Tuesday, March 25, 2008
The government of Indonesia’s development of palm oil production through land concessions to large companies, government plantations, and small holder programs has been clearly successful in securing edible oil and generating foreign exchange. The subsequent rise in palm oil production has also resulted in the loss of tropical rain forests and generated major concerns about the effect of palm oil production on habitat loss for many endangered species and the reduction of biodiversity. Most recently, the Indonesian government, working with some palm oil producing companies is negotiating sustainability standards with Europe and the United States under the auspices of Roundtable on Sustainable Palm Oil (RSPO). RSPO is an international organization of producers, distributors, conservationists and other stakeholders. During plantation visits on Sumatra and Borneo, Cargill and Musim Mas; the agricultural assessment team was shown many of the sustainable practices and positive reinvestments made back into the work force and the surrounding community. The team was shown projects such as schools, nurseries, clinics, and produce markets. The demand for palm oil will likely remain strong and research and development work is being done in both top producing countries of Indonesia and Malaysia. Yields will steadily increase as the newly planted areas enter into their twenty year plus productive lifecycle. In addition, replanting will continue to adopt better suited varieties developed from hybrid research and cloning. The availability of land in Indonesia, coupled with recent years of high seed sales, record energy prices, and high vegetable oil prices are factors that will result in Indonesia continuing to lead the world in palm oil production for years to come.
A plantation’s long term success depends in part on well timed replanting operations. This requires a steady supply of high quality seed, seedlings, and young palms from breeders and nursery operations who specialize in this part of the industry. The availability of quality hybrid seeds is essential for establishing plantations and replanting. Only the highest quality seeds are selected for use. Seeds are hand inspected for quality characteristics prior to being released for sale or use. A germinated seed is cultured in the pre-nursery for 3 months, then moved to a nursery to develop for an additional 9 to 10 months. After this initial phase from germination to plant establishment of one year, the plants are culled for the best characteristics and then planted in the field. After 30 to 36 months in the field the young palms begin to produce the first harvestable fruit bunches. The first bunches are small and weigh only 2 to 3 kg and the individual fruitlets comprising the bunch are small in size. Peak harvest (or palm productivity) occurs from years 8 to 15. The economically viable life span of an oil palm is typically 22 to 25 years depending upon oil price, economically harvestable height, and yield. Oil palms can exceed 70 to 100 feet in height, however they are typically removed from production when they reach 25 feet, which coincides with an average age of 25 years. The 25 feet height is an industry limit which is based loosely on the height of the average harvester plus the length of the long sickle harvesting pole.
FAS Field Visits
Major oil producing provinces visited by FAS include: North Sumatra, Riau, and South Sumatra (Sumatera Selatan) on the island of Sumatra. On the island of Borneo, field visits were conducted on the province of West Kalimantan (Kalimantan Tengah). Palm oil producing areas have slowly expanded since the early 20th century when the palm was first introduced. The island of Sumatra has long been the largest producer. The oldest large-scale plantations were first established in 1911 on Aceh and North Sumatra province. Since those early days, palm plantation development spread south and to the other areas of Indonesia. The highest producing provinces on Sumatra, are North Sumatra, Riau, and South Sumatra. Even though the bulk of Indonesia’s production remains on Sumatra, 70 to 80 percent according to some sources, rapid expansion is occurring on the island of Borneo; the second largest producing area in Indonesia. In recent years, there has been a growing expansion of palm oil plantations on the island of Borneo—particularly in Central and West Kalimantan. Important, but secondary areas of expansion are Sulawesi and Western New Guinea (or West Papua). Even with the expansion areas, Sumatra will continue to be the leading production center for the foreseeable future.
The following image is a satellite scene and FAS field travel routes (in yellow) that covered major palm oil producing provinces on the islands of Sumatra and Borneo.Area Expansion
Over the next few years, the pace of Indonesian palm oil production is expected to dominate other producing countries and rise steadily, assuming continued high prices and favorable weather. This continued increase in production is a result of area expansion. It is the availability of land on Borneo and other previously non-developed areas that has allowed Indonesia to become the top producer. The current (December) USDA production forecast of 2007/08 Indonesia Palm Oil is 18.3 million tons. This a 10 percent increase from last year's estimated production of 16.6 million tons. Production of palm oil has continued to climb steadily since 1998. New regions on the islands of Sumatra, Borneo, Sulawesi and West Papua have been opened up in recent years and have added significant area that only now is coming on-stream in terms of production. In addition to new areas of land developed, another reason for the growing production numbers is that the surge in planting activity during the past ten years is now beginning to be realized. There is several years lag time when palms are initially planted on the plantation until the first production of fruit bunches. Data on actual area planted to oil palm is not easily obtained. Where government data does exist, many in theindustry believe that the government data is not as complete as it might be, often having production estimates lower than those of the industry. One proxy source of area data is oil palm seed sales. Data presented at the International Palm Oil Congress 2007 on seed sales reveals a rapid increase in demand, so much that seed producers have had difficultly keeping up with demand.
Nearly 100 percent of oil palms growing today in Indonesia are the DxP or Tenera hybrid. The Tenera, is a hybrid cross of the Dura and Pisifera oil palm varieties. The Dura line is the mother line, while pollen is used from the Pisifera. Until recently planting material wase only available in the form of germinated hybrid seeds. In the last few years some plantation research and development laboratories have successfully cloned parent lines to produce hybrid seed of high yielding Tenera from young leaf tissue cultures. Large scale production of this clone is of intense interest to the industry. Early studies of clonal yields show yield increases of about 10 to 30 percent above the standard DxP hybrid. These clones are not typically sold. They are almost always used internally by various developing plantations for area expansion and replanting purposes. The main suppliers of germinated oil palm seeds in Indonesia fall in three groups: the large and well established plantations of London Sumatra, Socfindo, the government agency of Marihat, and a group of new producers. The recent increase in demand has brought new seed producers into the market place such as the plantation group of Binasawit Makmur.
Oil palm is the most productive vegetable oil crop, yielding more oil per hectare than any other major oilseed commodity. For example, the oil yield on a per unit area basis from properly maintained oil palms is significant greater than oil yields from commercially grown rapeseed and soy. In terms of energy balance it takes less sunlight to produce a unit of oil. However, on the basis of oil yield per man-day it is not as competitive because of the labor intensive plantation management and harvesting of the fruit. This is less an issue in areas of Indonesia where labor is more readily available. Given the current situation, these characteristics appear to favor oil palm as a renewable energy source for the near future, until cellulosic technologies advance to an operation level.