palmoil importers in the world. Among all vegetable oils, palmoil price appears to be the lowest, thus dominating the vegetable oil import market. Indonesia and Malaysia are the two main exporters, in which Pakistan alternately imports palmoil. Within such conditions, this study aims to analyze the sustainability of IndonesiaPakistansupplychain by estimating (i) the influencing factors of Pakistanpalmoil import volume from Indonesia, (ii) the price co-integration in the Indonesian-Pakistanpalmoilsupplychain, and (iii) the adjustments of the short run dynamics towards the long run equilibrium. Using monthly data from 2010 to 2016, the sustainability was analyzed with Auto Regressive Distributed Lag model and Vector Error Correction Model. The results show Pakistanpalmoil import volume is significantly influenced by the price of Pakistan’s palmoil import, trade balance and soybean oil price. The lower the palmoil import price, the higher the volume palmoil imported to Pakistan. The import price is co-integrated with all prices along the IndonesiaPakistansupplychain but no error correction towards long run equilibrium, which is partly reflecting impact of Pakistan Government interventions in palmoil trade. Based on these results, it can be concluded that price is the most influencing factor of the Pakistanpalmoil import, thus IndonesiaPakistansupplychain could be sustained if the Indonesian palmoil selling price remains competitive. Therefore, Indonesian producers need to increase their productivity and reduce their production costs in all stages of the supplychain, including those among the oilpalm smallholders.
menjadi salah satu importir minyak sawit utama di dunia. Diantara semua jenis minyak nabati, minyak kelapa sawit mempunyai harga yang paling rendah, sehingga mendominasi pasar impor minyak nabati. Pakistan mengimpor minyak sawit tersebut secara bergantian dari dua negara ekportir sawit utama, Indonesia dan Malaysia. Untuk menganalisis kondisi tersebut digunakan data bulanan dari tahun 2010 sampai 2016, dan diestimasi dengan model Auto Regressive Distributed Lag dan Vector Error Correction. Hasil estimasi menunjukkan bahwa volume impor PLQ\DN VDZLW 3DNLVWDQ VHFDUD VLJQL¿NDQ GLSHQJDUXKL ROHK KDUJD LPSRU PLQ\DN VDZLW QHUDFD perdagangan dan harga minyak kedele. Semakin rendah harga impor minyak sawit turun maka semakin tinggi volume impor minyak sawit ke Pakistan. Harga impor tersebut terkointegrasi dengan harga-harga minyak sawit di sepanjang supplychainIndonesiaPakistan namun tidak terkoreksi menuju keseimbangan jangka panjang, yang sebagian diakibatkan oleh campurtangan Pemerintah Pakistan dalam perdagangan sawit. Berdasarkan hasil estimasi tersebut, maka dapat disarankan bahwa Indonesia perlu mempertahankan harga jual yang kompetitif di semua tahap sepanjang supplychain, termasuk di tingkat petani untuk menjaga keberlanjutan ekspor kelapa sawit ke Pakistan.
This thesis project intends to analyze how smallholder farmers’ participation and incorporation into the PO GVC have impacted sustainability and inclusive efforts. Due to its controversial nature, the PO industry was forced to undergo several transformations, especially in the sustainability front. Still dubious, however, is the degree to which smallholder farmers are included and benefit from equitable distribution of value along the chain. Because large corporate plantations predominantly dominate the commodity, adverse incorporation processes and risks of exploitation still take place. Indonesia, the case study of this Master’s thesis, is “currently the world’s largest producer of palmoil, and, together with Malaysia, accounts for 85 to 90% of total global palmoil production” (Nurfatriani et al. 2019, p. 1). This, in turn, attracts global investment, as buyers as popular as Unilever, Nestle, Procter & Gamble Co and PepsiCo are the leading names among the Fast-moving Consumer Goods (FMCG) industry. The socio-economic and environmental consequences resulting from oilpalm production are mixed and often disagreed upon. The contradictory nature of the commodity makes it one of the most controversial products of the sector and subject to many criticisms. With a rising population and consequent steady demand, the industry of this vegetable oil is projected to expand by 3 percent over the next decade (Ibid.), attracting more farmers to switch to the cultivation of PO. How do PO smallholders benefit from engaging in this fast-moving sector? Furthermore, how does their involvement make an impact on sustainable PO production? Does the PO sector provide a win-win situation in which both farmers and the environment win?
