Upload
send2wish
View
53
Download
0
Embed Size (px)
DESCRIPTION
A global value chain approach
Citation preview
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 1/27
GLOBAL VALUE CHAIN IN
AGRICULTURE INDUSTRY:A Study of Palm Oil Industry in
Indonesia in Comparison with Malaysia
Prepared by:
Wishnu Agung Baroto
52111608
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 2/27
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 3/27
Table of Contents
Introduction
Palm Oil in Brief
Analysis
Conclusion
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 4/27
INTRODUCTION
Indonesia became number one palm oil (CPO)producer in the world by surpassed Malaysia in
2007.
Palm oil industry has a lot of derivative product that
have more value-added. By exporting 82% of CPO production, Indonesia is
shifting its more value-added industry to other
countries.
Malaysia able to export more value-added products.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 5/27
INTRODUCTION
What is the difference between Indonesia and
Malaysia in managing palm oil industry?
How to utilize those resources and create more
efficient production process which able to competewith other countries production
Sustainability environment standard?
Using input and output analysis and global value
chain framework Indonesia palm oil will be explored
in comparison with Malaysia
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 6/27
PALM OIL IN BRIEF
What is palm oil
Palm oil cultivation area
Palm oil in global production
Indonesia palm oil at glance
Malaysia palm oil at glance
Palm oil value chain
Global user of palm oil
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 7/27
PALM OIL IN BRIEF
What is palm oil
Palm oil (elaeis guineensis) is edible plant oil that natively came from Africa
which requires specific physical conditions in sunshine, temperatures ranging
between 24 and 32 degrees and distributed rainfall throughout the year.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 8/27
PALM OIL IN BRIEF
Palm oil cultivation area
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 9/27
PALM OIL IN BRIEF
Palm oil in global production
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 10/27
PALM OIL IN BRIEF
Indonesia palm oil at glanceChart of Indonesia Palm Oil Production and Export
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 11/27
PALM OIL IN BRIEF
Malaysia palm oil at glanceChart of Malaysia Palm Oil Production and Export
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 12/27
PALM OIL IN BRIEF
Palm oil value chain
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 13/27
PALM OIL IN BRIEF
Palm oilvalue chain
Plantation
Oil millCrude
palm oil
Palm
kernels
Crushing Plant
Crude
palmkernel oil
Palm
kernelmeat
Refinery RBDPO RBDPKO
Oleochemical plantFattyacids,
glycerine
Refinery RBD OleinRBD
Stearin
Fresh fruit bunches
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 14/27
PALM OIL IN BRIEF
Global user of palm oil
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 15/27
Analysis
Stage of industry
Palm oil cultivation (upstream industry) productivity
Downstream industry
Analysis of major oil palm plantation in Indonesia
Global Value Chain Analysis
Future Upgrading
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 16/27
Analysis
Stage of industry
Malaysia has export- oriented-approach
Indonesia, in his stage of expanding area of
cultivation, is in import substitution intervention.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 17/27
Analysis
Palm oil cultivation (upstream industry) productivity
Commodity
Productivity
Small
Companies State Owned
Large
Companies
Palm oil 2,173 4,929 2,693
Year Indonesia Malaysia
1976-1980 3.1 3.4
1981-1985 3.78 3.58
1986-1990 3.8 3.57
1991-1995 3.69 3.51
1996-2000 3.32 3.63
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 18/27
Analysis
Downstream industry
2007 Indonesia Palm Oil Summary
Year Production
of CPO
Usage Downstream Idle
capacityExport Domestic Capacity
2007 16.700 12.400 4.115 13.720 9.605
(000 ton)
Based on the table, in 2007, 82% of the production able
to produce further in Indonesia. However, only 24% was
domestically produced and the rest are exported to other countries. This idle capacity should be taken into
account for further upgrading.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 19/27
Analysis
Analysis of major oil palm plantation in Indonesia
Indonesian companies and foreign companies in general(except Wilmar group) produce almost similar yield. Yet someIndonesian companies perform better than foreign companies.It shows that technology owned and used in Indonesia palm oil
plantation mostly similar. Group companies produced 7,223,723 MT out of 9,020,000
MT total production of Indonesia in 2002. Therefore, hundredsof small companies produce 1.796.277 were selling their products to larger companies without adding more value of their products.
