KUD Sejahtera Builds CPO Mill with Rp100 Billion Investment
The KUD Sejahtera village unit cooperative in Musi Banyuasin Regency, South Sumatra, has built a crude palm oil (CPO) processing plant with an investment of around Rp100 billion, which is targeted to become a model for cooperative-based palm oil downstreaming in other regions.
Cooperatives Minister Ferry Juliantono said the government is encouraging the construction of CPO mills by cooperatives to increase added value while strengthening the bargaining position of oil palm farmers.
“We deliberately intend, together with KUD Sejahtera, to make this palm oil mill a new example, a role model that we will replicate in other regions,” Ferry said at the inauguration of the KUD Sejahtera CPO mill in Musi Banyuasin Regency, South Sumatra, on Wednesday.
According to him, the government has encouraged palm oil cooperatives in various regions to follow the KUD Sejahtera model by entering the processing sector, so that cooperatives do not only act as collectors of fresh fruit bunches (FFB).
Ferry said PT Agrinas Palma Nusantara has received registrations from around 20 cooperatives interested in establishing CPO mills.
In addition, he said the Ministry of Cooperatives together with the Revolving Fund Management Institution (LPDB) has also received applications from two oil palm farmer cooperatives wishing to build CPO mills.
“The hope is that CPO mills like this, owned by cooperatives, can be established in all palm oil centres in Indonesia,” he said.
Meanwhile, KUD Sejahtera Chairman Thamrin said the investment in the mill construction reached around Rp90 billion for the factory facilities. With additional infrastructure and land, the total investment reached around Rp100 billion.
He said the financing for the mill construction came from bank loans, member capital, as well as capital participation from the community and business actors around the cooperative.
Thamrin said the mill has a processing capacity of up to 45 tonnes of fresh fruit bunches (FFB) per hour.
According to him, the existence of the mill provides added value for member farmers because the cooperative can provide certainty of FFB absorption while opening opportunities for members to obtain a share of profits from the palm oil processing business.
KUD Sejahtera currently has 1,536 members with a total of member-owned oil palm plantations managed by the cooperative reaching around 3,074 hectares.
Around 76 percent of the mill’s raw material needs are supplied from KUD Sejahtera member plantations. Meanwhile, the supply shortfall to support mill operations is met from FFB from farmers around the mill who partner with the cooperative.
For marketing, Thamrin continued, KUD Sejahtera’s CPO production is currently not intended for direct export. The product is marketed to industrial partners, one of which is Wilmar.