Palm oil farmers state investment for mini CPO mills reaches Rp40 billion

The Chairman of the Indonesian Oil Palm Farmers Union (SPKS), Sabarudin, stated that the construction of mini crude palm oil (CPO) mills with a capacity of 10 tonnes of fresh fruit bunches (FFB) per hour requires an investment of approximately Rp30 billion to Rp40 billion.

During the second National Conference on Smallholder Plantations in Jakarta on Monday, Sabarudin noted that while palm oil farmers are prepared to enter the downstream sector, they still face financing obstacles in building processing plants.

“Access to financing for factory construction is expensive; I believe it requires a fairly large investment,” he said.

According to him, mini CPO mills could be established by cooperatives comprising around 1,000 to 2,000 farmers, with a total land ownership of approximately 5,000 to 6,000 hectares.

Sabarudin mentioned that about 80 per cent of smallholder palm oil farmers are independent farmers, while the remaining 20 per cent are plasma farmers who have established partnerships with larger companies.

“Moving forward, the direction for palm oil farmers could be to own mini mills and potentially collaborate with large-scale corporations,” he added.

On the same occasion, the Minister of Cooperatives, Ferry Juliantano, encouraged palm oil farmers to form cooperatives and expand their businesses from FFB management to CPO processing.