Chemical Engineering Department, Faculty of Engineering Sebelas Maret University

of Surakarta, Indonesia

Palm Oil - Challenges and Opportunities in

Sustainable Development

1. Abdul Kadir M. Jamal (Class of 2009)

Passport Number : V 283947
E-mail Address : munsheed_mania@yahoo.com
Contact Number : +62 856 4229 6733

2. Rina Sari Utami (Class of 2009)

Passport Number : A 1447154
E-mail Address : rina_utami@rocketmail.com
Contact Number : +62 856 4234 3082

1
Universiti Teknologi Malaysia 16-18 December 2011
Definition 3
Challenges 4
The Sustainable Industry 5
Economic Sustainability 6
Social Sustainability 7
Environment Sustainability 8
Conclusion and Future Development 13
Bibliography

Table of Content 2
“Development that meets the needs of the present
without compromising the ability of future
generations to meet their own needs”
(International Institute for Sustainable Development)

ECONOMY

SUSTAINABLE
DEVELOPMENT
ENVIRONMENT SOCIAL

Sustainable Development
3
Challen
Challen g es
es

4
 Palm Oil Industry, the Sustainable Industry

Economically Socially Environmentally

- High Demand - Rural Economy Vehicle -Soil Friendly

- High Product Value - Job Provider -Self Sufficient Energy

- Cool Prospect - High Income -Zero-Waste Product

-GHG Friendly

5
1. High consumption lead to high demand

World Palm Oil Consumption Production Cost (2008)

400 350
70
60
60 300

US Dollar
50 45.1
Million Ton

199.3
40 200 150
30 21.9
20 100
11
10 1.7 4.5
0
0 Palm oil Soybean Rapeseed
1970 1980 1990 2000 2009 2020
Source : World Growth, 2011

Palm Oil is now account 34% of world vegetable oil consumption

2. Biggest agriculture export commodity in Indonesia ($14.5 billion in
2008). In 2007, Malaysian export value around US $19.6 billion
3. Bright prospect for the future

6
1. A good means to spread prosperity via transmigration.
Felda, the largest producer of palm oil in Malaysia resettled 112,635
families from 1960-2006 (Ahmad Tarmizi, 2009)
2. The second biggest agriculture product in Indonesia (41% of the land
owned by small holder )
3. More than 2 million people working on this sector by 2006 in Indonesia
and can grow up to 6 million (Goenadi, 2008)
4. Seven times higher of average income than farmers of other crops
(Hardter et al, 1997)

Year Employment in Area Planted Palm Oil Poverty

Agliculture (ha) Production Indicator
(tons)
1995 44 % 2,025,000 4,480,000 84.6 %
2005 45 % 5,454,000 11,682,000 53.8 %

Source : World Growth, 2009

7
1. Soil Friendly
30 years of Oil Palm
• Land cleared once during
the period  less damage
to the soil
• Mature trees replaced once
during the period 
minimal impact to soil
• Less impact on soil erosion
and silting of waterways
• Less fuel used in field
preparation and crop
support activities
Short Rotation Crop
• Land cleared annually 
soil damaged annually
• Crop has to be replaced
every year  higher impact
to the soil
• Processing makes possibility
of soil erosion and
waterways’ sliting higher
• More fuel used in field
preparation and crop
support activities
8
2. Self Sufficient Energy
Mass and Energy Balance:
Energy needed for production :
20-25 kWh & 0.73 ton steam 167 kg

1 ton FFB

140-200 kg CPO

Oil palm Industry

600-700 kg POME (liquid waste) ≈ 276 MJ Biogas

190 kg fibers & kernel
9.4 kg N2 as Fertilizer 120 kWh
230 kg EFB
Potential
200 kg CPO ≡ 100 kWh free energy Generation
Indonesia’s CPO Production (2009) = 18 million ton ≡ 9 GW potential generation 9
 1 ton of palm oil needs 19.2 GJ,
generates 182.1 GJ
ENERGY RATIO
Area Requirement 9.5
10
palm oil soybean rapeseed
8
6
2.2
1.5 4 3
2.5
2
0.26
0
Hectare Land Used / Ton Production palm oil soybean rapeseed

