Introduction and rationale
Palm oil is still a lucrative business thought the price has jumped low to 60% for few months after a bullish increase in early 2008. The share of palm oil in world vegetable oil trading has increasing significantly to more than 25% in last 10 year. This is thought mainly due to the high productivity of the palm and therefore the production cost per ton oil is much lower compared to other vegetable oils.
The expansion of the oil palm plantation has been so fast in the last decade. The total world oil palm plantation (mature palms) has reached about 11.3 million ha in 2008, doubled as compared to that of in mid 1990s. Indonesia has been the biggest palm oil producing country since 2006.
The fast growing of palm oil industry has also enjoyed by the smallholders. More than 40% of the total palm oil palm plantation (6.8 million ha) in Indonesia belong to the smallholders. This makes the industry a vital agent of development in rural area in the country. The big companies have also benefited from the industry.
There are still great opportunities for the industry to grow in the future in line with the growing demand for vegetable oil both for food and non-food purposes. Various new uses of the oil and other byproducts will also grow including renewable energy. Again, the high productivity of the palm to produce oil per acreage will make it stand out amongst its competitors in biodiesel.
However, the industry is faced with some great challenges such as the yet still wide gap in yield, growing concerns about the negative impacts of the industry on environment, and social conflicts. Much of the environmental issues have been used by international activists to put pressure on the development of palm oil. This resulted in the establishment of Roundtable on Sustainable Palm Oil (RSPO), a voluntary business initiative of the producers and users of the oil and NGO. The certified sustainable palm oil (CSPO) has just recently entered the European market, but the positive impact of RSPO movement on palm oil industry has yet to be seen. A premium price for CSPO is expected by the growers as an indication of true demand for such oil as frequently sounded by the international activists.
There are other issues on the stake that might hinder the development of palm oil industry. These include the EU directive which will discriminate palm oil from other vegetable oils in biofuel market. In addition, the fluctuation of palm oil price has been mostly controlled by the users/buyers in Europe with less ability of the producers to play their role.
The complexity of such critical issues faced by the industry require the leaders of the industry need to enter to the debate and collectively address the issues to save the industry from further image damage. In fact, there is a need for a global alliance in which the leaders can work collaboratively and voice their concern. The proposed Top Leaders Forum is organized to for such purposes.
| Objective |
| 1. |
To discuss critical and strategic issues faced by palm oil industry |
| 2. |
To strengthen network of the top leaders of companies/organizations working on palm oil |
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