Abstract
Palm oil industry is one of the main contributors to the economic development in Indonesia. It has experienced rapid growth in recent decades, and become a significant contributor to the world market for vegetable oils. Oil palm plantations produce crude palm oil (CPO) used as raw material by downstream industries to provide many types of derivative products such as in food and oleochemicals. In consequence, managing value chains are vital to gain sustainable palm oil development considering the increasing competitiveness and needs to maintain mutual partnerships among stakeholders. This chapter analyzed possible external shocks that would give potential impacts to value chains of the palm oil industry in Indonesia and recommends what the policymakers should do to anticipate the negative implications. We found that some variables show elastic values represented by the world price of CPO, the export price of Indonesian CPO and the exchange rate to the export quantity of Indonesian CPO. Based on our simulation, the export tax policy of palm oil has caused negative impacts both to the small scale (farmers) and the big scale industries in the form of decreasing FFB price and exported quantity of CPO, respectively.
This research was as a part of the project of Economic Research Institute for ASEAN and East Asia (ERIA) ‘Economic Risk Characteristics of an Indonesian Value Chain and Identifying Sources of Uncertainty in Policy Making.’ The opinions expressed in this paper are the sole responsibility of the authors and do not reflect the views of ERIA.
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Falatehan, A.F., Setiawan, B.I. (2020). Economic Risk Characteristics of an Indonesian Palm Oil Value Chain and Identifying Sources of Uncertainty in Policy Making. In: Anbumozhi, V., Kimura, F., Thangavelu, S. (eds) Supply Chain Resilience. Springer, Singapore. https://doi.org/10.1007/978-981-15-2870-5_5
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