Coconut Plantaion in Indonesia 2011 -July2011

INDONESIAN COMMERCIAL NEWSLETTER

July 2011

COCONUT PLANTATIONS: POTENTIAL NOT PROPERLY TAPPED

As a tropical country, Indonesia is a fertile land for coconut palms. The low lands of its coastal areas from Sumatra in the west and Papua in the east are lined with the swaying slim tall plants. However, the potential has not attracted enough big investors to produce major export commodity from coconut palms like crude palm oil, coffee and cocoa.

Currently Indonesia has 3.8 million hectares of coconut plantations expanding from 1.66 million hectares in 1969. The vast majority of 98% or 3.7 million hectares of the plantations are made up of smallholdings of individual farmers. Plantations owned by state companies total around 4,669 hectares with private plantation companies owning the rest. Or owned by state plantation companies and the rest by private companies.

Most of the plantations, owned by farmers are left to grow naturally without proper fertilization. They are not well tended, therefore, they remain small not up to commercial scale.

Around 65% of the country's coconut production is disposed of on the domestic market 35 exported either in the form of fresh fruits or processed products. No much progress has been made in the development of downstream industry

One factor causing the sluggish development of coconut industry is that its has lost ground in competition with palm oil industry. Oil palm trees produce more and much cheaper vegetable oil. Crude palm oil (CPO) has even become a major world commodity and gained greater domination in the market of edible oils.

However, a number of copra-based products have good prospects as they could not be substituted with CPO-based products. Among the coconut-based products that could not be substituted with other products include coconut milk powder, coconut jam, liquid coconut milk, coco chips, desiccated coconut, coconut pith, coconut vinegar, frozen coconut meat, nata de coco, virgin oil, fresh coconut and coconut water concentrate. Other copra-based products like cooking oil and coco chemicals could not stand the competition against those from palm oil and soybean oil.

Copra-based industrial scheme

Almost parts of coconut palms have commercial value - its trees, fruit meat, fibrous husk, the shells and the coconut milk.

Among the products from coconut fruits having high commercial value are Virgin Coconut Oil (VCO), activated carbon (AC), coconut fiber (CF), coconut charcoal (CCL), and oleo-chemicals in the form of fatty acid, metal ester, fatty alcohol, fatty amine, fatty nitrogen, glycerin, etc. Coconut trees are used as raw material for furniture.

Among coconut products which have been developed in the country include Coconut Crude Oil (CCO) and derivatives Desiccated Coconut (DC), Virgin Coconut Oil (VCO), activated carbon (AC), coconut fiber (CF), coconut charcoal (CCL).

Around 90% of coconut meat is processed to turn out CCO and the rest for other products. However, the percentage has tended to decline in favor of other products such as oleo-chemicals (OC), which are the derivatives of CCO.

Other than OC, the products from the coconut fruit meat having good prospects are VCO, DC, CM and CC. The four products have high commercial value. VCO could improve health (immunity to degenerative disease) and as basic material for high value natural cosmetics.

DC is a product of food mixture hygienic and practical. CM is a isotonic drink that could substitute milk, and CC is a practical and hygienic material for cooking to substitute milk from manually scraped coconut.

Derivatives of coconut shells having commercial value are AC, CCL, shell flour (CP). Activated carbon could be used in oil and gas industry, water distillation, pulp processing, fertilizer industry and gold mine.

The fibrous husk could be used as material for furniture, like luxurious car seats, spring beds and geo-textile (GT). From coconut fruits - the fiber, the meat and the milk could be processed into various products as follows:

Plantations dominated by smallholder's estates

Coconut plantations have been dominated by smallholdings accounting for 98% owned by individual farmers, traditionally managed and not well tended that they are not up to commercial scale.

Altogether there are 3.8 million hectares of coconut plantations in the country including 3.7 million hectares owned by smallholders 4,669 hectares owned by state companies and 66,189 hectares owned by private companies for about 34 years, from 1969 to 2011, the coconut plantations expanded from 1.66 million hectares to 3.8 million hectares.

The largest plantations are found in Riau, Central Java, east Java and North Sulawesi.

No significant increase in production

The country has the world's largest coconut plantations but production is not proportional with the size of the plantation areas. The country's production of coconut in 2010 reached 3.26 million tons. The production has not increased much from the previous years.

In 2003, production totaled 2,325 million tons. Until 2008, the production fluctuated with the lowest at 3.05 million tons in 2004 before rising to 3.26 million tons in 2010.

The production was relatively small given the size of the plantations. In 2011, production is only 0.7 ton per hectare as against the potential production of 2.5 tons per hectare.

Plantations owned by smallholders are generally traditionally managed without proper fertilization. As a result the productivity remains low. ...

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