12/05/2011 (Jakarta Post) - The Indonesian palm oil industry can increase its output by enhancing the productivity of smallholder plantations through intensification programs, an association executive says.

Speaking on the sidelines of the International Conference and Exhibition of Palm Oil on Wednesday, Indonesian Plantation Entrepreneurs Association (GPPI) chairman Soedjai Kartasasmita said such intensification efforts would be more important than expanding the area of oil palm plantations to boost palm oil production.

“It takes both the government and entrepreneurs to facilitate smallholders to achieve higher production,” he said, citing access to fertilizers and good seeds as examples.

Soedjai said to get higher palm oil output, smallholders also needed to improve their technical ability and apply better cultivation practices.

He added that the government could allocate funds from export duties of palm oil to assist smallholders, while major plantations could help them through their corporate social responsibility programs.

Currently, Indonesia has about 7.5 million hectares of palm oil plantations, 45 percent of which, or around 3.38 million hectares, are managed by smallholders.

Borneo Orangutan Survival Foundation chairman Bungaran Saragih said during his opening address that currently Indonesian plantations could produce around 3.18 tons per hectare of palm oil per year, or less than Malaysia’s 3.93 tons per hectare.

The plantations could increase its current output of 3 tons per hectare to 6 tons per hectare annually, Bungaran said.

Recently, Franky Widjaja, the Indonesian Chamber of Commerce and Industry deputy chairman for agribusiness, food and forestry, said that several major plantations could produce 6 tons of palm oil per hectare each year.

Bungaran, a former agriculture minister, said the development of palm oil plantations in Indonesia in the past had contributed to deforestation and environmental damage.

“The plantation expansion will probably happen but it will be limited. We should therefore focus on improving our productivity,” he said, adding that Indonesia could produce 40 million tons of palm oil in the next 10 years with better productivity.

Indonesia’s palm oil producers aim to produce 23 million tons of crude palm oil (CPO) this year, compared to 21 million tons in 2010.

Indonesia is the largest palm oil producer and exporter in the world followed by Malaysia, with both countries contributing 85 percent of total global output of CPO, which is used to make edible oil, soaps, detergents and cosmetics.

The total revenue generated from the exports of palm oil and its products in 2010 reached $15 billion, or nearly 10 percent of Indonesia’s total exports of $157.73 billion.

Last year, under an agreement with Norway, Indonesia pledged to support a two-year moratorium on new concessions that allowed conversion of virgin forests and peatlands into plantations, in exchange for a $1 billion grant from Norway to reduce deforestation in Indonesia.

Indonesia said the deal was in line with its goal of cutting emissions by 26 percent by 2020 with its own resources, or by 41 percent with international assistance.

Environmental groups, including Greenpeace, have raised concerns that expansion of oil palm plantations in Indonesia will further destroy forests and raise greenhouse gas emissions blamed for global warming.

The three-day conference, held at the Jakarta Convention Center, engaged 700 participants from 13 countries, including Bangladesh, Finland, German, India, Malaysia and Pakistan.

Separately, about 100 firms, both domestic and multinational, took part in the exhibition, including giant plantation firm Sampoerna Agro and equipment maker New Holland.