Indonesian Palm Oil Research Articles

Assessment of CO2 flux from peat soil under simulated groundwater level and monthly rainfall for sustainable water management in a tropical oil palm plantation

Sustainable production of oil palm plantation in tropical peat land is determined by ground water level and rainfall as the important factors controlling the carbon balance. It is not easy to set up a stable groundwater level (GWL) in the field and even more impossible for the monthly rainfall (MRF) to get CO2 flux data as the basis for determining technical aspects of water management. This research was aimed to obtain basic CO2 flux data under simulated stable GWL and MRF from tropical peat materials of an Indonesian oil palm plantation. The experiment was conducted by applying CRD with those 2 factors as the treatments for 3 months period of greenhouse experimentation. There was no significant interaction effect of the GWL and MRF treatments. The single effect of GWL treatment at −40 cm produced the significant lowest monthly CO2 flux with an average of 18.26 t.ha−1.year−1 after 3 months experimentation, while that of MRF at 300 mm.month−1 resulted in the significant lowest CO2 flux of 24 t.ha−1.year−1 after 2 months experimentation. It can be recommended that the GWL should be set up in the field at around –40 cm to get the best control on CO2 flux.

Cradle to Gate Life Cycle Assessment of Palm Oil Industry

Crude palm oil production Indonesia especially in Aceh every year continues to increase because the consumption of its derivative products such as cosmetics, food and fuel increases. The increasing demand for CPO has caused palm oil companies expanding their plantations. Based on data from the Ministry of Agriculture in 2018, the total area of Indonesian palm oil reaches 14.3 million hectares. The focus of this paper aims to evaluate the cradle to gate impact produced at land preparation, the nursery stage and the process of producing palm oil. Life cycle assessment is used to evaluate the impact of product for its entire life cycle. This research was conducted with simulation using SimaPro 9.0 software and impact 2002+ method. The results of the data processing with the simulation showed that fertilization stage was the stage with the largest impact with persentage 83% of the category, namely human health, ecosystem quality, climate change and resources 0.0000567 DALY, 9.44 PDF.m2.year, 148 kg CO2 eq and 1650 main MJ, respectively. Meanwhile, the processing of palm oil into CPO the largest environmental impact was in the category of non-renewable energy and global warming of 90 MJ and 9.6 kg CO2 eq.

The Influence of the External and Internal Business Environment on the Marketing Strategy and Their Impact on the Marketing Performance

One of the challenges faced by palm oil companies in Indonesia is how they can maintain and increase sales of palm oil at a price and acceptable manner. For this reason, one of the efforts the companies must take is to adopt an effective marketing strategy that is in line with the company’s business objectives. Marketing strategy has a strategic role, however, research on the factors influencing marketing strategy adoption and its impact on marketing performance is still relatively limited. This study aims to examine the influence of the external and the internal environment on the adoption of marketing strategy and their impact on marketing performance. This study used a survey method and a questionnaire to collect data relevant to the research objectives. The samples involved were 125 oil palm companies located in South Lampung Province of Indonesia. The findings indicate that both the external and the environment have a significant positive effect on marketing strategy and performance. The finding is in line with the notion that the business environment, marketing strategy, and marketing performance are positively correlated. The findings also indicate that product, price, promotion and distribution-based marketing strategies have a positive effect on the marketing performance. The findings imply the importance for companies in aligning their adopted marketing strategy with the external and internal environmental aspects in an effort to reach their goals effectively. Keywords: business environment, marketing strategy, marketing performance, Indonesian palm oil companies DOI: 10.7176/EJBM/13-7-06 Publication date: April 30 th 2021

Environmental impact of ASEAN-China free trade agreement: A case of Indonesia palm oil industry 2005-2010

This research focused on the impact of the ASEAN-China Free Trade Agreement (ACFTA) on the environment of the Indonesian palm oil industry. The theory used in this research was trade liberalization impact with scale effect, composition effect, and technique effect as the variable to seek the environmental impact of trade liberalization. The method of this research used a qualitative approach and explanatory data analysis technique. This research indicates that ACFTA has a positive impact on the member states’ economy. However, on the other hand, ACFTA has a negative impact on the environment because of deforestation and increased carbon emissions. Deforestation and increased carbon emission are caused by the expansion of palm land area, which is encouraged by the escalation in demand for palm oil products in the free trade area.