Plantation Boundaries and Planted OilPalm. The RSPO secretariat supplied polygon vector data that outlined the boundaries of 134 of RSPO-certified supply bases worldwide. We digitized additional polygons from maps avail- able from audit reports hosted on the RSPO website, and supplemented these with plantation boundaries provided in annual communications of progress (ACOPs). For noncertified plantations, we used oilpalm concession leases (35)* supplemented with RSPO member-held noncertified concessions from ACOPs. We identified noncertified, RSPO member-held plantations by comparing company names from this database with names of RSPO member subsidiary companies. The noncertified dataset overlapped substantially with certified polygons, and we reconciled these geodatabases by modifying overlapping areas. Planted oilpalm was derived from maps developed through manual digitization of plantations from satellite data (2, 40). Plantations in our dataset occurred across Indonesian regions, including Kalimantan, Sumatra, Papua, Sulawesi, the Riau Islands, the Maluku Islands, Nusa Tenggara, and Java. Forest Cover Loss and Fire Occurrence. We aligned our forest loss outcome metrics as closely as possible with those in the RSPO certification system. We used 2001 –2015 Landsat satellite-derived deforestation, defined as a stand- replacement disturbance or the complete removal of tree canopy cover, to assess deforestation, and primary and peatland forest loss (39). Since tree plantations may be indistinguishable from intact forest based on forest canopy cover (25, 49), we excluded areas identified as plantation and mixed tree crop from deforestation assessments (2, 40). We define forest as hav- ing >90% tree cover in 2000 (39). We chose this threshold to exclude agroforests, secondary forest regrowth, and other lower forest cover lands from deforestation metrics (49). This is particularly important in Indonesia, where agroforests, forest-like fallows, jungle rubber, pulp and paper, and oilpalm have high canopy cover but are not targeted for conservation under the P&C (17). Sensitivity analyses explored the effects of alternate forest definitions (30% and 60% forest cover) on outcomes ( Table S4 ). To evaluate the impact of certification on primary forest loss, we quantified tree cover loss (39) in areas of “primary forest,” mature natural forest of ≥5 ha retaining natural composition and structure (38). We assessed the degree to which certified plantations were located on peat (58 –60) and quantified forest cover loss in peatlands. We used the MODIS global monthly fire lo- cation product (MOD14 v6) to identify locations of active fire (37). To gen- erate annual fire rates (fire detections per square kilometer per year) from 2002 to 2015, we summed annual fire detections in each plantation and divided by plantation area.
label that the product contains palmoil they are unaware of the impacts that the palmoil industry has on the environment and biodiversity. Therefore an option for products with sustainable palmoil needs to be widely available and ultimately this should change into the only option available. But the question at hand is, if consumers want the latter scenario as well and when this happens, what are they willing to pay more for sustainable palmoil. Multiple field experiments were conducted to research the willingness to pay for products containing sustainable palmoil, such as the studies from Bateman et al, Disdier et al, and Giam et al. In these studies, sustainable palmoil was in general defined as, that during the production the environment and biodiversity was not damaged. The overall result of these field experiments is that the consumers are willing to pay a significantly greater amount for products with sustainable palmoil, but only when they were well informed about the impacts of the palmoil industry on the environment and biodiversity (Bateman et al, Disdier et al, and Giam et al.). Therefore, NGOs play an important role to inform and raise awareness among customers about the impacts of the palmoil industry. However, the three mentioned field experiments are limited in that they were conducted in developed countries like Singapore, France and the UK, while the largest consumer countries of palmoil are less developed such as Indonesia, India and China. Thus, information is currently lacking and further research is required into the willingness to pay for sustainable palmoil in the latter countries, where people pay a relatively bigger amount of their income for products containing sustainable palmoil. This will be crucial information for the demand of sustainable palmoil but also beneficial for the supply of sustainable palmoil, and above all necessary to achieve sustainability in the palmoil industry.
