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GAPKI Opposes Plan To Cap Plantation Area
GAPKI Opposes Plan To Cap Plantation Area
04/04/2013 (Jakarta Post) - The Indonesian Palm Oil Association (GAPKI) strongly opposed the government’s plan to prohibit plantation companies from owning more than 100,000 hectares of land, saying the measure will severely curb the expansion of the palm oil industry.
GAPKI General Secretary Joko Supriyono criticized the plan as unnecessary, saying it would only generate losses to both the companies and the country, as it would put off investors and would start a long-term decline in production.
“We see around 200,000 hectares of expansion annually, most of which is carried out by major players that already have more than 100,000 hectares of plantation. If one hectare of land can produce around 20 tons of CPO [crude palm oil] annually after five years, imagine how much we might lose with this limitation,” Joko said.
“We might even have to give up our status as the world’s main player in the palm oil market due to the regulation.”
Joko also warned that capping plantation expansion might thwart the government’s plan to develop a plasma plantations to help local residents, saying that only big companies can actually build a plasma plantation.
The Agriculture Ministry is currently revising the 2007 Ministerial Regulation on Plantation Permits, which will limit the total plantation area a company can own to 100,000 hectares. Through the revised regulation, the ministry will also oblige companies owning at least 250 hectares of plantation to establish a plasma plantation outside their area to benefit local residents. The size of the plasma plantation should be at least 20 percent of the company’s plantation area.
“The revision is our move to forestall any land monopoly. The revised regulation will be announced in late April and is expected to be effective in May,” Deputy Agriculture Minister Rusman Heriawan told The Jakarta Post on Wednesday.
He, however, said that the cap would not affect existing plantation areas that already exceed 100,000 hectares.
Indonesia, according to the data from the Agriculture Ministry, currently has 9 million hectares of palm oil plantation. The country produced 26.5 million tons of CPO last year — or up 12 percent compared to the previous year — and contributes to around 60 percent of the global market.
Among palm oil companies that own more than 100,000 hectares of plantation are Sinar Mas Group (320,463 hectares), Singapore-based Wilmar International Ltd. (210,000 hectares), PT Astra Agro Lestari (192,372 hectares), PT London Sumatera (245,629 hectares) and Raja Garuda Mas (259,075 hectares).
The new regulation would affect the expansion plans of a number of major oil palm plantation companies. The world’s second-largest oil palm plantation firm Golden Agri-Resources Ltd. (GAR), part of the Sinar Mas Group conglomerate, intends. For example, to spend up to US$550 million this year as it plans to acquire more concession areas and increase the capacity of its refineries.
Besides palm oil plantations, other sectors that will likely be affected by the regulation include cacao and rubber. Indonesia is the world’s third biggest producer of cacao, with annual production of around 700,000 tons.
GAPKI General Secretary Joko Supriyono criticized the plan as unnecessary, saying it would only generate losses to both the companies and the country, as it would put off investors and would start a long-term decline in production.
“We see around 200,000 hectares of expansion annually, most of which is carried out by major players that already have more than 100,000 hectares of plantation. If one hectare of land can produce around 20 tons of CPO [crude palm oil] annually after five years, imagine how much we might lose with this limitation,” Joko said.
“We might even have to give up our status as the world’s main player in the palm oil market due to the regulation.”
Joko also warned that capping plantation expansion might thwart the government’s plan to develop a plasma plantations to help local residents, saying that only big companies can actually build a plasma plantation.
The Agriculture Ministry is currently revising the 2007 Ministerial Regulation on Plantation Permits, which will limit the total plantation area a company can own to 100,000 hectares. Through the revised regulation, the ministry will also oblige companies owning at least 250 hectares of plantation to establish a plasma plantation outside their area to benefit local residents. The size of the plasma plantation should be at least 20 percent of the company’s plantation area.
“The revision is our move to forestall any land monopoly. The revised regulation will be announced in late April and is expected to be effective in May,” Deputy Agriculture Minister Rusman Heriawan told The Jakarta Post on Wednesday.
He, however, said that the cap would not affect existing plantation areas that already exceed 100,000 hectares.
Indonesia, according to the data from the Agriculture Ministry, currently has 9 million hectares of palm oil plantation. The country produced 26.5 million tons of CPO last year — or up 12 percent compared to the previous year — and contributes to around 60 percent of the global market.
Among palm oil companies that own more than 100,000 hectares of plantation are Sinar Mas Group (320,463 hectares), Singapore-based Wilmar International Ltd. (210,000 hectares), PT Astra Agro Lestari (192,372 hectares), PT London Sumatera (245,629 hectares) and Raja Garuda Mas (259,075 hectares).
The new regulation would affect the expansion plans of a number of major oil palm plantation companies. The world’s second-largest oil palm plantation firm Golden Agri-Resources Ltd. (GAR), part of the Sinar Mas Group conglomerate, intends. For example, to spend up to US$550 million this year as it plans to acquire more concession areas and increase the capacity of its refineries.
Besides palm oil plantations, other sectors that will likely be affected by the regulation include cacao and rubber. Indonesia is the world’s third biggest producer of cacao, with annual production of around 700,000 tons.