected to be higher compared with 2017 asssuming that price of CPO is reatively same. With that, we we expect expor to reach around 34-35 million tonnes. In 2017 export reached 32 million tonnes.
10 months ago
Fadhil Hasan
10 months ago
We estimate that production of CPO in 2018 will reach 38.5 million tonnes, production of 40 million tonnes will be raexched in 2018 which is one year earlier than we targeted. The raeson for this is that we are now in three years cycles of production after experiencing El Nino in 2015 we have la Nina 2016 and 2017, so that we expect production to continuously increase in 2017 and 2018 considerably. However, Indonesia also launch replanting program starting in 2017, and in 2018 the target is to replant around 185 thousand hecatres. This will affect production in 2018 and in the following years.
gus Lim
10 months ago
Will production of crude palm oil in Indonesia go up to 40 million metric tons in 2018. Please advise
Fadhil Hasan:
We estimate that production of CPO in 2018 will reach 38.5 million tonnes, production of 40 million tonnes will be raexched in 2018 which is one year earlier than we targeted. The raeson for this is that we are now in three years cycles of production after experiencing El Nino in 2015 we have la Nina 2016 and 2017, so that we expect production to continuously increase in 2017 and 2018 considerably. However, Indonesia also launch replanting program starting in 2017, and in 2018 the target is to replant around 185 thousand hecatres. This will affect production in 2018 and in the following years.
10 months ago
gus Lim
10 months ago
Will the moratorium on palm oil concession announced by the Indonesian President in May 2017, have major impact on curbing Indonesia production in 2018?
Fadhil Hasan:
The moratorium started in 2011 and extended up to now. In fact, now government will issue another decree on moratorium for 3 years up to 2021. So far, we saw that moratorium has impacts on the new area expansion especially for the firms. We do not exactly know the precise number, but we can proxy the impact by looking at the number of seed sales that has been declining in the recent years from around 172 millions seed in 2017 to only 76 millions in 2017. The declining of new area expansions that reflected in number of seed sold is dues among others by moratorium.
10 months ago
Guo Gengcun
10 months ago
Dear Mr. Mohd Fadhil, can you share more on the consumption of palm oil within Indonesia for 2017 as well as your forecast on the domestic demand for palm in 2018. Thank you.
Fadhil Hasan:
Domestic consumption in 2017 amounted to 11 million tonnes consist of biodiesel, cooking oil, oleochemical and others. While we expect that in 2018 will increase to around 12.5 milion tonnes if provided that mandatory biodiesel for non-Public Service Obligation (PSO) be implemented. Otherwise, the increase in domestic consumption will only increase slightly.
10 months ago
Sathia Varqa
10 months ago
Dear Mr. Mohd Fadhil Hasan, Thank you for your presentation. What specific measures have the Council of Palm Oil Producing Countries taken on price, tax harmonization and sustainability? Thank you, SV
Fadhil Hasan:
So far CPOPC is working in harmonization of sustainability standard between Indonesia (ISPO) and Malaysia (MSPO). This in turns is expected to provide modality for establishing international sustainability scheme for palm oil. What I understand CPOPC is successful in harmonizing principles of ISPO and MSPO, and is still working on the detail related to criteria and indicators. As for, price and tax harmonization, CPOPC does not touch that issues specifically. However, CPOPC has division policy and strategy with the objective of stabilizing prices through other measures.
10 months ago
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