Malaysia is classified among the world’s leading producer and exporter of palmoil products (MPOC, 2015). Among the palmoil companies in Malaysia such as Sime Darby, IOI Plantation, Golden Hope Plantation, Guthrie Groups, Kulim, and Federal Land Development Authority (FELDA). Felda Global Venture (FGV) is the biggest player which has a complete palmoilsupplychain operations through their subsidiaries. FGV has taken up every aspect of the value chain ranging from the production of seedlings, nursery, fertiliser, plantation of palmoil trees, palmoil mills, palmoil refiners, palm kernel crushers, manufacturer of palm-based selling of palmoil based products. Hence, FGV has the comprehensive supplychain network in palmoil industry. Besides, FGV has a unique supplychain network within their group of companies through their supplychain management (SCM) members of the supplychain which include the upstream and the downstream activities, establishes relationships that covers the coordination of production and logistics activities. Thus, coordination required decisions to be made jointly with regarding companies’ production, inventory, and delivery activities. Today, upstream and downstream integration with suppliers and customers have emerged as an important element of manufacturing strategy. In addition, the emergence of Indonesia as one of the palmoil producer has effects on the competitiveness of FGV in palmoil market. In 2012, Indonesia produced 35% of the world's certified sustainable palmoil (Sarif, 2013). Thus, FGV needs to develop a complete and efficient SCM in order to remain competitive in this industry.
Abstrak. Indonesia adalah produsen crude palmoil (CPO) terbesar di dunia. Pada kondisi puncak panen, sering terjadi penumpukan Tandan buah segar (TBS) karena bahan baku yang melimpah. Berdasarkan data pada salah satu pabrik kelapa sawit di provinsi Sumatera Utara, persentase TBS menginap dilapangan selama satu malam yaitu sebesar 41% dari keselurahan TBS olah, di satu pihak TBS yang telah dipanen harus segera diproses karena dapat mempengaruhi kualitas minyak yang akan dihasilkan. Selain itu faktor proses produksi dan penyimpanan juga sangat berpengaruh terhadap kualitas CPO. Ketidak-seimbangan perencanaan produksi menunjukkan belum optimalnya perencanaan produksi pada rantai pasok CPO sehingga diperlukan suatu rancangan optimasi produksi pada rantai pasok CPO. Algoritma genetika dipilih dalam penyelesaian model optimasi karena karakteristik rantai pasok CPO yang kompleks. Tujuan dari penelitian ini yaitu mengoptimasi sistem rantai pasok minyak sawit untuk meminimumkan biaya produksi. Metode ini menunjukkan hasil produksi optimum untuk Triwulan III 2017 adalah sebesar 12.202.285 kg. Dengan sistem usulan diperoleh peningkatan persentase produksi CPO sebesar 8,34% dibandingkan sistem aktual.
Wind power is expected to continue to rise as one of the worldwide energy mix.For more than a decade Shell has been is involved in wind power projects in Europe and North America. Presently, Shell’s has 507 megawatts from wind power. Most of this comes from around 720 turbines at eight wind projects in the USA (Shell, 2011). At Waterton in Canada Shell invested nearly C$2 million to improve energy efficiency of its 50 year old gas processing site (Shell, 2011). A new energy monitoring system of CO2 and energy management used across 20 Shell manufacturing sites has improved energy efficiency. This system has led to savings of more than $20 million in 2013 (Shell, 2013). Statoil Sheringham Shoal offshore wind farm is now on full production with 88 turbines and an installed capacity of 317 megawatts (MW). Statoil also purchased 70% shareholding in the Dudgeon wind farm project in October 2012 together with Statkraft. The project is located near Sheringham in the Greater Wash Area off the English east coast. The expected installed capacity Dudgeon wind farm is 402MW, pending a final investment decision in 2014. The wind farm will provide renewable energy to approximately 400,000 households in the UK market (Statoil, 2012). Gas is a lower carbon fuel that is increasingly secure and affordable. If gas replaces coal for supply of power, it could reduce CO2 emissions by half. BP believes that oil will remain the dominant source for transport fuels, accounting for as much as 87% of demand in 2030 (BP, 2011). BP Energy was the first foreign company in the Spanish market in 2000, serving 10% of the commercial and industrial market segment by 2002 (Eikeland, 2007). Currently BP, Chevron, Shell and Statoil produce more natural gas as it emits less CO2 than fossil fuel and coal when used in generating electricity (BP, 2011, Chevron, 2011, Shell, 2011 and Statoil, 2012). BP is playing major role in the growth of gas with production in countries such as the US, Trinidad, Indonesia and Egypt and important supply chains such as those serving China, India and Europe (BP, 2011).