Less land use to generates more oil Less energy use Economically
Beneficial and
Source : World Growth, 2009 Sustainable
LOW COST
10
 Animal Number Rainforest Loss in Indonesia and
Malaysia due to Oil palm
Asia elephant 2800
forest destroyed
Rainforest Birds 112
burned in wildlife
Sumatran
12000 future plantation
Orangutans
Sumatran rhino 50 current plantation
(ha)
Sumatran tigers 250 0 40000 80000
Source : Ellie Brown, Ph.D., Center for Science in the Public Interest, 2005

Crude Palm Oil = Cruel Palm Oil?

11
They say : Palm oil industry is the biggest contributor of deforestation because of the area
expansion which results in animal extincion, high GHG emission and waste management
problem
We say :
• Palm oil plantation is allowed only in land zoned for agriculture. The animal’s habitat in the
protected forest will not be damaged.
• The growth of productivity is not merely because of area expansion but also fertilizer
application rate, cultivation method, and yield per ha.
• For the basis of 1 ton oil produced, palm oil has the lowest carbon footprint among other
crops
• Palm oil waste can be processed to make other product

Table : Palm Oil Industry Performance in Indonesia and Malaysia

1995 2000 2005 2008
GHG emissions
Indonesia

Ton CO2 / Ton Oil

Area planted x1000 ha 2.025 4.158 5.454 7.008 1.562
1.387
Yield ton/ha 2,21 1,68 2,17 2,58
Oil production x1000 ton 4.480 7.001 11.862 18.090 0.835

Malaysia
Area planted x1000 ha 2.540 3.377 4.051 4.488
Yield ton/ha 3,07 3,21 3,69 3,95
palm oil soybean rapeseed
Oil production x1000 ton 7.811 10.842 14.962 17.734
Source : World Growth, 2009 12
 Palm Oil Industry is
Environment-friendly and Sustainable
HOW ?
1. Improving financial, social, and economic benefits
2. Implying a balanced approach to reduce
environment impact over short and long term
3. Finding market and technology for the production
of high value products from palm oil and its
derivatives
4. Committing to maintain the high standard of the
industry to create “Zero-waste Production
Process” by full use of its by-product as alternative
energy source or other utilizations

13
 Bibliography
Ahmad Tarmizi, A. 2008. “Felda- A success story”. Global Oils & Fats Business
Magazine. Vol.5, Issue 1: 7-11
Basiron, Y. 2004, The Oil Palm and Its Sustainability, Journal of Oil Palm
Research Vol. 16 No. 1, June 2004, p. 1-10
Basiron, Y. 2008, Malaysia’s Oil Palm — Hallmark of Sustainable Development,
Global Oils & Fats Business Magazine, Vol. 5, Issue No. 4
Brown, Ph. D., et all., 2005, Cruel Oil : How Palm Oil Harms Health, Rainforest
& Wildlife, Center for Science in the Public Interest, Washington
Hardter, R., Chow, W. Y., dan Hock, O. S., 1997, Intensive Plantation Cropping,
A Source Of Sustainable Food and Energy Production in The Tropical Rain
Forest Areas In Southeast Asia, Forest Ecology and Management, Vol. 91,
No. 1, page 93-102
Goenadi , 2008, Perspective on Indonesian Palm Oil Production, Paper
Presented in “Rapat 2008 Musim Semi International Food & Agricultural
Trade Policy Council”, 12 May 2008, Bogor, Indonesia
World Growth, September 2009, Palm Oil-The Sustainable Oil, World Growth
Palm Oil Green Development Campaign, Arlington
World Growth, Februari 2011, Manfaat Minyak Sawit Bagi Perekonomian
Indonesia, World Growth Palm Oil Green Development Campaign,
Arlington
Teoh, Cheng Hai, Key Sustainability Issues in the Palm Oil Sector, World Bank
Group