Rocky Outlook for CPO Could Mean Seed Import Suspension
The government may halt imports of oil palm tree seeds next year as domestic demand for the seeds slows amid the global economic slowdown and a drop in crude palm oil prices.
“We are still trying to figure out how much domestic demand there will be for [oil palm seeds] next year,” Achmad Mangga Barani, director general for plantations at the Ministry of Agriculture, told reporters in Jakarta on Friday.
“If demand were to fall below 160 million seeds next year, then in 2009 we could stop seed imports,” he said, adding that the government would wait for demand forecasts from the Indonesian Palm Seed Producers Association before setting a final demand benchmark.
Mangga noted that seed imports would still be permitted for foreign companies that are developing plantations in Indonesia but getting seeds from overseas.
Facing a difficult pricing environment for crude palm oil, some of the nation’s large plantation firms have recently decided to delay planting, thus weakening demand for oil palm seeds.
As CPO prices hit their peak in March of this year, estimated demand for oil palm seeds in 2008 reached 230 million seeds. “When the CPO price reached its peak, everyone wanted to plant palm trees, and we had to import more seeds,” Mangga said.
Only about 160 million seeds have actually been traded and planted so far this year.
Dwi Asmono, chairman of the Indonesian Palm Seed Producers Association, said the group was still determining at what point an import stoppage would be advisable.
“There are many things that need to be calculated, like the 2009 demand estimate, the seed production plans of each producer, and the impact of export plans,” Dwi said after a meeting between seed producers and the Agriculture Ministry.
“We will announce the exact number in mid-January 2009,” he added.
Indonesia is the world’s biggest producer of oil palm seeds, but the country’s inability to meet the demands of its immense palm oil industry has also made it the world’s biggest seed importer.
This year alone, the country produced some 167 million seeds, out of a worldwide total of 240 million.
To cope with domestic production shortfalls, Indonesia is expected to import 60 million seeds from Malaysia, 25 million from Costa Rica and 15 million from Papua New Guinea by the end of this year.
Given falling domestic demand for palm seeds, the government is also considering exporting seeds in 2009 if domestic output exceeds domestic demand.
“Next year, we might export 100,000 seeds to Thailand and countries in Africa, and we need to recalculate how much actual 2009 demand will be,” Mangga said.
Taking a long-term view, Howard J. Sargeant, operations director of PT Bakrie Sumatera Plantations Tbk, said that prospects for the palm seed industry remained bright.
Sargeant said that his company was researching palm seed production with the aim of becoming a seed industry player.
“We are developing high-quality seeds at Kisaran, Asahan district, North Sumatra Province,” he said. The company, he continued, plans to start producing some one million palm seeds in 2011, with the aim of producing three million seeds in 2012.
“With a $5 million total investment we hope to be able to produce 20 million seeds,” he added.
At present, eight Indonesian producers sell more than 30 types of palm tree seeds. The largest among them include the state-run Indonesian Oil Palm Research Institute, PT Sucofindo, and PT PP London Sumatera Indonesia Tbk.
“We are still trying to figure out how much domestic demand there will be for [oil palm seeds] next year,” Achmad Mangga Barani, director general for plantations at the Ministry of Agriculture, told reporters in Jakarta on Friday.
“If demand were to fall below 160 million seeds next year, then in 2009 we could stop seed imports,” he said, adding that the government would wait for demand forecasts from the Indonesian Palm Seed Producers Association before setting a final demand benchmark.
Mangga noted that seed imports would still be permitted for foreign companies that are developing plantations in Indonesia but getting seeds from overseas.
Facing a difficult pricing environment for crude palm oil, some of the nation’s large plantation firms have recently decided to delay planting, thus weakening demand for oil palm seeds.
As CPO prices hit their peak in March of this year, estimated demand for oil palm seeds in 2008 reached 230 million seeds. “When the CPO price reached its peak, everyone wanted to plant palm trees, and we had to import more seeds,” Mangga said.
Only about 160 million seeds have actually been traded and planted so far this year.
Dwi Asmono, chairman of the Indonesian Palm Seed Producers Association, said the group was still determining at what point an import stoppage would be advisable.
“There are many things that need to be calculated, like the 2009 demand estimate, the seed production plans of each producer, and the impact of export plans,” Dwi said after a meeting between seed producers and the Agriculture Ministry.
“We will announce the exact number in mid-January 2009,” he added.
Indonesia is the world’s biggest producer of oil palm seeds, but the country’s inability to meet the demands of its immense palm oil industry has also made it the world’s biggest seed importer.
This year alone, the country produced some 167 million seeds, out of a worldwide total of 240 million.
To cope with domestic production shortfalls, Indonesia is expected to import 60 million seeds from Malaysia, 25 million from Costa Rica and 15 million from Papua New Guinea by the end of this year.
Given falling domestic demand for palm seeds, the government is also considering exporting seeds in 2009 if domestic output exceeds domestic demand.
“Next year, we might export 100,000 seeds to Thailand and countries in Africa, and we need to recalculate how much actual 2009 demand will be,” Mangga said.
Taking a long-term view, Howard J. Sargeant, operations director of PT Bakrie Sumatera Plantations Tbk, said that prospects for the palm seed industry remained bright.
Sargeant said that his company was researching palm seed production with the aim of becoming a seed industry player.
“We are developing high-quality seeds at Kisaran, Asahan district, North Sumatra Province,” he said. The company, he continued, plans to start producing some one million palm seeds in 2011, with the aim of producing three million seeds in 2012.
“With a $5 million total investment we hope to be able to produce 20 million seeds,” he added.
At present, eight Indonesian producers sell more than 30 types of palm tree seeds. The largest among them include the state-run Indonesian Oil Palm Research Institute, PT Sucofindo, and PT PP London Sumatera Indonesia Tbk.