Again, where alienability has been contentious in other instances of commodification, such as the detachment of carbon emissions reductions from fossil fuel burning (Lohman 2010), the practice of separating the claim of sustainability from the raw material itself has barely been commented upon in the certification literature. Arguably this stems from the established conventions of the certification business. Segregated supply-chains are only one method by which certified raw material is transported to the final customer. Another is called mass balance, in which certified and conventionally-produced material are mixed at points along the supply-chain and a set of industry- wide norms have emerged in order to provide credibility to this system. This includes clearly stating on the label where the final product is made from ‘mixed source’ materials, and checking the intermediary firms along the supply-chain to make sure they are not selling on more certified material than they actually received. Evoking the watchful eye of Polanyi’s administrators, RSPO regulation on how to trace certified palmoil runs into hundreds of lines on its website. By extending this to certificate trading – only allowing manufacturers using palmoil certificates to claim that they ‘support’ sustainable palmoil production and not that their products actually ‘contain’ it, for instance – the RSPO have effectively parlayed the existing legitimacy for certification into tacit consent for certificate trading too.
The impact of agricultural activity on the environment has been a topical issue around the world especially as it relates to oilpalm cultivation. Because demand for palmoil increases, more lands are cleared for expansion or plantation, in most cases at the expense of the environment. Loss of natural forests, loss of biodiversity, ecosystem degradation, and anthropogenic climate change have all been attributed to large scale cultivation. Respondents were asked about their knowledge of environmental conservation and protection of animal species and if they considered it important. The response showed that 37(64%) strongly agree, 15(30%) agree, and 3(6%) unsure. The finding concurs with Basiron (2007), that policies are in place to ensure the preservation of the environment including the Protection of Wildlife Acts promulgated as early as in 1972, and a ban on the establishment of oilpalm plantations on natural forests and peat- lands (Butler,2007b). On the use of modern technology in their operation, results showed that 28(56%) strongly agree that modern technology was important and it has helped in reducing environmental impact, 12(24%) agree, 8(16%) unsure and 2(4%) strongly disagree. Most of the respondents argued that through training and mechanization that they have achieved much in reducing environmental issues. They also said that extension officers do visit their plantations from time to time to give training, and that enforcement agents equally visit to ensure compliance on the best practices. Respondents were aware that their plantation activity contribute to the destruction of ecosystem and wildlife; the results showed that 30(60%) strongly agree, 13(26%) agree, 6(12%) unsure, while 1(2%) strongly disagree (Table 4). When asked their opinions, majority said they were concerned about ecosystem destruction but also constrained to do more to stop it because they needed to grow crops to be able to care for their families. On periodic review of the, 26(52%) indicated strongly agree, 20(40%) agree, 4(8%) unsure, while 0(0%) strongly disagree. By the result we conclude that FELDA scheme review their activities periodically in order to improve in their environmental sustainability. This is consistent with best agricultural practices. Life cycle assessment by Malaysian PalmOil Board on oilpalmsupplychain, and the Conservation efforts (Malaysia palmoil board in was one of the efforts towards conservation and sustainability.
Today, palmoil products especially Crude PalmOil (CPO) is one of the most important agricultural commodities in Indonesia for at least three reasons. Firstly, palmoil is the main raw material for cooking oil, therefore a continuous supply of CPO to the processors is imperative to maintain cooking oil availability and price stability. Secondly, CPO has proven to be a promising major source of foreign exchange earnings and taxes in Indonesian economy. Thirdly, the palm fruit farming, supplychain and CPO processing has been creating employment opportunities and at the same time improve the welfare of the community (Soetrisno and Winahyu, 1991).