Indonesia companies established partnership with foreigncompanies to develop and obtain their technology throughstandardized products, foreign direct investment, or other relationship (will be explain more in global value chain analysispart).
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 20/27
Analysis
Global Value Chain AnalysisProcess Upgrading
Year Area (ha) Production (ton) Labor (person) P/L Changes in
P/L
2006 6,594,914 19,520,170 4,232,319 4.61
2007 6,611,614 19,776,640 4,120,647 4.80 0.04
Small companies, in 29 years, able to increased 20 times
productivity while state-owned increased 1.3 times. On the other hand, private companies drop 0.98 times.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 21/27
Analysis
Global Value Chain AnalysisProduct Upgrading
Year Area (ha) Production (ton) Export (ton) E/L Changes in E/L
2006 6,594,914 19,520,170 16,251,000 0.83
2007 6,611,614 19,776,640 16,515,000 0.84 0.003066151
The product of upstream industry in palm oil industry is almostsimilar. The difference is only on the standardization by the the
RSPO (Roundtable on Sustainable Palm Oil). Therefore, producer
could not expect more in product upgrading because the quality
mostly depends on the external factors, such as climate, age of
trees, and etc.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 22/27
Analysis
Global Value Chain AnalysisKaplinsky schema
Market Share Decreases Market Share Increases
Unit Value RisesRelative to Industry
Average
Quadrant 1Failed product upgrading
Quadrant 2Product upgrading
Unit Value Falls
Relative to Industry
Average
Quadrant 3
Product and process
downgrading
Quadrant 4
Process
competitiveness
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 23/27
Analysis
Global Value Chain AnalysisFunctional Upgrading
Indonesia palm oil industry in their history has donefunctional upgrading. Starting as producing CPO andCPKO only and export all the products without further processing and then import those consumer productsderived from CPO (food and non-food).
Indonesian biodiesel from palm oil just started in 2008
when Wilmar Bioenergy was established. This newfunction tends to be the future of palm oil industry. Due toglobal warming and environmental destruction, usingrenewable energy, which not gives negative impact to theenvironment, is necessary.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 24/27
Analysis
Global Value Chain AnalysisFuture Upgrading
Production
R/D
Downstream
Distribution
Innovate
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 25/27
Conclusion
- Indonesia has to become more productive (processupgrading) and differentiation (product upgrading). Itis followed by improvement in functional upgrading.
- Government role in global value chain is as facilitator of infrastructure, both physical and regulation. Importsubstitution as a tools to protect domestic productshould be evaluated its efficiency. Recent newsrelated to this matter is Indonesian governmentwould like to reduce its tax on export of RBD olein
and stearin (downstream products). Other thing thatgovernment can do is a facilitator in partnership withmarket (as it was with Netherlands).
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 26/27
Conclusion
- Utilizing resources and creating more efficient productioncan be done by process upgrading. As it was analyzed,
Indonesia productivity is less than Malaysia. Therefore,
possessing technology, well-planned cultivation, and
R&D are keys to improve efficiency.
- Roundtable on Sustainable Palm Oil should be obey and
enhance into biodiesel will help the sustainability of palm
oil.
- analyzing Indonesia palm oil industry using global value
chain as a producer driven, input-output analysis, and
benchmarking to Malaysia, it is shows the possibility of
upgrading in the future for the benefit of Indonesian
people.
7/16/2019 GVC-Palm Oil
http://slidepdf.com/reader/full/gvc-palm-oil 27/27
THANK YOU