Obstacles and Barriers of Business Oil Palm Industry

Oil Palm Industry does not escape from the various challenges. Among these are the fluctuations in prices of CPO, which is still low productivity, the ability to develop downstream industries, social conflict and environmental issues.
Lately, the demand for oil industry development is vigorous environmental friendly voiced by NGOs. For example Principle & Criteria for Sustainable currently being disseminated by the Roundtable on Sustainable on Palm Oil (RSPO).

At company level, another challenge to be faced was the threat of business failure of the oil palm agribusiness that will harm capital owners who have invested their capital in large numbers. Some factors that could cause failures include the use of fake seeds, application of technical culture is not appropriate (such as planting, maintenance, fertilizer application, crop management), errors in interpretation of land suitability classes and more.

Social factors are a problem in the oil palm agribusiness enterprise is disharmony relationship between estates, local communities and relevant agencies. This situation can create problems such as the product of looting, land occupation, the problem of land availability and licensing.
The high price of CPO 2007-2008 are expected to be difficult to get back to the CPO price trends 2009-2010. CPO prices have abnormalities in 2008 was the high liquidity of the securities outstanding during the year, so that all products, including prices of crude palm oil become a means of speculation, so that price does not reflect the real state price, which is based on supply and demand. In 2007 and 2008 the price of CPO rose 68% -100% of the average CPO price in the year 2003-2006 in Rp.3500/kg level. Meanwhile, core prices also increased by 48% to 82% when the average price for the core Rp.2065/kg years 2003-2006. Based on the projection of world crude palm oil industry in 2009 will still be an increase in the volume of demand by 6% for the whole world. So our projected price of CPO and the nucleus for 2009 will be in Rp.4800-Rp.5000/kg level.

In September 2007 the Government changed the pattern of implementation of the export tax (ET) on petroleum products as well as all derivative products such as crude palm olein, crude stearin, olein kernel oil, RBD Kernel palm olein ET progressive. With the new rules of this ET, the exporter must pay the export tax is more costly to the office of Customs and Excise, if the price of oil and petroleum products in international markets at the top. Conversely, if prices in international markets are down, then ET to pay for exporters as well. This policy is to ensure the supply of CPO (crude palm oil) in the domestic market to avoid shortages.

However, on 15 June 2009, the government raised the tax rate on CPO exports from 1.5% to 6.5%. This policy is carried out, apparently to ensure the delivery of this product in the country. I understand that, as the price of CPO in the world market soared, the industry and traders were more happy playing in the export market.