Multi-stakeholder engagement in the Indonesian Sustainable Palm Oil (ISPO) framework

There has been an increasing concern in the development of sustainability in Indonesia. Indonesia’s sustainability policy through Indonesian Palm Oil Sustainability (ISPO) and recently Presidential Decree Number 44 of 2020 on Certification System for Sustainable Palm Oil Plantations prove the government’s seriousness in managing palm oil. Growing global market demand requires the expansion of oil palm plantations. Unfortunately, land expansion can cause environmental hazards, such as deforestation, loss of biodiversity, increased greenhouse gas emissions, and green land damage. On the other hand, the threat to sustainable development in the palm oil industry and pressure from stakeholders for more responsible industrial practices require sustainable production activities and minimize environmental and social impacts through sustainability principles. The government, companies, smallholders, palm oil associations, and INGO/NGO strive to build synergies in finding strategic solutions under the ISPO certification scheme. This article explores the involved actors in the palm oil industry and the relationship pattern between actors. Methodologically, the author uses a qualitative method and multi-stakeholder approach to invent how actors deal with sustainability issues in the palm oil industry and carry out sustainability commitments. The results show that Indonesia faces economic, social, and environmental imbalance. In implementing ISPO certification, Indonesia has involved all multi-stakeholder actors: state, company, IGO, and civil society.

Global sustainability agenda and institutional change

The concept of sustainability has become a global agenda penetrating from global institutions to diverse forms of domestic policy making. This dissertation focuses on how, and to what extent, the global sustainability agenda and the actors involved influence domestic policy change. The Indonesian palm oil sector, particularly the Indonesian Sustainable Palm Oil (ISPO) policy, provided the case study for the research. Three independent studies were conducted using multiple data collection strategies with both qualitative and quantitative approaches. The first study examines power relations amongst stakeholders in the Indonesian the palm oil sector supply chain. The second study investigates historical development of the institutions that lead towards a vision of sustainability for governing the Indonesian palm oil sector. The third study, uses discourse analysis to explore the main factors that trigger initiation of the new ISPO policy under the influence of transnational negotiations. The research revealed that international stakeholders have tried to exert influence on the national sustainability agenda in the Indonesian palm oil sector, using power held at the global level. However, institutional change in the Indonesian palm oil sector resulted from power contestation within the government’s national coalitions and occurred as a form of sovereignty. The findings reveal that institutional change was not mainly a response to exogenous influence from global institutions, but resulted from the interplay of endogenous factors that changed the perspectives of national actors. The state, nevertheless, is undergoing a transformation and is enhancing national institutional capacity through the publication of the ISPO policy instead of being ‘hollowed-out’ by the rise of transnational actors operating at the global level. The dissertation presents novel insights on the interaction between globalization and domestic policy making. From a theoretical perspective, new insights contribute to knowledge of the links between institutions, sustainability, globalization and the processes of domestic policy change. From the practical perspective, the research results can help the palm oil sector stakeholders understand power relations between actors; development of institutions contributing to the national sustainability vision; and components of the discourses on the ISPO and oil palm sector that need to be focused to enhance sustainability.

Polyprenol and Dolichol Content in the Seed Tissues of Elaeis guineensis Jacq. from Commercial Seeds

