Gov’t to Build Small Cooperative-Based CPO, RPO Factories

President Jokowi hosts a Limited Meeting on CPO, RPO management at Merdeka Palace in Jakarta (07/14) (Photo by: PR of Cabinet Secretariat/Agung)

The Government Monday (07/18) discussed the formation of small cooperative-based crude palm oil (CPO), red palm oil (RPO) factories that aim to support palm fruit farmers to easily market their fresh fruit bunches (FFB) with a very worth price so that the fruit bunches can be processed into CPO and RPO.

The statement was made by Minister of Cooperatives and Small and Medium Enterprises Teten Masduki in his press statement after attending the Limited Meeting hosted by President Joko “Jokowi” Widodo at Merdeka Palace in Jakarta.

Teten continued that as the President has agreed to develop cooperative-based red cooking oil production, it will be a solution to the distribution of red cooking oil so that the supply in public will be adequate.

The Minister also added that red cooking oil is healthier and has high protein, vitamin A.

Teten also said that the production technology for red cooking oil is currently being developed by Palm Oil Research Institute (PPKS) in Medan, adding that, he expected that the PPKS can immediately issue the Detail Engineering Design (DED) so that the machine can be manufactured to be a pilot project.

Later, the Government will determine where will the pilot project be built, whether in Sumatra or Kalimantan.

The construction of cooperative-based CPO, RPO factories was expected to start in January 2023, while the PPKS was targeted to finish the DED by August 2022. After finishing the DED, the production step can be started in collaboration with State-Owned Enterprise as well as private sector, according to Teten.

Teten further said that one small cooperative-based CPO, RPO factory requires an investment amounting to Rp23 billion in order to produce 10 tons of red cooking oil per day, adding that, the investment can be integrated with working capital and the Revolving Fund Management Agency (LPDB) with 5 percent of interest, investment on the machine can be integrated with the Oil Palm Plantation Support Fund Management Agency (BPDPKS), and as for investment on the on-farm palm oil development, it can be integrated with Micro-credit Program (KUR) by the Association of State-Owned Banks (Himbara).

In order to achieve the production target of 10 tons of red cooking oil per day, it requires approximately 50 tons of fresh fruit bunches per day or 1,000 hectares of palm oil land. Thus, the Government is projected to provide one small cooperative-based CPO, RPO factory in every 1,000 hectares of palm oil land.

As of today, Teten added, there have been several palm oil cooperatives that have lands covering more than 1,000 hectares.

Furthermore, Teten reiterated that the policy is a solution to two major problems including price stability of fresh fruit bunches from palm fruit farmers and cooking oil supply, adding that, the small cooperative-based CPO, RPO factories will boost palm fruit farmers’ economy. (BPMI of Presidential Secretariat/MAY/AIT) (AP/MUR)