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Indonesia Palm Oil Industry Report - H2, 2012

March 2013 | 33 pages | ID: I2A9282211DEN
Emerging Markets Direct

US$ 475.00

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Indonesia is the world’s largest producer of palm oil and the industry has been the economy’s most valuable agricultural export sector for the last decade. The attractive returns and strong demand have encouraged investment in the Indonesian palm oil industry, resulting in significant rural economic development and poverty alleviation.

The Indonesian palm oil industry saw significant growth in recent years, thanks to increasing matured palm areas as well as improvements to the operational productivity of plantation and CPO processing. Indonesia’s CPO production reached 25.6mn tonnes in 2012, representing half of the world total. Forecasters expect the country’s production to increase to 28mn tonnes in 2013 and 40mn tonnes by 2020. Demand growth remains solid in Indonesia with palm oil consumption of 6.9mn tonnes in 2012, up 9.2% year on year.

The country should be cautious, however. Despite the expected increase in future demand, restrictions on the conversion of forests to oil palm plantations in Indonesia would reduce the availability of fertile land and impede expansion of the industry. Government policies should aim to improve productivity, particularly among smallholders, and implement pro-industry growth policies.

Current leading players in the market include Astra Agro Lestari, Sinar Mas Agro Resources & Technology, London Sumatra Indonesia, Sampoerna Agro and BW Plantation. The industry players posted mixed results in FY/2012 due to lower average selling price and volume of palm products.

Key Points:
  • In 2012, Indonesia maintained its lead over Malaysia, producing 6.8mn tonnes more of palm oil. The two largest producing countries together represent about 85% of the global palm oil production.
  • In 2013, Indonesia’s CPO production is projected to reach 28mn tonnes, mainly attributed to increasing matured palm areas and yields.
  • The growth in palm oil demand remains solid in Indonesia, accounting for 14% or 6.9mn tonnes of the total world consumption in 2012, up 9.2% year on year. The country’s consumption is expected to reach 7.9mn tonnes in 2013.
  • CPO prices plunged in 2012 due to weaker global demand and rising palm oil stock. In 2013, the average price of CPO is expected to recover amid slower production of competing vegetable oils and higher palm oil demand.
1. INDUSTRY PROFILE

1.1 Overview
1.2 Plantation
1.3 Production
1.4 Consumption
1.5 Exports
1.6 Stocks
1.7 Prices
1.8 World oils and fats

2. MARKET TRENDS AND OUTLOOK

2.1 Industry developments
  2.1.1 Oleochemical
  2.1.2 Biodiesel
2.2 Industry challenges
  2.2.1 Environmental challenges
  2.2.2 Land availability constraints
  2.2.3 Land rights and degradation
  2.2.4 Closing the productivity gap
2.3 Policy and taxation
2.4 Government incentives
2.5 Sustainable palm oil
2.6 Market outlook

3. LEADING PLAYERS AND COMPARATIVE MATRIX

3.1 Leading players
  3.1.1 PT Astra Agro Lestari Tbk
  3.1.2 PT Sinar Mas Agro Resources & Technology
  3.1.3 PT London Sumatra Indonesia Tbk
  3.1.4 PT Sampoerna Agro Tbk
  3.1.5 PT BW Plantation Tbk
3.2 Comparative matrix
3.3 SWOT analysis

4. TABLES AND CHARTS

Table 1: Palm oil closing stocks (2008–2012) (‘000 tonnes)
Table 2: Plantation land prices and income yields in 2011
Table 3: Old and new Indonesian palm oil export taxes (effective Sep 15, 2011)
Table 4: AALI operational highlight (2012 vs. 2011)
Table 5: AALI five-year financial highlight
Table 6: SMART operational highlight (2012 vs. 2011)
Table 7: SMART five-year financial highlight
Table 8: LONSUM operational highlight (2012 vs. 2011)
Table 9: LONSUM five-year financial highlight
Table 10: SGRO operational highlight (2012 vs. 2011)
Table 11: SGRO five-year financial highlight
Table 12: BWPT operational highlight (2011 vs. 2010)
Table 13: BWPT five-year financial highlight
Table 14: Selected peer comparison of key financials
Table 15: Selected peer comparison of operational statistics
Chart 1: Global palm oil production (2002–2012)
Chart 2: Key palm oil areas in Indonesia and Malaysia
Chart 3: Palm oil plantation area (2000–2011)
Chart 4: Palm oil area by category of producers in 2011
Chart 5: Global key palm oil producers in 2012
Chart 6: CPO production in Indonesia and Malaysia (2003–2012)
Chart 7: Domestic palm oil consumption (2008–2013)
Chart 8: Global key palm oil exporters in 2012
Chart 9: Domestic palm oil exports by volume (2008–2013)
Chart 10: Domestic palm oil exports by value (2002–2012)
Chart 11: Price trend of CPO vs. soybean (Oct 2007–Oct 2012) (USD per tonne)
Chart 12: World exports of major oils and fats in 2012
Chart 13: World production of major oils and fats (2012 vs. 2011)
Chart 14: Biodiesel production and export in 2011 (‘000 tonnes)
Chart 15: CSPO production area (2008–2012)
Chart 16: CSPO and CSPK production capacity (2008–2012)
Chart 17: CSPO and CSPK supply by country


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