Polyisoprenoid alcohols are found in the cells of all living organisms. This work aims to investigate their distribution in the seed tissues of oil palms in commercial and non-commercial companies using two-dimensional thin layer chromatography (2D-TLC). The distribution of dolichols and polyprenols found in oil palm plants varies depending on the region. There is no difference in the distribution of polysoprenoids between Socfin Indonesia (Socfindo) CI Ganoderma susceptible, Socfindo Lame, and Indonesian Oil Palm Research Institute (IOPRI) BSY2C seeds tissue (4.5 mg/g dry weight). The total polyprenol and dolichol in the seed tissues of oil palms from Socfindo MTG was higher than those from other oil palms: it was 6.1 mg/g dry weight and 4.7 mg/g dry weight, respectively. The highest polyisoprenoids concentration in the seed tissues of oil palms was found in those from Socfindo Yagambi. Polyprenol; longer chain lengths were observed in the oil palms of non-commercial (C75-C100) and dolichol of commercial seeds from IOPRI 05-73 (C70-C100). The seeds from Socfindo Yagambi were clearly separated from other samples, however, the seeds from commercial and non-commercial seeds (IOPRI B SMB and oil palm PT Harapan Sawita (OPHS) respectively were observed in one group. This study indicated that there are distinct groups of polyisoprenoid carbon chains randomly derived from cluster analysis in the origin of oil palm seeds.

Spatio-Temporal Variability of Peat CH4 and N2O Fluxes and Their Contribution to Peat GHG Budgets in Indonesian Forests and Oil Palm Plantations

Land-use change in tropical peatlands substantially impacts peat emissions of methane (CH4) and nitrous oxide (N2O) in addition to emissions of carbon dioxide (CO2). However, assessments of full peat greenhouse gas (GHG) budgets are scarce and CH4 and N2O contributions remain highly uncertain. The objective of our research was to assess changes in peat GHG flux and budget associated with peat swamp forest disturbance and conversion to oil palm plantation and to evaluate drivers of variation in trace gas fluxes. Over a period of one and a half year, we monitored monthly CH4 and N2O fluxes together with environmental variables in three undrained peat swamp forests and three oil palm plantations on peat in Central Kalimantan. The forests included two primary forests and one 30-year-old secondary forest. We calculated the peat GHG budget in both ecosystems using soil respiration and litterfall rates measured concurrently with CH4 and N2O fluxes, site-specific soil respiration partitioning ratios, and literature-based values of root inputs and dissolved organic carbon export. Peat CH4 fluxes (kg CH4 ha−1 year−1) were insignificant in oil palm (0.3 ± 0.4) while emissions in forest were high (14.0 ± 2.8), and larger in wet than in dry months. N2O emissions (kg N2O ha−1 year−1) were highly variable spatially and temporally and similar across land-uses (5.0 ± 3.9 and 5.2 ± 3.7 in oil palm and forest). Temporal variation of CH4 was controlled by water table level and soil water-filled pore space in forest and oil palm, respectively. Monthly fluctuations of N2O were linked to water table level in forest. The peat GHG budget (Mg CO2 equivalent ha−1 year−1) in oil palm (31.7 ± 8.6) was nearly eight times the budget in forest (4.0 ± 4.8) owing mainly to decreased peat C inputs and increased peat C outputs. The GHG budget was also ten times higher in the secondary forest (10.2 ± 4.5) than in the primary forests (0.9 ± 3.9) on the account of a larger peat C budget and N2O emission rate. In oil palm 96% of emissions were released as CO2 whereas in forest CH4 and N2O together contributed 65% to the budget. Our study highlights the disastrous atmospheric impact associated with forest degradation and conversion to oil palm in tropical peatlands and stresses the need to investigate GHG fluxes in disturbed undrained lands.

Impact of European Renewable Energy Directive (RED) Policy On Indonesian Palm Oil Export Volume

Impact of European Renewable Energy Directive (RED) Policy On Indonesian Palm Oil Export Volume

FAKTOR PENENTU EKSPOR MINYAK KELAPA SAWIT DI INDONESIA

Indonesia is a country that is abundant in natural resources both in agriculture and plantations. One of the advantages of plantation commodities owned by Indonesia is palm oil, but palm oil has experienced a decline in world demand for several years due to several factors. This study aims to analyze the determinants of palm oil exports in Indonesia. This study uses a simple regression analysis with the help of Eviews 9 analysis tools. The data used in this study are secondary data on the volume of Indonesian palm oil exports, inflation, interest rates, trade openness, exchange rate of volatility, exchange rates of Indonesian palm oil prices, the price of Malaysian palm oil, and export duties for the period of 2005 to 2019. The results can show that the determinants of palm oil exports are the price of Malaysian state palm oil and the price of Indonesian palm oil (fitted). While the exchange rate (fitted) and export duty does not affect the volume of Indonesian palm oil exports. In addition, the variable price of Indonesian palm oil is a mediating variable, while the exchange rate variable is a moderating variable.