Significant improvements are found in environmental sustainability due to the use of a biogas trapping system. Whilst the gap between the ranking and threshold values reduced for GHG emissions and waste recovery/ recycled PMs, biodiversity became the environmental hotspot, as the impact caused by upstream plantation activities in producing Fresh Fruit Bunches (FFB) for the supplychain remained unsolved. The supplychain thus needs to consider strategies in improving plantation practices (e.g. increase landscape heterogeneity, practice integrated farming, zero burning), reduce land use changes and the loss of biodiversity. Energy consumption (fossil fuel and biomass) intensity still remained as another hotspot despite additional amount of bioenergy was generated in BGPP. This is because the current calculation method considers all forms of energy inputs within the system boundary, including energy input that is recovered or generated from waste. For example, biomass waste including mesocarp fibre and empty fruit bunches which could otherwise be wasted, was recovered from the supplychain for combustion in a boiler to produce steam for the palmoil mill. This recovered amount of energy was added as an input to the system rather than as a substitute or avoidance of commercial energy. About 96.9% of the energy input of the palmoil mill came from biomass waste recovered from the supplychain. Thus, net energy input by subtracting the recovered energy from the total energy input could have been considered in calculating the PM for energy consumption intensity (i.e. input/ output ratio). Incremental capital investment and operating cost, and additional income due to this biogas plant would change the current financial situation of the crude palmoil mill supplychain as AGR is further deviated from the SGR. The stakeholders in the crude palmoilsupplychain should thus monitor and control the financial implications due to the implementation of any improvement strategies, in order to ensure the sustainable growth of the business. Thus, the score of economic sustainability objective was the lowest compared to environmental and social sustainability objectives, due to the incorporation of this environmental strategy. The results reflect the fundamental principle of POSA framework, which was developed on the strong sustainability concept. Even-though the incorporation of the biogas trapping system brought more wealth to the business, economic sustainability measured how well this wealth was shared. The supplychain needs to improve its sustainability performance by spending its additional profit for the empowerment of the local community in order for the stakeholders in the supplychain to establish themselves as good corporate citizens. For example, increased number of smallholder equity and support schemes can be created for the local economy through.
While a large number of studies modeled regions in Malaysia, the world’s second largest palmoil producer after Indonesia, only a few have discussed the case of Indonesia. Some studies that analyzed the Malaysian case are worth mentioning. Chiew et al. [ 16 ] carried out various scenarios to identify the optimal location of combined heat and power (CHP) plants for treating EFB, aiming at maximizing regional profit. The optimization model took into account biomass availability, transport distances, and the scale and location of CHP plants within the state of Selangor. Also, Foo [ 6 ] described the regional bioenergy supplychain for utilizing EFB, minimizing transportation costs to CHP plants for the case of Sabah state in Malaysia. Idris et al. [ 9 ] assessed the utilization of EFB, fronds, and trunks for co-firing, using spatial optimization to identify the technology cost. The regional bioenergy supplychain under carbon pricing and trading policies was discussed by Memari et al. [ 8 ] to evaluate the impact of using EFB in a CHP plant. Lam et al. [ 7 ] and Theo et al. [ 17 ] evaluated complex supplychain network designs, considering both the full biomass potential in a single plant and accounting for multiple palmoil mills in Malaysia. Lam et al. [ 7 ] proposed a strategy to integrate the solid biomass residues with industrial waste motor oil for fossil fuel substitution, while Theo et al. [ 17 ] focused on the utilization of POME and its distribution pathways.
The concept of a value chain has assumed a dominant position in the strategic analysis of industries . The strategy formulation of a company can be seen as a decision that promises to generate economic rents that may provide generic strategies of low-cost and differentiation strategies to suggest where costs should be cut or how products should be differentiated . The importance of a supplychain system in achieving a simultaneously high-level efficiency has generally focused on new performance measures and categorizing existing value chain measures to utilize the supplychain became more complete, accurate and therefore more effective .
