Observer: PKE Exports Prove Downstreaming Does Not Always Require Large Investment

An agricultural observer from the Center of Reform on Economics (CORE), Eliza Mardian, has stated that the export of palm kernel expeller (PKE) demonstrates that the downstream processing of palm oil derivatives can be carried out without requiring large-scale investment. According to Eliza, PKE is a by-product of palm kernel processing that provides higher economic value without the need to build downstream industries such as oleochemical plants. “The export of PKE shows our ability to capture added value from parts of the oil palm tree that were previously underutilised or sold at very low prices,” Eliza said in Jakarta on Monday. She added that revenue from PKE sales can also improve the margins of palm oil mills and indirectly support the price of fresh fruit bunches received by farmers. She noted that optimising derivative products like PKE could be part of the palm oil industry’s downstream strategy by utilising existing processing capacity. According to Eliza, exports of PKE to New Zealand also indicate market opportunities for Indonesian palm oil derivative products in developed countries. Although not a primary market for Indonesian palm oil, New Zealand has a dairy industry that imports large quantities of PKE as a raw material for animal feed supplements. “This shows an opportunity to expand market access to developed countries with strict biosecurity standards … this is a signal that opportunities are also open in the by-product and animal feed segment,” she said. The Lampung Animal, Fish, and Plant Quarantine Office recently released the export of 14,000 tonnes of PKE to New Zealand with an economic value of approximately Rp20 billion. Head of the Lampung Quarantine Office, Donni Muksydayan, stated that New Zealand is a potential market for PKE as it uses the product as raw material for animal feed, particularly for dairy and beef cattle. Throughout 2025, Lampung recorded 184 PKE exports with a total volume of 1.34 million tonnes worth Rp3.12 trillion, an increase compared to 172 exports in 2024 with a volume of 569,000 tonnes and a value of Rp2.58 trillion.