Estimating induced land use change emissions for sustainable aviation biofuel pathways

Sustainable aviation fuels (SAFs) are expected to play an essential role in achieving the aviation industries' goal of carbon-neutral growth. However, producing biomass-based SAFs may induce changes in global land use and the associated carbon stock. The induced land use change (ILUC) emissions, as a part of the full life-cycle emissions for SAF pathways, will affect whether and to what extent SAFs reduce emissions compared with petroleum-based jet fuels. Here, we estimate the ILUC emission intensity for seventeen SAF pathways considered by the International Civil Aviation Organization (ICAO), covering five ASTM-certified technologies, nine biomass-based feedstocks, and four geographical regions. We introduce the SAF pathways into a well-established computable general equilibrium (CGE) model, GTAP-BIO, and its coupled emission accounting model, AEZ-EF, to study economy-wide implications of SAF production and estimate ILUC emissions intensity for each pathway. The estimated SAF ILUC emission intensities, using a 25-year amortization period, range from -58.5g CO2e MJ-1 for the USA miscanthus alcohol (isobutanol)-to-jet (ATJ) pathway to 34.6g CO2e MJ-1 for the Malaysia & Indonesia palm oil Hydrotreated Esters of Fatty Acids (HEFA) pathway. Notably, the vegetable oil pathways tend to have higher ILUC emission intensities due to their linkage to palm expansion and peatland oxidation in Southeast Asia. The cellulosic pathways studied provide negative ILUC emissions, mainly driven by the high carbon sequestrations in crop biomass and soil. Using the core life-cycle emissions established by ICAO, we show that fifteen of the assessed pathways have a lower full life-cycle emission intensity than petroleum-based jet fuels (89g CO2e MJ-1), offering promising options to reduce aviation emissions.

Improvement of anionic and cationic dyes removal in aqueous solution by Indonesian agro-waste oil palm empty fruit bunches through silylation approach

In this study, oil palm empty fruit bunch (OPEFB) waste has been successfully utilized and chemically pretreated as a powerful adsorbent for removing anionic and cationic dyes in aqueous media. The extracted- and silylated-OPEFB, denoted as tOPEFB and s-OPEFB respectively, were prepared and morphologically, chemically and physically characterized using TEM, FTIR, XRD, BET, and TGA. The tOPEFB was contained α-cellulose confirmed by FTIR and XRD. This material has good adsorption toward methylene blue, having adsorption capacity (Qm) of 192.31 mg g−1, but it was weak to adsorb procion red dye (Qm = 20.70 mg g−1). Surface modification of tOPEFB not only provided a new amine functional group as indicated by FTIR analysis, but also improved the BET surface area of material up to 30.53%. As results, a high Qm of s-OPEFB was achieved toward procion red (Qm = 208.33 mg g−1) and methylene blue (Qm = 149.25 mg g−1). It confirmed that the surface engineering by silylation approach offered a positive impact on material properties, which directly improved their adsorption performance toward both anionic and cationic dyes.

Morphological characters of Rhynchophorus spp. (Coleoptera:Curculionidae) associated with sago, coconut, and oil palm in Indonesia

Rhynchophorus weevil is known as the most damaging insect pest of palms worldwide and the major pest in sago (Metroxylon Sagu) and coconut (Cocos nucifera) in Indonesia. Nowadays, Rhynchophorus weevil has become a threat to oil palm (Elaeis guineensis) since 2018. This study aims to identify Rhynchophorus spp. morphological characteristics and pronotal color pattern polymorphism in sago, coconut, and oil palm using 16 morphological characters, i.e., length and width of pronotum, elytra, and rostrum. The variations between samples were assessed by one-way ANOVA and principal component analysis (PCA). The results showed three types of pronotal patterns, specifically to the weevil species. They were red stripe, red stripe-spot marking, and black for oil palm, coconut, and sago, respectively. There were no significant differences in all morphological characters of Rhynchophorus spp. in coconut and oil palm. In contrast, 12 morphological characters of Rhynchophorus spp. in sago were different from oil palm and coconut. The Rhynchophorus associated with oil palm and coconut has differences in the pronotal color pattern but has similarities in all morphological characters, identified as R. vulneratus. The Rhynchophorus associated with sago has black pronotal color, and the smaller size is alleged to be R. bilineatus.

