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PALM OIL : WHAT SHOULD BE OUR FOCUS?12 August 2015 , 06:36 WIB | Read : 938 | By : Agus Pakpahan*
in the long term kondratiev perspective, the technology, being had by big plantation and which has been developed in the last years, is the result of the long term technology innovation, that is, the innovation from 1700s. in the history of evolution of plantation which is more than 300 years, we witness, in the era of voc coming to indonesia in 1602, indonesia had many kinds ofspices. as the world develops, the spices came to an end in short time, knowing the competition in Europe decreased the price of spices too.
The next was labour enforcement which started in 1830, and put coffee and sugarcane as the mainstay commodities. So the two kinds of commodity were exceptable from labour enforcement in the early 1900s. The coffee era ended in 1800s which was replaced by sugar. Then sugar era ended in 1930s. Then the sugarcane was replaced by rubber. The rubber era ended in 1960s.
What becomes the source of Indonesian exchange then?The golden age after rubber was crude oil and the exports of forest products. The two kinds of commodity ended the golden age in 1980s. In 1980s Indonesia started to develop palm oil massively, which was specificly supported by the National Private Big Plantation Programme. Now Indonesia has its title as the biggest palm oil plantation which reaching more less 10 millions hectares. The areas reach about one country, like South Korea. The question remains, will palm oil plantation be as same as the previous commodities mentioned above?
Data from Malaysian Palm Oil Community (Picture 1) describes the price fluctuation during July 1st - 25th, 2015. The price on June 25th, 2015 reached RM 2.264/ton or equal to US$ 588,6/kg. The price was drastically decreasing if it is compared to the price on 6 or 7 June 2015, which reached RM 2.341/ton or equal to US$ 608/ton. But the highest price in June was lower than the real price in 1965, reaching US$ 1.262/ton.
The decreasing price of the agricultural commodity in the long period (1900 – 2010) could be seen in Picture 2 and the trend of the decreasing price, according to kinds of commodity in 1960 – 2000 could be seen in Table 1. Nowadays palm oil price is the price in 1996 – 1998. But it should be noticed, the price in Table 1 is the real price according to the constant value of dollar in 1990. It means, nowadays value will be lower if it is compared to the palm oil price in 1996 – 1998.
Picture 2 informs that fluctuative palm oil price also happens in the other kinds of agricultural commodity. Though the world population increases, agricultural commodity price keeps decreasing in the world markets at all.
Of course, in the short term, there will be fluctuation but in the long term, the commodity price really keeps decreasing. Table 1 informs the detail, that is, in the long term, the price of 11 agriculture commodities (rice, sugar, coffee, soybean oil, palm oil, coconut oil, tobacco, rubber, tea, button, cocoa) keeps decreasing.
What is the implication from the phenomenon above, namely for palm oil plantation for special and the agriculture in general?
The first, . . .