I N I NDONESIA , oil still the major player for fulfilling the energy needs in the electricity generators, transportation, industrial, and household sectors. Unfortunately, the soaring oil consumption is negatively in line with the diminishing fossil energy resources. Responding to this issue, Indonesia’s Government directed their focus on renewable energy, with the main highlight on biofuel. In 2006, the Indonesian government set its very first biofuel national policy as part of the efforts to ensure the fuel supply availability, from revising the national energy bill, creating mandatory markets, creating alternative fuel distribution policy, and plan to directly subsidized biodiesel price . The objective of this biofuel development, besides to reduce imported oils and fuel subsidies, is to create employment (especially in rural areas) and to strengthen the agricultural sector, as well as to discover new export opportunities . Early government plan estimates that biofuel will cover 10 percent of total fuel consumption for transportation sector and creates thousands of employment opportunities in 2010, and gradually increase into 20% in 2025 with total estimated demand is 10.22 million kl. The government published a national blueprint and roadmap 2006- 2025 as a reference for all stakeholders in accomplishing the biofuel development objectives.
Green design in supplychain management indicates the designing process of a product that takes environment into serious consideration (Handfiled et al., 2001). It is a topic that is usually associated with safety regulations and product innovative design. The strategic essentiality of product ecological design and use of efficient recourses have already been explored by much previous literature such as Tischner (2001), Handfiled et al. (2005) and Scott (2008). Both LCA and ECD 3 are discussed in much literature in order to address the importance of developing an understanding of the impact of product design on its environmental compatibility (Srivastava, 2007). However, the green design here does not restrain itself to solely product design; it also involves the material design/recovery, (dis-)assembly design and waste minimization design (Ljungberg, 2007). Its scope involves tracking all the energy and raw material flows of any product from extracting raw materials to the disposal of the final products. There are many common and useful approaches for implementing green design. Srivastava (2007) reports that the most prevailing way is to replace the hazardous raw materials with the safe ones to reduce the occurrence of possible problems. Nevertheless, this is not always the optimal option due to the associated cost increment. Other approaches for green design may be based and focused on legislations and regulations, new product redesign or solid waste management.
According to Green Tech Malaysia (2013), the criteria of sustainability is related to the products or services which minimize the degradation of the environment, have zero or low greenhouse gas (GHG) emission, safe for use and promote healthy and improved environment for all forms of life, conserve the use of energy and natural resources and promote the use of renewable resources. In Malaysia, there are a lot of initiatives organized by the government in order to involve in a sustainable environment such as Green Township, Green Building and Low Carbon City Framework as well. Organisation such as Roundtable Sustainable PalmOil (RSPO) plays their role in making sustainabilitypalmoil environment become realistic. However, there are problems identified for the current sustainability initiatives as listed per below:-
The supplychain of a commodity is closely related to the price. Therefore, supplychain analysis is immensely needed to identify the critical points in the pricing formation process. Price is a multidimensional issue in business and industrial structure (Vickner and Davies, 2002; Bompard et al., 2007; Heywood and Ye, 2009). Price is an important factor in the calculation of inflation and even inflation is connected to price increases. Price also indicates the market structure of an industry. Empirically, it is rare for an industry to have a monopoly structure, but it is not rare to have an oligopoly market structure controlled by certain business cartels (Zhao and Zou, 2002). Such a condition is characterized by an unnatural mechanism of price formation. Agricultural commodities are vulnerable to such unnatural price formation mechanisms due to cartel dominance and a tendency toward oligopoly (Vickner and Davies, 2002). Agricultural commodities at global marketing level are interesting for investors and speculators. In Indonesia this sector is vulnerable to cartel behaviors that cause an oligopoly market structure. Some empirical research in Indonesia reveal that agriculture and its supporting industry has an oligopoly structure, for example rubber (Rizkyanti, 2010), dairy cows (Yusdja and Ilham, 2006), and agriculture in general (Amir and Nazara, 2005).
While we have 3 factors to consider i.e. the weight levels of risks, investments and technology for all five of the supplychain actors, we use mathematical permutation to seek the combinations of the factors which will provide the highest added value of the POSC business. We start with assigning the lowest possible value for one factor (0.001) and increase this value step-by-step by 0.001 until it to reach the highest value of 0.998. For the second factor we started with the lowest value of 0.001, keep it at this level, while to the third factor we assign the highest value of 0.998 because have already assigned the initial value of 0.001 and 0.001 for the first two factors, and that the sum must be equal to one.