The Agrarian, Structural and Cultural Constraints of Smallholders’ Readiness for Sustainability Standards Implementation: The Case of Indonesian Sustainable Palm Oil in East Kalimantan

The expansion of oil palm plantation has caused adverse impacts on the ecosystem. It has been associated with deforestation, biodiversity loss, disturbances to environmental services and livelihood change. The government of Indonesia has made an effort to control the negative effects by issuing relevant policies. One of the policies is Indonesian Sustainable Palm Oil (ISPO)’s sustainability standards to which large-scale plantations and smallholders are obliged to adhere. This study assesses the readiness of two types of smallholders, namely, the nucleus–plasma scheme and independent smallholders to adopt ISPO standards. Using a case study research approach in two oil palm plantation villages in East Kalimantan, the study found out a number of ISPO implementation challenges, grouped into structural and socio-cultural challenges, which make smallholders less ready to adhere to this mandatory policy. Coping with these challenges, this study proposed that land and business legality programs be expedited to strengthen property rights, and that training and education programs be intensified to enhance awareness, knowledge and capacity of smallholders to enable them to comply with sustainability standards.

Factors affecting the volume of Indonesian CPO exports in international trade

Palm oil is one of the commodities of plantation products that has an important economic role in Indonesia and is also an export commodity as foreign exchange earner for oil and gas. Palm oil produces the main product Crude Palm Oil (CPO). As main product, CPO continues to experience an increase in export volumes in line with the growing need for CPO in export destination countries, both as food raw material and biodiesel. However, when the implementation of the customs policy was issued in 2009, there was a change in the composition of exports from CPO to palm-derived products, namely RBD palm olein and PFAD. The main markets for Indonesian palm oil products are in Asia and Europe, the four largest countries, including India, Malaysia, the Netherlands, and Italy. This research aims to analyze the factors that influence the volume of Indonesian CPO exports in export destination countries. Based on the results of Ordinary Least Square (OLS), the variables that significantly affect Indonesia’s CPO exports in export destination countries are (1) India: export volume lag, (2) Malaysia: soybean oil prices, (3) Netherlands: RCA, and (4) Italy: estimates of sunflower oil, RCA, exchange rates and dummy exit fees.

The impact of the economic crisis on Indonesian palm oil exports: a long term simulation analysis

This study aims to analyze the impact of the economic crisis on Indonesia’s palm oil exports. The relationship between factors in palm oil trade was analyzed using the simultaneous equation system model and estimated using the Two-Stage Least Square (2SLS) method. This research uses time-series data (years 2000 - 2018). The results showed that Indonesia’s economic growth contracted up to 5.32% leading to an economic recession due to the Covid-19 pandemic and the United States-China trade war which caused Indonesia’s palm oil exports to decline significantly. However, the increase in domestic palm oil consumption is thought to be due to lower palm oil prices and the implementation of domestic industrial policies. In this condition, the depreciation of the rupiah (11%) and the reduction in import tariffs for palm oil from trading partner countries are predicted to be able to improve the performance of Indonesia’s palm oil exports, but still low in net compared to conditions of average economic growth. This proves that the reduction in export tariffs (Indonesia) and import tariffs (trading partners) during the depreciation of the Rupiah due to contraction in economic growth can improve the performance of Indonesia’s palm oil exports.

