The Strength Imunity of Palm Oil Industry as a Locomotive Economy in The Pandemic Covid-19
Like a trains, the palm oil industry has been transformed into a locomotive that capable of pull others economic sectors behind it such as the financial services sector, trade services, transportation services, etc. The economic pull generated by palm oil industry is able to produce a contribution to the Indonesian economy. In fact, the Indonesian palm oil industry is also able to drive other country economy, through exports to fulfill the needs of the world community. This shows that the palm oil industry is one of the economic sectors that is inclusive.
In the Covid-19 pandemic, many industries were affected by the decline in economic activity such as the production process that stops temporarily and laid off workers. However, until now this impact has not been felt by palm oil industry, especially at the plantation. In fact, the role of the palm oil industry as the locomotive of Indonesia’s economy still exists amid the threat of the Covid-19 outbreak. The operations of the palm oil industry, both at the upstream and downstream levels, are still running normally to fulfill both domestic and export needs.
Oil palm plantations as the spearhead of the palm oil industry are quite advantageous because of its location in remote areas and far from the city center, so as to minimize the interaction at risk of Corona virus infection. In addition, the work patterns in oil palm plantations also have been spaced out different from the work patterns in factories, so the workers at plantation have done physical distancing. Although it is relatively safe from the Corona virus, the operations of oil palm plantations in both the smallholders and companies plantation still adhere to government’s recommendations such as minimizing physical contact, maintaining distance and maintaining personal hygiene by washing hands.
The price of FFB smallholder farmers at the beginning of Ramadan is around Rp 1,250-1,700 per kilogram. This price is better if compared to the beginning of Ramadan in 2019 around Rp 800-1,350 per kilogram, so it becomes an incentive for farmers to continue to operate their oil palm plantations and harvest FFB. Meanwhile, until now, no oil palm company has closed or laid off its employees. APKASINDO officials also reported that there were additional workers in oil palm plantations from people who had previously worked in the non-pal oil industry that was laid-off by their company.
The farmers and the palm oil industry also have the support from local government. One of them is Rokan Hulu Riau Regent who issued a Surat Edaran to ensure that the Palm Oil Factory (PKS) in that area continues to operate to receive FFB from smallholder farmers in the the Covid-19 pandemic with still following government directives (Health Prototype). It is intended that the wheels of the people’s economy continue to spin and not be affected by the Corona outbreak. The continued operation of Oil Palm Factory is also a signal for palm oil farmers to continue gardening and harvesting FFB.
Meanwhile at the downstream industry level, there is an increase in demand for palm oil to fulfill both food and non-food needs. Increased demand for palm oil raw materials by the food industry to produce more palm-based food products such as cooking oil, margarine, biscuits, chocolate and others. The increasing production of palm-based food is to fulfill the needs of the Indonesian people in Ramadhan and Eid Fitr.
Increased demand for palm oil also comes from the surfactant industry. The high demand for surfactants (soap and hand sanitizers) in an effort to prevent Covid-19 transmission, also has an impact on increasing demand for palm oil-based glyserin. In addition, the performance of palm oil downstreaming remains optimal, amid the Covid-19 pandemic, is the implication of B30 policy implementation. The development of palm biodiesel with the B30 policy is able to absorb 10 million tons of palm oil as raw material.
When compared with the performance of palm oil downstreaming that was able to survive in the pandemic, on the contrary the performance of palm oil products export in the January-February 2020. Based on GAPKI data, exports of palm oil and its derivatives decreased by 20 percent compared to January-February 2019. Even though the foreign exchange of palm oil exports declined, the palm oil industry still contributed to foreign exchange of USD 3.5 billion so that Indonesia’s trade balance remained in surplus.
The greater contribution of the palm oil industry as an economic locomotive amid the Covid-19 pandemic showed that the industry’s “immunity” is quite strong. The operation of the palm oil industry is expected to be able to strengthen the rural and regional economy, fulfill domestic needs and secure Indonesia’s trade balance amid the weakening world economic situation due to the Covid-19 outbreak.
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