Djajanti Group to build CPO refinery

JAKARTA (JP): PT Varita Majutama, the plantation arm of Indonesian timber company Djajanti Group, announced on Wednesday it would build a US$7.5 million crude palm oil (CPO) processing plant to service its oil palm plantation in the Babo subdistrict of Irian Jaya.

Company president Enap Surjatman said the plant would have the capacity to process 60 tons of fresh oil palm kernel per hour.

"The plant is expected to begin operation in early 2002," he said.

The plant will process the company's oil palm into CPO, which will then be sold in Surabaya, Jakarta and overseas.

Enap said Djajanti would provide 30 percent of the financing for the plant, while the remaining 70 percent would be funded with loans from state Bank Ekspor Impor Indonesia.

Enap said Varita was developing 100,000 hectares of oil palm in Bintuni Gulf, Irian Jaya, some 6,000 hectares of which had been planted.

"This year we plan to plant another 4,000 hectares. We expect to complete planting the 100,000 hectares within the next 10 years," he said.

Enap said the plantation was fully funded by the Djajanti Group.

"We need between Rp 8.5 million and Rp 10 million for every hectare of the plantation," he said.

He said 80 percent of the plantation would be managed by farmers under the nucleus-smallholder cooperation scheme.

He said Varita, as a nucleus firm, would only manage 20 percent of the plantation.

"The proportion of the plantation managed by farmers and the nucleus firm differs from other regions," he said.

For example, plantation firms operating in Sumatra and Kalimantan only allow farmers to manage 20 percent of their plantations.

"We trust the farmers so we let them manage the majority of the plantation," he said.

The nucleus estate and smallholder farmers model was first introduced by the government in the early 1980s in an attempt to attract private investment in the plantation sector, while simultaneously helping resettle migrant farmers.

Under the scheme, nucleus companies allow farmers to manage part of the companies' plantation areas. The nucleus firms also provide farming materials, ranging from seeds to fertilizers, to smallholder farmers, who are in turn obliged to sell their harvest exclusively to the nucleus firms.

Enap said his company was also cooperating with the Ministry of Transmigration to employ migrants as smallholder farmers on the plantation.

He added that Djajanti built a port in the area to ship its CPO products.

"In the future, we plan to operate more CPO plants," he said. (gis)