Robust multi-stage method (MM) and least median square (LMS) evaluation on handling outlier for multiple regression

Outliers are observation with extreme values that are very different from most other data. The least squares method (OLS) is a method that is very sensitive to outliers because it can cause the modeling accuracy decrease. Throwing out outliers with the aim of improving the suitability of the regression equation cannot be done carelessly because it will provide imprecise estimation precision. This study examines the performance of robust method of the least median squares (LMS) and the multi-stage method (MM) compared to OLS in a regression analysis of data which contains outliers. Data analysis was performed on simulation data and oil palm production data. Based on the average parameter estimate bias value, MM method has the best performance in each scenario condition of data size and outlier percentage, while based on the average root mean squares error (RMSE), LMS has better performance than MM when the data size is 25. Analysis of Indonesian oil palm production data in 2018 which data size 25 and contains 44% outliers resulted the conclusion that LMS method produced smallest RMSE and highest R2, namely 38.81 and 99.78%, respectively. MM method is in the second best position, while OLS produces largest RMSE and highest R2.

The Role of Farmers Readiness in the Sustainable Palm Oil Industry

One effort currently made by the Indonesian government to ensure the sustainability of the development of the palm oil industry is to create a sustainability standard called Indonesian Sustainable Palm Oil (ISPO) in presidential regulation no 44 in 2020. The purpose of this study is to determine the value of the ability of independent coconut farmers palm oil in Indragiri Hilir to meet the Indonesian Sustainable Palm Oil (ISPO) standards and identify the problems faced in achieving these standards. Evaluation of the ability of independent smallholders to achieve ISPO standards is carried out by an audit method, the results of the assessment of all parameters set in accordance with the Principles, Criteria and Inductors. The Criteria and Indicators contained in the ISPO provisions are then assessed in percent. The audit method is carried out in a quantitative descriptive analysis of the appropriateness of ISPO principles, criteria and indicators by comparing the implementation of legality, organization and management, management and environmental monitoring implemented by independent smallholders. Readiness of ISPO application for smallholder farmers by evaluating four principles, 20 criteria and 47 indicators. Of the 47 indicators determined in the ISPO requirement for self-help patterns, as many as 58.94% of the ISPO indicators have never been implemented by independent smallholders and 42.06% of the ISPO indicators have farmers running them. From ISPO indicators that have been carried out by independent smallholders, only a small portion of independent smallholders are run.

The ambiguities of Indonesian Sustainable Palm Oil certification: internal incoherence, governance rescaling and state transformation

There are persistent tensions of both a technical and political nature between Southeast Asia’s two major palm oil producers, Indonesia and Malaysia, and the sustainability governance mechanisms shaping global environmental and trade standards emerging from Europe. The establishment of the national Indonesian Sustainable Palm Oil (ISPO) certification standard in 2011 is a sign of discontent with the transnational Roundtable on Sustainable Palm Oil (RSPO) regime, sparking debate about the legitimacy of private governance models initiated by non-governmental organizations and companies in Europe. This article questions whether the adoption of sustainability norms by Indonesia signals normative convergence or the emergence of rival governance structures that challenge the state. Evidence suggests that elements of norm adoption and rival governance coexist in Indonesia and that ISPO certification is an ambiguous policy with degrees of internal incoherence. The ambiguous nature of ISPO certification gives rise to unresolved disputes over power and authority between various actors. This article shows how these disputes came into being by framing these dynamics as part of a long historical process. Novel insights are gained by employing the state transformation framework and the concept of governance rescaling. Within this framework, we argue that the ambiguous nature of the ISPO results from complex interrelated processes of fragmentation, decentralization and the internationalization of the Indonesian state.

The Environmental Impact of Palm Oil: Introduction for Students of Tasmania University, Australia

Palm oil is one of the most demanded commodities globally, which has led to a significant increase in its production and raised issues regarding its environmental impact. However, many of these issues are not based on substantial evidence. To provide a proportional picture on the oil palm industry, Universitas Sumatera Utara (USU), the University of Tasmania (UTAS) and the Association of Indonesian Palm Oil Entrepreneurs (GAPKI) have collaborated to carry out this program. The program was conducted for seven days through classroom lectures and field trip activities, involving 14 students and two supervisors from UTAS and four USU students. Pre and post-tests were conducted to evaluate the impact of the program. The results showed changes in participants' knowledge and perception regarding the environmental, social, and economic effects of the oil palm industry. Therefore, this program could be considered an effective counter to misleading Indonesian palm oil industry issues.