Indonesia is the largest producer of palm oil in the world. Indonesia is a major supplier of palm oil needs in the global market.

Indonesia has a very large area of ​​oil palm which is dominated in certain areas. Such as Riau, Medan, West Kalimantan, and surrounding areas. Palm oil in Medan is one of the palm oil processing companies that are exported to the global market.

In recent times, the Indonesian government has moved forward for the palm oil industry. Considering that Indonesia has millions of oil palm lands that need to be addressed.

The Indonesian president signs a concession permit for oil palm land. The government will continue to conduct a comprehensive national review of several palm oil licenses.

The aim is none other than to increase the productivity of oil palm processing and especially for small farmers. This step is one of the steps taken by the Indonesian government to improve the governance of the palm oil sector.

Managing Sustainable Palm Oil in Indonesia

Management of palm oil in Medan is one of the best steps taken by the government for various purposes, especially for small farmers.

Then how can we ensure that the supply of palm oil will continue to exist and be sustainable? In addition, can the palm oil sector reduce the negative impact on the environment and improve the performance of smallholders who play an important role in processing palm oil?

One of the studies conducted at CIFOR or the Center for International Forestry Research has examined the relationship between public and private company regulations to address the gaps that exist in the oil palm sector.

This is focused on Indonesia, considering that Indonesia is the largest palm oil-producing country in the world. Of course, there is a gap between oil palm processing companies, oil palm landowners, and smallholders.

Not to mention the processing of palm oil which harms the environment. The three main gaps are land conflicts, carbon emissions arising from peatland conversion, and smallholder incomes.

The key to closing this gap is improving chain governance in palm oil production. One way is to make public regulations for private companies and also for small farmers.

Palm oil in Medan under PT. Mahkota Group is an example of a policy that benefits the company as well as small farmers and considers the gaps that exist in the palm oil sector.

Because there is still a lot of dirty business carried out by many companies that harm small farmers. Farmers are one of the keys to managing the palm oil production chain.

Palm Oil Growth Sector

As we know that palm oil can be used for thousands of products ranging from food products, cleaners, cosmetics, and biodiesel. This is what makes the need for palm oil increases every year.

No single sector has managed to grow as fast as palm oil. But often the problem that often occurs is island conflicts.

Conflicts over land to plant oil palm are difficult to resolve despite efforts to prioritize tenure rights. Small farmers more often rely on informal transactions, especially in accessing their land.

Smallholders only produce 40% of Indonesia’s oil palm area. Even this result is still very lacking due to limited access and quite poor financial management.

Moreover, the reduction of carbon emissions is also hampered because of the licensing regulations for the use of forest areas and areas that have high carbon.

Overcoming the Gap

RSPO is one of the sustainability standards in the palm oil sector. This can be a compliment that can help Indonesia in managing sustainable palm oil.

But Indonesia has used its sustainability standard, ISPO, against external players in the palm oil trade.

Scientists also say that this needs to be studied further. Moreover, a greater impact can be achieved if aligning the RSPO with ISPO to make the palm oil sector a sustainable industry.

For the performance of the palm oil sector to improve, it is very important to see what are the opportunities and implications associated with the use of raw CPO Funds.

One example is palm oil in Medan which links the incentives of companies involved in supplying biodiesel with buying from small farmers. However, these smallholders must comply with sustainability terms and conditions.